Argentina is a potentially lucrative market for genetically modified seed makers. The South American farming powerhouse is the world's third-largest soybean exporter and ranks No.2 in corn exports.

The 50-50 venture between Bioceres and Arcadia, dubbed Verdeca, hopes to have its soybean seeds on sale in 2015 or 2016, Arcadia Biosciences CEO Eric Rey said in an interview.

The two companies have already invested about $120 million to develop seeds that will combine transgenic traits for resistance to the herbicide glyphosate with drought tolerance and increased nitrogen and water use efficiency.

Another $20 million to $40 million will be spent over the next four or five years to gain regulatory approval for the seeds in key markets, including other South American nations, the U.S., China and India, Rey said.

The U.S., Brazil and Argentina dominate global soybean sales, while China is the world's top importer. Demand for soybeans has surged in recent years for use as animal feed to sate the world's growing hunger for meat.

Argentina already ranks No.3 in the world behind Brazil in the area planted with genetically modified seeds, according to the International Service for the Acquisition of Agri-Biotech Applications.

In its annual report, the trade group, whose backers include Monsanto and the U.S. Department of Agriculture, said that Argentina planted about 23.7 million hectares with genetically modified soybean, corn and cotton in 2011.

Bioceres is owned by over 230 of Argentina's biggest farmers, who together plant about 2.5 million hectares of soybeans each year in South America. The firm has developed its seed technology with the federal government's science and technology promotion institute, Conicet.

Verdeca's strategy involves building on a platform of established genetic traits and to take advantage of the expiration of Monsanto's U.S. patent for glyphosate-resistant soybeans in 2014, said Bioceres CEO Federico Trucco.

Privately held Arcadia has so far focused on developing new agricultural biotechnology and licensing it to other companies who go through the costly process of obtaining regulatory approval.

But as a partner in Verdeca, Arcadia wants to take it's new seeds through the regulatory approval process, after which "value goes up dramatically," Rey said.

Verdeca plans to sell its products through conventional seed channels under licensing agreements with major distribution companies, he said.

But local farmers are notorious for using pirated transgenic seeds and ducking attempts by companies to collect royalties.

Monsanto failed to obtain a local patent for the genetically modified soybean seeds it introduced into Argentina 15 years ago and its efforts to collect royalties have been foiled by local regulations.