The rolling countryside of Rio Grande do Sul is home to a long agricultural tradition. The region was settled mainly by Italian and German immigrants, and it is their descendants - prosperous small farmers - who are now caught up in a very modern controversy.

Luis Clovis Camargo walks through one of the fields which belong to him and his seven brothers. It´s spring-time, and the oats he is trampling under foot will soon be replaced by soya.

Mr Camargo says bad weather and the low price of soya are conspiring against him. If he could, he says he would use more resistant, genetically modified seeds:

"The main advantage of GM soya is that it would bring us a much better income. We would use fewer herbicides, and could prepare our fields at a fraction of the current cost."

A few kilometres down the road from Mr Camargo lies the house of Walter Missio, another small farmer who relies on soya for a living.

Brazil is the world's second largest soya producer

He is relieved that, for the time being, the multinational biotech company, Monsanto, is not being allowed to sell its GM variety in Brazil.

" We don´t know what effects genetically modified soya could have on our health and the environment. And we´ve heard that GM seeds would become sterile, so we would become dependent on the multinationals because we would have to keep buying them year after year," he says.

But some local scientists disagree with the idea that GM technology is bad for small farmers. Luis Carlos Federizzi is a plant-breeder at the Federal University of Rio Grande do Sul.

"I think that´s a wrong idea, he says. "I think that bio-tech can help a lot the small farmers. Instead of the famers planting soybeans or corn - they are commodities, low price in the international market - they can grow peaches, grapes. And we can help a lot the small farmers doing that."

Soon to be planted with soya

The left-wing state government in Rio Grande do Sul has taken a firm stand against GM soya. At a news conference an official is demonstrating a new kit - complete with test tubes and litmus paper -designed to detect which seeds are genetically modified.

The Agriculture Secretary, Jose Hoffman, says some GM seeds have been illegally planted in the region, and gives a stern warning: "Any farmer who plants GM soya will probably not be able to harvest it. If we hear of any such cases, we will tell the Federal Police, and the crops will be destroyed."

A truck empties 27 tonnes of soybeans into a silo at the Ceval food factory in the city of Porto Alegre. Ceval uses soya to make emulsifiers which are exported to companies like Nestle, Suchard and United Biscuits.

They are demanding that Ceval buys only traditional grains. State Agriculture Secretary Jose Hoffman says this simply reinforces his anti-GM argument.

"European consumers are rejecting GM products," he says, "and most of our soya goes to Europe. So we will be able to get a better price for our exports if we remain GM-free."

Biotech companies not allowed to sell GM products in Brazil

But biologist Luis Carlos Federizzi disagrees. "The problem is, what is the price that the market wants to pay for non-GM? Because to segregate these soybeans will cost a lot of money. And the market is not willing to pay for that. So, I think there will be a market, but it will not be willing to pay a lot more for segregation of the non-GM crop."

Brazil is the world´s second-largest soya producer - so the legal battle over whether or not to authorise GM crops is highly significant for the global market.

In Rio Grande do Sul, the state government says it will fight tooth and nail to remain GM-free, even if a different decision is taken at a national level. That will be tough. But Brazil´s soya war is far from over.