Required Report - public distribution

**Date:** 7/14/2006

**GAIN Report Number:** PA6004

PA6004

**Paraguay**

**Biotechnology**

**Annual**

**2006**

**Approved by:**

![](media/image1.wmf)Kari Rojas

U.S. Embassy

**Prepared by:**

Andrea Yankelevich

**Report Highlights:**

Paraguay is the fourth largest soybean exporter in the world, producing
about two percent of the world soybean production. About 70 percent of
all soybeans sown in Paraguay are Round Up Ready (RR, glyphosate
resistant). Up until the 2004/2005 season, the country did not allow
imports of GMO seeds. However, Paraguayan farmers agreed in March 2005
to pay royalties to Monsanto for the use of its GMO soybeans starting
the 2004/2005 crop year.

Includes PSD Changes: No

Includes Trade Matrix: No

Annual Report

Buenos Aires \[AR1\]

\[PA\]

Table of Contents

[Executive Summary 3](#executive-summary)

[Biotechnology Trade and Production
3](#biotechnology-trade-and-production)

[Policy 3](#policy)

[Current Situation of Regulatory Framework
3](#current-situation-of-regulatory-framework)

[Creation of SENAVE 4](#creation-of-senave)

[Resolution N. 020 (Appendix A) 4](#resolution-n.-020-appendix-a)

[Traceability 5](#traceability)

[Labeling 5](#labeling)

[Stacked Genes 5](#stacked-genes)

[Coexistence 5](#coexistence)

[Royalties 5](#royalties)

[Marketing Issues 6](#marketing-issues)

[Capacity Building and Outreach 6](#capacity-building-and-outreach)

[Proposed activities 7](#proposed-activities)

[Appendix A 8](#appendix-a)

[Appendix B 10](#appendix-b)

[Appendix C 11](#appendix-c)

# Executive Summary

Paraguay is the fourth largest soybean exporter in the world, producing
about two percent of the world soybean production. About 70 percent of
all soybeans sown in Paraguay are Round Up Ready (RR, glyphosate
resistant). Up until the 2004/2005 season, the country did not allow
imports of GMO seeds. However, Paraguayan farmers agreed in March 2005
to pay royalties to Monsanto for the use of its GMO soybeans starting
the 2004/2005 crop year.

After Resolution 020, issued in October 2004, which authorized the
inclusion of varieties that are still pending in the government seed
registry to be imported and commercialized the past crop season
(2005/2006), the controversy aroused one more time. The severe drought
that affected the country damaged production, and the varieties that
were available were not adapted to the soil or the growing season, made
the situation even worse causing dramatic losses. As a side effect, the
confidence that farmers have in biotechnology is damaged as well. They
are now more receptive to the anti biotech propaganda from church and
NGOs.

Paraguay has still not passed a biosafety law. In November 2002, a draft
biosafety bill was sent to the Paraguayan National Congress that would
regulate the eventual production and commercial release of GMO products
in Paraguay. The Ministry of Agriculture drafted the bill in conjunction
with FAO, and with input from interested sectors of Paraguayan society.
The Ministries of Agriculture, Environment and Health would jointly
enforce the law, while the Biosecurity Commission, which was created in
1997, would continue to advise the Ministries on technical issues. The
National Service of Seed and Vegetables Quality, (SENAVE) would advise
the Ministry of Agriculture on policy issues.

In 2003, Paraguay ratified the Cartagena Protocol on Biosafety (CBP).
The Secretariat of Environment is seeking Paraguayan Central Government
consent to administer the provisions of the CBP. This request has met
with resistance from other ministries, as there is concern that the
Environment Secretariat does not have the technical expertise required
to understand the implications of the CBP.

# Biotechnology Trade and Production

Paraguay approved in October 2004 four soybean varieties containing the
Roundup Ready genes (RR), for planting and marketing. About 70 percent,
or 1,5 million hectares, is planted with RR varieties. At the moment
there are ten RR varieties approved for planting and commercialization.
(Appendix A)

There are three corn varieties under analysis , MON 810, NK 603, and
BTRR (MON 810 x NK603) (all Monsanto varieties), and three cotton
varieties: BT, RR and BTRR that are expected to be in the market the
next crop season.

Paraguay imports biotech seeds from Argentina (nearly 80 %) and from
Brazil.

