"They are easy to identify. The fields are perfectly green without any weeds among the soy plants," said the representative at Monsanto's Nao-Me-Toque test farms who preferred to be unnamed. GM crops are a touchy subject in these regions and are still illegal in Brazil, despite widespread use in the country's South.

Ironically, Monsanto, stopped all GM test planting in Brazil almost a year ago, after a court suspended the company's license to develop several GM soy and corn in Latin America's farming giant.

Monsanto's Roundup Ready soybean seeds need fewer costly herbicide applications because the soy is genetically modified to resist the company's strong herbicide Roundup, which would kill a conventional soy plant. The company sells Roundup herbicide and varieties of conventional seeds in Brazil, and has strains of Roundup Ready soy ready for sale should the ban end.

But soy producers, fed up with bureaucratic delays in the legislature and Congress to lift the four-year-old ban on GM, have ignored the law and are committing more fields to the biotechnology they say is keeping them in the black.

The black market seeds are thought to be smuggled in from neighboring Argentina.

"Transgenic technologies reduce farmers' operational costs, which is crucial right now with world commodity prices lagging," Ireneu Orth, a small farmer and substitute federal congressman for Rio Grande do Sul, told Reuters at the Expodirect Farm Fair being held by the Cotrijal cooperative this week in Nao-Me-Toque.

Official seed producers in the region have informally pegged GM soy planting at 60 percent of Rio Grande do Sul state's crop, up from 30 percent last year, by monitoring the fall in yearly conventional seed sales.

Making an example of some may be difficult and not particularly effective in curbing illegal plantings. Unlike common criminals, farmers pay taxes, own land, create jobs and are influential in their communities.

The government indicted about 15 farmers caught with GM seeds in the South but most have cooperated with prosecutors in exchange for light fines and community service.

"There is no way to prosecute them all. When the use of transgenics reaches this level, it's beyond the government's ability to stop it," said Iwao Miyamoto president of Sementes Maua, a large seed producer for in Brazil's South.

Miyomoto added that producers throughout the No.2 soy state Parana were now plants transgenic soy but with less frequency than in the No.3 soy state Rio Grande do Sul.

Farmers say GM crops will also succeed in the fast growing Center-West and Northeast soy operations because of the cost benefits they offers producers.

Orth said the GM-food bill in Congress now provides the foundations for a national labeling system which would allow the country's farm industry to separate GM from conventional grains through the food production chain.