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SAO PAULO, Oct 23 (Reuters) - The majority of soy exporting firms in Brazil have still not agreed to collect royalties for seed giant Monsanto Co, threatening sales of up to a quarter of the country's soy crop, industry association Abiove said on Thursday.
A small, local exporter told Reuters earlier this month it had agreed to police farmers' royalty payments on Monsanto's new Intacta RR2 Pro seeds in exchange for a fee, and Abiove told soy growers group Aprosoja in September that the months-long dispute was close to being resolved.
But a broader deal has stalled due to lingering legal concerns that Monsanto could halt shipments on cargoes that contain soy for which the company has not received royalties, Abiove said, highlighting an increasingly tense relationship between global grain merchants and biotech firms.
"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 biotech company's patents are protected by laws that do not allow farmers to reuse seeds year after year there.
In Brazil, where genetically modified seeds have only been legal since 2005, reusing seeds is more common and it is easier for farmers to skip out on Monsanto's fees after buying the seeds the first season.
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 for their shipments, without any compensation from Monsanto.
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 did not immediately respond to request for comment.
Abiove represents global grain merchants Bunge, ADM , Louis Dreyfus and Cargill as well as smaller Brazilian firms.
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)