Approvals from Argentina, the United States, and Canada are taken into
account as a precedent in the approval evaluation process.

Regarding cotton biotech varieties, authorities in the Ag Ministry
indicated that they are in the final stages at authorizing the varieties
that are under research now, as a way to put an end to the illegal
cultivation that represents about 150,000 has.

# Policy

## Current Situation of Regulatory Framework 

The current regulatory framework applied to GMOs and to biosecurity is
incomplete, unclear, and without a legal framework. Paraguay, in
recognition of its need to regulate GMOs, proposed a biosecurity law
based on: discussions within the biosecurity commission, regulations in
place in MERCOSUR countries and the results of three public hearings.

The Paraguayan Congress has been evaluating this proposal since April
2003

At present, relevant laws or regulations in force regulate approval for
experimentation and commercialization with GMOs. Current laws and/or
regulations are related to compliance with international laws, such as
article 19 of the Cartagena Protocol, and national laws and regulations
that protect the environment, biodiversity, and human health.

In 1997, under Decree 18481, the Biosecurity Commission was created,
with the objective of analyzing and advising on the introduction, field
trials, and environmental release of GMO plants. This commission acts as
an advisory organism and includes representatives of the Ministry of
Health, the Ministry of Agriculture and Livestock and the Ministry of
Environment, as well as representatives of scientific institutions and
representatives of the production sector. Functions of this commission
include the receipt and evaluation of requests for use of GMOs,

\- risk analysis, (a private company selected by public competition will
carry out this analysis),

\- as requested by the involved ministries, the Commission will
cooperate with the functions of control and inspection.

\- information exchange with national and/or international public and
private institutions in reference to risk analysis and approval for
commercialization of GMOs.

\- provide technical advice to the involved ministries in reference to
policy implementation and national strategy related to biosecurity.

## Creation of SENAVE

In October 2004, under Decree 5042 a new organism was created, the
National Service of Seed and Vegetables Quality, SENAVE (Servicio
Nacional de Calidad y Sanidad Vegetal, in Spanish), as a fusion of the
National Seed Direction, the National Direction of Vegetal Defense, the
National Control Office for Tobacco and Cotton and the Office in charge
of domestic and international commercialization of vegetable sub
products of the Ministry of Agriculture.

In general terms, the functions of SENAVE are:

-Preserve the introduction of exotic diseases in the country.

-In charge of issues related to Biotechnology.

-Application authority of all in force laws related to seed and cultivar
protection.

-Application authority of international agreements related to seed
quality and safety and to protection to vegetal biotech species.

-Advise the Minister of Agriculture in formulation and continuation of a
national policy related to production of seed and products derived of
biotechnology.

## Resolution N. 020 (Appendix A)

On June 2005, SENAVE's President launched a resolution authorizing that
varieties that are still pending inclusion in the government seed
registry, may be imported and commercialized for the crop season
(2005/2006) paving the way for several companies that had started but
not finished with the approval process.\
This measure was taken due to a prolonged drought that affected the
country that severely impacted the quality and quantity of seed
production. After a report of the National Seed Direction informing that
the availability of seed for this season would only cover 25 percent of
the demand, the Ministry of Agriculture took a non precedent action by
approving through resolution the import of GMO seed varieties (RR
soybeans) for the campaign 2005/2006 that have not been yet approved for
commercialization.

This measure aroused diverse reactions from different sectors, while
several agricultural associations applauded the government stating that
the measure would legalize the inevitable entrance of black market seed
from neighboring countries, others strongly criticized SENAVE claiming
that the measure is illegal and a violation to the country's Seed Law.

One year later, it is evident that Resolution 020 was not the correct
step. The seeds that were available in the market were not adapted to
soil conditions and plus, were not sown at the right time. Both factors,
combined with the severe drought that affected the country, resulted in
an immense loss with a yield as low as 900 kg per hectare.

Cooperatives are strongly recommending the Ag Ministry to avoid issuing
a similar measure to Resolution 020 for the next campaign.

Besides that financial damage, trust and confidence in the technology is
affected as well. Farmers believe now that GMOs present no benefit to
them, and they give credit to a strong anti biotech campaign headed by
the Catholic Church.

