Monsanto, soy exporter royalties dispute rages on in Brazil

(New throughout, adds Monsanto, companies agreeing)

SAO PAULO, Oct 23 (Reuters) - Some soy exporting companies in Brazil have still not agreed to collect royalties for Monsanto Co seeds, which could prevent farmers from selling a portion of this year's crop.

Monsanto, however, said around 500 firms that purchase soybeans from farmers have agreed to police royalty payments at more than 3,000 points across Brazil, an arrangement that highlights the increasingly complex relationship between global grain merchants and biotech firms.

One exporter told Reuters this month it would collect payments on Monsanto's new Intacta RR2 Pro seeds in exchange for a fee, and Abiove told soy growers group Aprosoja in September that other companies were in the process of settling on compensation amounts.

But Abiove said on Thursday a broader deal had stalled, citing lingering legal concerns that Monsanto could halt shipments on cargoes that contain soy for which the company has not received royalties.

"The risks of possible future embarrassment to the soy industry from Monsanto... may prevent crushing and trading firms from receiving that (Intacta) soy," Abiove said in a statement.

Trading firms have not had to oversee royalty payments in the United States, the world's No. 2 soy exporter after Brazil, because farmers are not allowed to reuse seeds year after year there.

In Brazil, where genetically modified seeds have only been legal since 2005, it is easier for farmers to skip out on Monsanto's fees and reuse the seeds. Brazil is Monsanto's second-largest market.

While some merchants have been collecting royalties on Monsanto's first-generation RoundupReady soy seeds in Brazil for a decade, that arrangement was deeply frustrating for merchants as it required them to accept additional work and liability without any compensation.

The industry has been determined to avoid a similar situation with Intacta, which includes a gene to ward off pests and was first planted in South America last year.

Farm groups believe between 15 and 25 percent of Brazil's current crop, which is now more than 10 percent planted, was sown with Monsanto's Intacta seeds.

Monsanto said farmers would have plenty of companies to sell their Intacta soybeans to as it continues to negotiate with Abiove members.

Abiove represents global merchants Bunge, ADM , Louis Dreyfus and Cargill as well as smaller Brazilian firms. Member companies have declined to speak on the record about the negotiations.

Brazil's Intacta saga is part of a global trade, copyright, environment and food-safety debate about genetic modification in agriculture that is far from resolved.

Early this year, China rejected 1.25 million tonnes of U.S. corn and by-products containing the genetically modified strain MIR-162 manufactured by Swiss firm Syngenta that China has not yet approved.

Cargill last month sued Syngenta for marketing the seeds in the United States even though it lacked Beijing's approval, estimating it suffered losses of more than $90 million.

(Reporting by Caroline Stauffer; Editing by Chizu Nomiyama and David Gregorio)