Aventis stumbles anew on Brazil soy market

(UPDATE: recasts lede; adds context, background throughout)

By Reese Ewing

SAO PAULO, Nov 20 (Reuters) - The French-German biotech firm
Aventis (NYSE:AVE - news) may lose its dominant position in the
Brazilian soybean market after Brazilian farmers reported a bad batch of
fungicide, only months after its bioengineered StarLink corn rattled
world grain markets.

Brazilian farmers said that last month's soy plantings failed because of
a bad batch of Aventis fungicide that killed the
germinating seeds, said grain analysts Safras e Mercado on Monday.

Brazil's multi-billion-dollar soybean sector now faces another potential
setback after enduring losses from a prolonged drought that parched farms 
the last two seasons. A bad batch of Rhodiauram fungicide may now undo 
the season's favorable planting.

Key soybean farms in Parana, Santa Catarina, Sao Paulo and Mato Grosso
do Sul states reported that seeds were not
sprouting from their recent 2000/2001 crop plantings.

``The reason seems to be a toxic effect on seeds treated with some lots
of the fungicide Rhodiauram, from the
chemical company Aventis,'' said Safras in its weekly soybean report.

Safras said the extent of the problem was not yet known, but the area
treated with Aventis's fungicide should be
substantially large.

Aventis company officials in the United States and in Brazil could not
be reached for comment.

The chemical that stops fungus from forming on seeds in the ground has
been widely used in Brazil in the past, over as much as 2.5 million 
hectares (6.25 million acres) of beans, or 20 percent of Brazil's total 
area planted to soybean.

This latest problem comes on the heels of the company's commercially
devastating debacle with its biotech StarLink corn, which found its way 
into U.S. human grain supplies. Some consumers reported the corn caused 
rashes, diarrhea and other allergic reactions.

The U.S. Department of Agriculture had approved the Aventis'
gene-altered corn only for animal consumption, but it turned up in taco 
shells and corn chips in late September.

The subsequent consumer backlash is hurting U.S. corn exports to big
buyers such as Japan and South Korea. Grain analysts said it would take 
years to remove the corn from U.S. silos earmarked for human food stuffs.

Despite its problems, Aventis traded at all-time highs last week on the
Paris CAC-40 exchange and closed Monday down slightly at 90.80 euros.

Aventis shares were down nearly 4 percent, or $2-15/16, at $75-1/2, in
trading on the New York Stock Exchange.

Brazil is the world's second largest soybean grower after the United
States and accounts for 20 percent of the world supply. Safras has forecast 
Brazil's soybean crop to reach 34.485 million tonnes in 2000/2001, an 8 percent 
jump over last year.

Although the company guarantees the products it sells, wasted planting
will still hurt the farmer. Safras said while they can still replant, higher 
operational costs and lower productivity will drain farmers' pockets.