But this prohibition is coming to an end.

"I believe the new biosafety bill will be passed into law in March or April," Jorge Guimaraes, president of Brazil's Biotechnology regulator the CTNBio, told Reuters.

The bill, defining a regulatory framework for commercial use of GMOs and which should clear the way for GMO soybeans first, is expected to pass a final lower house vote in the coming weeks, after a Senate approval late in 2004.

"There is considerable demand, both industrially and scientifically, for biotechnology in Brazil," Guimaraes said.

So strong is demand for the cost-cutting technology, that roughly one third of Brazil's massive 60 million tonne soybean crop and much of its cotton crop are already planted from illegal or pirated GMO seeds.

In anticipation of the new law, biotech seed companies are already ramping up their multiplication of GMO soybean seeds, which are based on US biotech giant Monsanto's Roundup Ready soy technology, for the October planting season.

Other competitive GMO soy varieties, some locally developed, are expected to follow soon after, as well as GMO corn, cotton and other important crops.

As the biosafety bill worked through Congress, the government began issuing yearly decrees that allow producers to sell GMO soy without prosecution, if they registered their black market biotech soy with the agriculture ministry.

But the sale of GMO seeds or distribution of GMO soy for planting is still strictly forbidden. Producers must rely on GMO soy from their previous crop. Monsanto and local GMO seed developers, such as the state crop research agency Embraba and crop research cooperative Codetec, can't sell their GMO soy.

"The ban on GMOs has hobbled Brazil agriculturally, undermined its advantages as a leading world producer," Ivo Carraro, executive director of Codetec and president of Brazil's seed producer's association Abrasem, said.

BLACK MARKET

Since soy producers about a decade ago began planting GMOs, and more recently cotton producers, certified seed producers have seen sales of conventional seeds fall yearly to the internal black market in seeds.

In initial government estimates, registered GMO soy plantings grew 11 percent to 92,875 producers this season, but final numbers are expected to come in higher and there are believed to still be many unregistered GMO soy producers.

It is now estimated that nearly all of the cotton seed on the market has been contaminated by some form of GMO variety.

"Once GMOs are freed up, Brazil's seed producing industry and its crop research industry will recover. With the strength of our scientific community, we are likely to become important in the development of new biotechnology products," he said.

The black-market seed market is expected to diminish as legal GMO seeds become more readily available.

Cotton producers have a lot to gain from biotechnology.

Currently, growers in the cotton belt can spray crops as many as 16 times to control the pesky boll weevil, accounting for the vast majority of their production costs and stressing the surrounding flora and fauna with agrochemicals.

Current Bt varieties of cotton would vastly reduce their operating costs and level the playing field with US producers, the world's leading producers against which Brazil recently won a World Trade Organization subsidy challenge.

Carraro said four companies -- Codetec, Embrapa, Monsoy (the local firm of Monsanto) and Pioneer -- were currently duplicating 43 varieties of GMO soybeans, designed for all tropical and subtropical growing regions in Brazil.