SEED PIRACY IN THAILAND: A "GROWING" PROBLEM

UNCLAS SECTION 01 OF 03 BANGKOK 003237

SIPDIS

SIPDIS

STATE PASS USTR
COMMERCE PASS USPTO FOR DKEATING AND PFOWLER

E.O. 12958: N/A
TAGS: KIPR EAGR TH
SUBJECT: SEED PIRACY IN THAILAND: A "GROWING" PROBLEM


1. Summary: Behind the headlines of record losses to
optical disc and trademark piracy in Thailand lies a less
known but equally serious form of intellectual property
infringement. Plant breeders in Thailand have seen their
plant varieties and the seeds derived from them, which
typically take years and large capital investments to breed,
copied and sold by small-time seed dealers. Thailand passed
a Plant Variety Protection Act in 1999 to protect these
investments, but delays in implementing regulations and
registration procedures has meant that enforcement is
non-existent. Seed firms look forward to enforcement of
rights to their new plant varieties, but in the meantime are
using their own security tactics to protect their valuable
products. End Summary.

Seed sales flowering, but piracy growing like a weed
-------------- --------------


2. Thailand is a net exporter of seed for both field crops
(corn, rice, soybeans, etc.) and vegetables, and a growing
site of seed production and research and development for
breeding new plant varieties. The Thai seed market is
estimated at over USD 200 million in annual sales, mostly in
field crops. Thailand imported about USD 11 million in seed
in 2005, but exported approximately USD 35 million worth and
projections are for that number to triple in the next five
years. The U.S. and Japan are the top export destinations.
Multinationals control about 80 percent of the field crop
seed market, but Thai firms are dominant in vegetable seed
sales.


3. Like most intellectual property, new plant varieties
are costly and time consuming to develop, but cheap and easy
to copy. Seed firms in Thailand develop their products the
old-fashioned way, selecting plants with desirable properties
such as high yield and resistance to disease and insects,
then cross breeding them to develop improved varieties.
After development and testing in field trials, the firms
contract with local farmers to grow the new and improved
variety to produce seed for sale to farms around the country
and for export. As Thailand's seed market began growing in
the 1990s, seed piracy grew right along with it. Seed
pirates, usually small-time sellers in rural areas but also
increasingly more sophisticated operations, purloin firms'
new plant varieties by either surreptitiously stealing the
parent lines of the new hybrid from test fields or paying off
contract farmers for a sample. The pirates then reproduce
the new breed on their own farms and sell the resulting seed.
(Note: Genetically modified crops are not authorized in
Thailand, but there is anecdotal evidence that some farmers
are growing bootlegged GM cotton and papaya without
authorization.)


4. Mr. Manas Chiravavonda, director of Chia Tai, the
largest vegetable seed seller in Thailand, couldn't put a
figure on the percentage of seed piracy, but labeled it
"huge", a problem affecting both Chia Tai's domestic sales
and exports. Monsanto reps estimated the piracy rate at
single digits, but saw it as a growing problem. Field theft
accounts for much of the piracy, but Manas said firms' own
employees were perhaps the greatest danger. Manas described
how one of Chia Tai's employees recently quit the company,
walked out the door with the company's latest line of melon
seeds and immediately set up his own business selling the
seeds to the Indonesia market. Without a means to protect
their variety, Chia Tai was helpless to prevent the theft.
"It's the wild West out here," says Manas.


5. To combat seed theft firms have developed a raft of
security procedures, from stationing security guards around
contract farms and research fields to growing and storage
protocols to prevent pirates from getting the latest variety.
Chia Tai treats plant development as a trade secret, keeping
research under tight wraps and in house to prevent
disclosure. The firm develops new varieties more quickly
than before and releasing them earlier, trying to stay one
step ahead of the pirates. Simon Jan de Hoop, Director of
R&D for East-West Seed, said their farms grow the male and
female parents of a new hybrid in different fields, making it
more difficult for pirates to get both keys to the new plant.
When possible multinationals like Monsanto keep the parent
lines back in the home country.


6. To further avoid piracy, seed firms are moving
production bases offshore to China, India, and Thailand's
ASEAN neighbors, particularly countries where the seed
variety to be sold in Thailand is not being sold locally.
Although piracy occurs in these countries as well, pirates

BANGKOK 00003237 002 OF 003


are less familiar with the plant material and the risk is
consequently lower. However, seed firms worry that the
pirates are developing their own international connections,
working with partners in other countries to pilfer the best
new varieties.

