This has occurred even as the environmental group Greenpeace has battled against government attempts to legalize GM products.

"Farmers in Brazil have two options: they can buy legal, conventional seeds or illegal transgenic seeds, and in Rio Grande do Sul state for example they now prefer to buy the illegal GM soybeans to plant," said Hummel.

Smugglers have been trucking GM beans for at least three years across the porous southern border of Rio Grande do Sul, Brazil's No. 3 soy state, from Argentina, one of the world's top growers of GM soybeans, because Brazilian farmers see GM seeds as a cost-saving product, said Hummel.

In 2000, Abrasem estimated that the planting of GM soy had reached about 30 percent of Rio Grande do Sul's total area sowed in the profitable oil seed. But Hummel said this figure had since grown to over 60 percent.

"Three years ago state-registered seed growers in Rio Grande do Sul alone produced 300,000 tonnes of soybeans to plant. This year production dropped to 100,000," said Hummel.

However, the state's production levels have remained fairly stable over the last few years, indicating that the parallel seed market now accounts for almost two-thirds of the state's crop, said Hummel.

The government has threatened in the past to set fire to fields found with GM soybeans, but has never done so and instead has largely turned a blind eye to the rampant growth in GM plantings.

IRONY OF ILLEGAL GM SEEDS IN BRAZIL

The consumer and environmental groups that have been effectively blocking biotechnology companies like Monsanto Co. from selling its Roundup Ready products in Brazil have failed to dissuade farmers from turning to the black market.

As a result, they are ordering less non-GM seed from certified seed growers which threatens to destroy the industry and its conventional crop research efforts in Brazil.

"Profit margins for the certified seed producers are shrinking. It is a life or death issue for the seed industry which relies on these revenues to fund research in new seed development," added Hummel.

Monsanto's Roundup Ready varieties of GM soybeans are designed to withstand the company's Roundup Ready herbicide, which requires fewer crop applications to destroy weeds, and thus costs less than conventional herbicides.

The clandestine GM soybeans are not being separated from the rest of Brazil's allegedly GM-free soy crop, for as one Rio Grande do Sul soybean trader put it, "Why should the government track or cooperatives make special room for something that is not legally supposed to be there anyway."

So far the government has been ineffectual at finding its way through the labyrinth of court injunctions that Greenpeace and local consumer rights groups have slapped on Monsanto.

"If Brazil lifts its ban on GM soybeans, registered seed growers could easily produce better quality GM seeds at lower prices than the black market can offer," Hummel said.

He said that only after registered seed growers began producing GM seeds would it be possible to track and register GM soybeans in Brazil.

Brazil's reputation as a non-GM food producer has won it healthy premiums from buyers in Asia and Europe, where consumers have been most resistant to bioengineered foods.