## Traceability

No provision for a traceability system is in place nor has been included
under the proposed law. Tests for GMO content on shipments arriving in
Paraguay are not contemplated either.

## Labeling

GMO products that are marketed will bear a label that contains specific
information required by the Ministry of Industry and Commerce. It should
be noted that officials of the Ministry of Agriculture, when questioned
about labeling requirements, responded that Paraguay would establish
information requirements for labeling according to CODEX resolutions.
However, this is not stated in the proposed law, where provisions for
labeling are vague and unclear.

## Stacked Genes

No policy yet.

## Coexistence 

No policy yet.

## Royalties 

**Framework Agreement signed in support of Royalty Collection System**

Paraguayan farmers agreed on March 2, 2005 to pay royalties to Monsanto
Co. for its genetically modified soybeans in the 2004/2005-crop year.
Paraguayan farmers, as well as those in Brazil and Argentina, have used
Roundup Ready soybean seeds for years without paying royalties. In
Paraguay it was agreed that they will pay \$3.22 per bag of seed use to
sow one hectare, but in consideration to the enormous losses in the last
campaign, Monsanto informed the Minister of Agriculture that the company
would lower the royalties to \$2.60 This is an example that clearly
shows that there is no intervention of the GOP in the regulation of the
royalties payment scheme, which makes the agreement transparent as the
price is negotiated between the provider of the technology (in this case
Monsanto) and the user of it (the farmer), informing the GOP once the
price is set.

The agreement signed between Paraguayan farm lobby groups and Monsanto's
Paraguayan branch, and a portion of those royalties will go to crop
research and germoplasm improvement within the country.

The system used to remunerate inventors for their technology is similar
in structure to the grain-based program implemented in southern Brazil
this year. A commission that included members of grower associations,
grain handlers, technology providers, and seed companies designed this
system.

As part of its commitment to Paraguayan agriculture, Monsanto plans to
fund research and development projects, agreed to by the government and
agricultural providers that analyze different technologies and
germoplasm across a range of growing regions throughout the country. At
this point, the recently created INBIO, (Institute for the Incorporation
of Biotechnology) underwent and finalized all the legal procedures, and
is ready to receive the first payment (10% of received royalties) that
Monsanto will provide as stipulated in the March 2005 agreement. The
INBIO, an organism that integrates representatives of the whole
Paraguayan agricultural sector, will be in charge of financing training
and research related to Biotechnology.

This new royalties collection scheme is a positive step in closing Latin
America's biotech black market. It will be based on grain production
collected at grain delivery points. A portion of the fees collected will
go to crop research and germoplasm improvement in Paraguay.

# Marketing Issues

Since Brazil is the main destination for Paraguayan soybeans; Paraguay's
approval policy for GMOs is closely linked to Brazilian policy, which is
not defined yet.

Additionally, it is important to mention that the Paraguayan public is
not well educated on the topic of agricultural biotechnology. Limited
knowledge of popular science among consumers has led to many myths and
rumors regarding agricultural biotechnology. The situation of
misinformation is even worse in rural areas, where the Church puts some
pressure on small farmers against the adoption of new biotech
technologies.

There are no relevant studies on marketing of biotechnology products in
Paraguay.

# Capacity Building and Outreach

2002

A.  FAS Buenos Aires organized a Biotechnology seminar in Uruguay that
    was very successful in term of attendance (over 400 participants)

B.  Through Cochran Funds, FAS Buenos Aires sponsored a two-week
    biotechnology training in the United States for 2 Paraguayan
    government officials, organized in concert by ICD and Michigan State
    University

2004

A.  FAS Buenos Aires selected one Paraguayan journalist that
    participated in a US Grains Council activity in Hawaii, where they
    learnt about the Papaya industry.

B.  Through Cochran funds, FAS Buenos Aires sponsored a two-week
    biotechnology training in the United States for one representative
    of the Paraguayan government, organized by ICD and Michigan State
    University.

C.  FAS Buenos Aires selected two Paraguayan producers that attended the
    Farmer-to-Farmer workshop at the University of Zamorano, Honduras.