PVP Act yet to reap benefits
--------------


7. Thailand passed the Plant Variety Protection (PVP) Act
in 1999 to extend intellectual property rights to new crop
varieties, but many implementing regulations have yet to be
promulgated and registration of new varieties is only now set
to begin. East West's Simon de Hoop blamed some of the
delays on staff turnover in the Ministry of Agriculture, but
considered the staff capable and knowledgeable about the
issues. Nevertheless, until varieties are officially
registered there exist no legal restrictions to prevent a
seed pirate from freely selling another seed firm's variety.
"It's free to steal," says Chia Tai's Manas.


8. The Ministry of Agriculture's (MoA) Plant Variety
Protection Office has responsibility for examining and
approving new plant varieties. Under the PVP Act only
certain crops can be protected; at the moment MoA accepts
applications for 33 crop varieties though plans are in the
works to add more crops to the protected list. Breeders can
request additional crop varieties to be added, and though the
variety must meet a set of criteria, MoA says that in
practice breeders are unlikely to be turned down. MoA has
accepted 99 applications for new plant variety protection in
the two years since they began accepting applications, but
only recently got closer to issuing approvals for the first
batch: 14 new varieties of orchids. If a new variety is
commercialized, MoA requires that one percent of revenues be
paid into a plant variety protection fund to go towards
conservation and community development projects. The fund
contribution is considered compensation for use of Thai
genetic resources in developing the product. Firms that do
not use Thai plant resources are exempt from the fund payment.


9. The PVP Act provides protection for new plant varieties
for between 12 to 27 years depending on the plant. The Act
lays out penalties for unauthorized sales of a protected
variety, up to two years imprisonment and/or a USD 10,000
fine, though there has yet to be a case filed. Mr. Sakorn
Tripetchposal of Pioneer Hi-bred said that a DNA
fingerprinting laboratory at Kasetsart (Agriculture)
University was available to seed firms and could offer proof
within days that a protected variety had been counterfeited.
Sakorn looks forward to enforcement authorities bringing seed
pirates to court, but it is uncertain whether authorities
will take this form of piracy any more seriously than they
have other IP piracy in Thailand. Without active involvement
from police, firms would be forced to resort to bringing
lawsuits against infringers and hoping for damages. East
West Seeds, which is expecting a new sweet corn variety to be
approved soon, said they were prepared to enforce their
rights, but were concerned that in the end a legal suit may
not be worth the cost to bring an infringer to justice.


10. In recent negotiations for a U.S.-Thai Free Trade
Agreement, Thai negotiators resisted a U.S. proposal for
Thailand to join the International Union for the Protection
of New Varieties of Plants (UPOV in the French acronym).
Thailand's PVP Act is based in large part on an earlier
version of the convention, UPOV 1978, but the 1991 updated
version tightens protections for plant breeders that Thai IP
experts consider not in Thailand's best interests. Dr. Tanit
Changthavorn of Biotec, part of the Ministry of Science and
Technology, explained that the RTG had concerns over UPOV's
restrictions on farmers saving seed for the next harvest,
resource issues on protecting all crop varieties rather than
only select crops, and the lack of a requirement for benefit
sharing for the use of local plant resources in breeding new
varieties. Some seed firms said that although they would
support Thailand joining the UPOV convention, they considered
the PVP Act to contain sufficient protection for their new
varieties and were substantially more concerned with
proceeding with enforcement of the current law.


11. Comment: Not as visible as the rampant trade in
counterfeit CDs, DVDs and Billabong shorts on the streets of
Bangkok, seed piracy is nevertheless having an economic
impact on Thailand, specifically on farmers, a population
perhaps least able to afford an economic blow. Firms have
been unwilling to conduct in-depth research into new
vegetable varieties that have relatively low sales, and

BANGKOK 00003237 003 OF 003


improvements in yield have lagged compared with the more
lucrative field crops. Counterfeits of new plant varieties
are typically not properly controlled in production and
farmers do not have access to detailed information on
fertilizer and herbicide spraying techniques and timing for
the new varieties, resulting in higher costs and lower
production yields. Hopes are high among plant breeders that
enforcement of the PVP Act can turn this situation around,
but it is an open question whether the police or courts will
take the crime seriously enough to put a dent in piracy. End
comment.
BOYCE