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Dec 12 (Reuters) - Major producers of genetically modified seeds, including Monsanto Co and Bayer AG, have long barred U.S. farmers from saving seeds after harvest to replant - a condition that allows the companies to charge every year for the technology.
Now, a smaller challenger, Stine Seed, wants to disrupt that practice.
Next year, family-owned Stine says it will give about 200 farmers in a pilot program the chance to replant genetically modified soybean seeds. The program is expanding after launching this year with about 50 farmers.
Major genetically modified seed companies have largely stamped out the once-common practice of saving seed in the United States over the past two decades. They have required farmers to sign contacts that bar them from replanting the patented, genetically modified seeds now used to produce most of the nation's soybeans.
If Stine's program succeeds and expands further, it would represent the renewal of a technique that major seed developers view as a threat to the commercial value of their intellectual property.
Seeds in Stine's program will include those containing a genetic trait called LibertyLink, which was developed by Bayer and licensed by Stine, and that's created tension between the companies.
Bayer "does not support saved seed," spokesman Jeff Donald said. He declined to comment specifically on Stine's program.
Two top Stine executives - Harry and Myron Stine, who are father and son - gave Reuters conflicting accounts of the company's talks with Bayer about the pilot program and its plans to profit from it.
"Bayer despises that we're doing it," Myron Stine, company president, said in a telephone interview in September. "We are constantly changing things to fit what Bayer wants," he added in an October interview.
In a later interview at a Stine Seed's office in Iowa, however, founder and Chief Executive Harry Stine said that Bayer merely wanted Stine to ensure that farmers did not replant Libertylink seeds without paying for the technology. Stine crafted a system to ensure it can accurately track when farmers save and replant seeds and ensure they pay Bayer the appropriate fees.
"They just wanted to make sure you weren't having some farmer just go to a bin (of genetically modified seeds) and plant whatever he wanted," Harry Stine said about Bayer in October. "Other than that, they were fine with the program."
Genetically modified seeds are sold by independent companies, such as Stine, and by major players, including Monsanto, Bayer and Syngenta AG. Stine and other independent seed sellers often pay to license genetic traits from the larger companies to put into seed.
Monsanto, the world's largest seed maker, has successfully sued U.S. farmers who saved genetically modified seed after pledging in contracts with the company to use it for only one crop. Other trait developers make U.S. farmers sign similar agreements.
In Argentina - where farmers are legally allowed to save seed - Monsanto has stopped launching new soybean technologies, following a dispute with exporters and the government over royalties paid for saved seed.
Monsanto and Syngenta declined to comment on Stine's program.
Stine plans to limit its seed-saving program to farmers willing to allow the company the option to buy the new genetically modified seed grown by farmers during each harvest.
To secure seed supplies, Stine has traditionally hired farmers to grow the seeds and agreed to buy all the seeds those farmers produce. In the pilot program, however, Stine will reserve the right to reject seeds because of low customer demand or other reasons, eliminating waste and saving Stine money.
As an incentive for farmers in the pilot program, Stine is offering discounts on the original seed they use - charging them as little as $26 per acre instead of the going rate of about $40 per acre for seeds containing Bayer's LibertyLink trait.
Myron Stine said Bayer had received calls from Stine competitors, who also pay to license the Bayer trait, complaining that Stine was offering farmers a "super lucrative price" on seeds containing LibertyLink, which protects soybean crops against a weed killer.
"It just ticks them off," Myron Stine said of Stine's competitors.
Asked about Myron's comments, Donald, the Bayer spokesman, said the company "wouldn't want to discuss our internal conversations with licensees."
Myron Stine said Stine Seed would initially lose money on the pilot program, partly because it must pay licensing fees to Bayer for LibertyLink.
But Stine could turn a profit later, he said, if it starts licensing new traits from a closely affiliated company, MS Technologies, possibly for lower prices than Bayer charges. Seeds containing the new MS Technologies traits are not yet on the market.
Harry Stine serves on the board of directors for MS Technologies and has a financial interest in the company, said Joseph Saluri, an MS Technologies director and general counsel for Stine Seed. He said pricing for the MS Technologies traits had not been determined.
After Myron Stine spoke to Reuters several times, company attorney Brenda Stine-Reiher wrote to a reporter in October saying Myron had provided "misinformation." She singled out his comments on potentially lower pricing - what she called "priority pricing" - for Stine Seed on traits from MS Technologies.
"There is no such pricing in place yet," wrote Stine-Reiher, who is Myron's sister.
The company then set up an interview with Harry Stine. In contrast to his son, Harry Stine said he intended to profit immediately from the pilot program. He said MS Technologies' fees were not set but would likely be similar to Bayer's.
If Stine eventually turns to MS Technologies for traits, Bayer will still be linked, at least to some degree, to its seed-saving program, Harry and Myron Stine said. One new trait Stine is considering for the program is a joint project of Bayer and MS Technologies.
Bayer declined to comment on that trait.
MS Technologies co-developed a second soybean trait with Dow AgroSciences. Stine also wants to offer that trait in program, Harry and Myron Stine said.
The traits will allow soybeans to resist more herbicides than LibertyLink.
Dow did not respond to questions about Stine's program but said in a statement it "will not support 'saved seed.'"
Reporting by Tom Polansek