D.  FAS Buenos Aires organized a two-day conference directed to
    Congressmen, but also to Media, Academia, Government officials and
    public in general as a continuation of the seminar organized
    in 2002. The activity was very successful in terms of attendance (48
    congressmen attended the first day and 300 people attended the
    second day)

2005

A.  FAS Buenos Aires in concert with FAS Santiago and ICD organized and
    accompanied a Southern Cone CODEL to the United States, to
    demonstrate how the United States uses and regulates agricultural
    biotechnology. One Paraguayan Deputy participated in the activity.

# Proposed activities

FAS Buenos Aires proposes a continuation of education and outreach
activities as well as more targeted information campaign. Specific
activities may include:

A.  Workshops in different cities to target producers and consumers
    around the country, in areas that rarely have access to "first hand"
    information.

B.  Coordination with local universities to demonstrate the benefits of
    biotechnology in Paraguay.

C.  Continue Cooperator, Cochran and International Visitor Program
    activities

D.  Conduct special activities designed for Consumer Association leaders
    and consumers in general.

E.  Workshop especially directed to medical doctors and nutritionists,
    explaining the innocuousness of biotech products

F.  New strategies to better educate small farmers to understand this
    technology, along with more frequent, sustained efforts to do so.

G.  Conduct a regional workshop in risk assessment directed to
    Argentine, Paraguayan and Uruguayan experts.

# Appendix A

+------------+-------------+-------------+----------------+-----------+
| **Crop**   | **Trait     | **Event/    | **Trait**      | *         |
|            | Category**  | Applicant** |                | *Status** |
|            |             |             | *              |           |
|            |             |             | *Description** |           |
+------------+-------------+-------------+----------------+-----------+
| Soybean    | Herbicide   | M-SOY 7878  | Glyphosate     | Approved  |
|            | Tolerant    | Monsanto    | Herbicide      | Feed      |
|            |             |             | Tolerant       | and/or    |
|            |             |             |                | Food      |
+------------+-------------+-------------+----------------+-----------+
| Soybean    | Herbicide   | M-SOY 8080  | Glyphosate     | Approved  |
|            | Tolerant    |             | Herbicide      | Feed      |
|            |             | Monsanto    | Tolerant       | and/or    |
|            |             |             |                | Food      |
+------------+-------------+-------------+----------------+-----------+
| Soybean    | Herbicide   | AW 5581     | Glyphosate     | Approved  |
|            |             |             | Herbicide      | Feed      |
|            | Tolerant    | Monsanto    | Tolerant       | and/or    |
|            |             |             |                | Food      |
+------------+-------------+-------------+----------------+-----------+
| Soybean    | Herbicide   | AW 7110     | Glyphosate     | Approved  |
|            | Tolerance   |             | Herbicide      | Feed      |
|            |             | Monsanto    | Tolerant       | and/or    |
|            |             |             |                | Food      |
+------------+-------------+-------------+----------------+-----------+
| Soybean    | Herbicide   | A6019RG     | Glyphosate     | Approved  |
|            | Tolerance   |             | Herbicide      | Feed      |
|            |             | NIDERA      | Tolerant       | and/or    |
|            |             |             |                | Food      |
+------------+-------------+-------------+----------------+-----------+
| Soybean    | Herbicide   | A 8000RG    | Glyphosate     | Approved  |
|            | Tolerance   |             | Herbicide      | Feed      |
|            |             | NIDERA      | Tolerant       | and/or    |
|            |             |             |                | Food      |
+------------+-------------+-------------+----------------+-----------+
| Soybean    | Herbicide   | A 8100RG    | Glyphosate     | Approved  |
|            | Tolerance   |             | Herbicide      | Feed      |
|            |             | NIDERA      | Tolerant       | and/or    |
|            |             |             |                | Food      |
+------------+-------------+-------------+----------------+-----------+
| Soybean    | Herbicide   | CD 212RR    | Glyphosate     | Approved  |
|            | Tolerance   |             | Herbicide      | Feed      |
|            |             | COODETEC    | Tolerant       | and/or    |
|            |             |             |                | Food      |
+------------+-------------+-------------+----------------+-----------+
| Soybean    | Herbicide   | CD 213RR    | Glyphosate     | Approved  |
|            | Tolerance   |             | Herbicide      | Feed      |
|            |             | COODETEC    | Tolerant       | and/or    |
|            |             |             |                | Food      |
+------------+-------------+-------------+----------------+-----------+
| Soybean    | Herbicide   | CD 214RR    | Glyphosate     | Approved  |
|            | Tolerance   |             | Herbicide      | Feed      |
|            |             | COODETEC    | Tolerant       | and/or    |
|            |             |             |                | Food      |
+------------+-------------+-------------+----------------+-----------+
| Soybean    | Herbicide   | CD 219RR    | Glyphosate     | Approved  |
|            | Tolerance   |             | Herbicide      | Feed      |
|            |             | COODETEC    | Tolerant       | and/or    |
|            |             |             |                | Food      |
+------------+-------------+-------------+----------------+-----------+
| Maize      | Herbicide   | NK 603      | Gliphosate     | Research  |
|            | Tolerance   |             | Herbicide      |           |
|            |             | Monsanto    |                |           |
|            |             |             | Tolerant       |           |
+------------+-------------+-------------+----------------+-----------+
| Maize      | Insect      | MON 810     | Resistant      | Research  |
|            | Resistant   |             |                |           |
|            |             | Monsanto    | EuropeanCorn   |           |
|            |             |             | Borer          |           |
+------------+-------------+-------------+----------------+-----------+
| Maize      | Herbicide   | MON 810 x   | Gliphosate     | Research  |
|            | Tolerance   | NK603       | Herbicide      |           |
|            |             |             | Tolerant       |           |
|            | Insect      |             |                |           |
|            | Resistance  |             | Resistant      |           |
|            |             |             | European Corn  |           |
|            |             |             | Borer          |           |
+------------+-------------+-------------+----------------+-----------+

  -------------- -------------- -------------- --------------- ------------
  Cotton         Herbicide      RR                             Research
                 Tolerant                                      

  Cotton         Insect         BT                             Research
                 resistance                                    
  -------------- -------------- -------------- --------------- ------------

# Appendix B

**Resolution N. 020, Authorization for Commercial Use of Soybean
varieties in crop season 2005/2006**

On June 13, 2005, the president of SENAVE signed Resolution N.020
attending the request of the National Seed Direction. The factors that
motivated that request were the draught that affected the country, the
fact that the availability of seed for this season would only cover 25
percent of the demand and the interest that several producers and seed
importers have expressed in registering seed varieties not included yet
in the National Registry of Commercial Cultivars. The National Seed
Direction will monitor the fulfillment of the resolution.

The Resolution authorizes the commercial use of soybean varieties ONLY
for the crop season 2005/2006 under the following conditions:

a.  The variety must have the request of inscription in the National
    Registry of Commercial Cultivars.

b.  The variety may have one year of agronomic evaluation in the 2005/06
    crop season.

c.  The importer/producer is totally responsible for the commercial use
    of the varieties.

> d\. The authorization for commercial use of the variety does not mean
> that it the variety will be definitely included in the National
> Registry of Commercial Cultivars.

# Appendix C

**Procedure to get government authorization for activities with GMOs
applicable to events developed in Paraguay or to be introduced from
another country.**

Provide to Biosecurity Commission:

-Full name, citizenship, legal address, contact information of applicant

-Name and identity of the GMO

-Projected use of the GMO.

-Detailed agenda of the activities that will be developed

-Amount or volume of GMO that will be used

-Report of the known and available risk analysis

-Suggested method of manipulation, storage, transportation, packaging,
labeling and disposal procedures that may be needed in case of
emergency.

-A formal declaration stating that all data provided is accurate.

Once the applicant has complied with this request, the Commission will
evaluate the necessity to perform the risk analysis evaluation. The
Commission may decide whether there is need for the risk analysis
evaluation, taking into account the approval that other countries have
given to that GMO under similar conditions.

As soon as the Commission reaches a decision, it will be published for
three consecutive days in national newspapers. The information published
includes name of GMO, name of applicant and requested use, as well as a
summary of the risk analysis. After this, and if the GMO under
consideration is approved, the public in general has the opportunity to
voice opposition for thirty days. Is such a case, the applicant will be
contacted and will have 15 days to respond to the opposition. If
necessary, the GMO will be placed on a probation for a period that will
be decided by the ministries involved, after which the final decision
will be made.

Failure to comply with all conditions of a granted authorization may
lead to cancellation of the permit, and to legal actions.

All ministries involved in the final decision must be in agreement with
the approval.

#