BRASILIA, July 7 (Reuters) -- Brazil, the hemisphere's last bastion against genetically-modified (GM) foods, is seen holding firm in its lonely stance, amid a flurry of court battles opposing scientific meddling in agriculture, government sources said on Friday.

While GM crops take over fields in neighboring Argentina and the United States, raking in hefty savings for farmers, Latin America's biggest agriculture producer has bucked the trend by maintaining a ban on so-called "Frankenstein foods."

Brazil's isolation on the continent was reinforced by a federal court ruling late Thursday, which agreed with environmental and consumer rights groups who say not enough is known about gene-spliced crops to call them safe.

The ruling dealt a severe blow against Brazil's government, which issued a note signed by every member of the president's cabinet saying Brazil "cannot be left out of this technology."

The unusually united stance in favor of GM crops was seen by top government sources as an attempt to mask deep divisions within the president's cabinet against transgenic crops, especially by GM-foe Environment Minister Jose Sarney Filho.

"Minister (Sarney) had no choice. He had to sign that note. But he is not in favor of transgenics, and he won't approve them without much more research," one government source said.

The government sources spoke to Reuters on condition of anonymity.

Sarney's approval is needed before Brazil's farmers, the world's biggest growers of coffee, oranges and sugar, can follow the rest of the hemisphere down the transgenic trail.

POOR CHICKEN FARMERS: AN UNLIKELY RALLY CRY

Agriculture Minister has found unusual allies in poor chicken farmers in Brazil's remote Northeast.

Although Brazil faces a shortage of cheap corn this year to feed livestock, like chickens, it has turned away Argentine ships carrying corn over worries GM nuggets got into the mix.

More than 20,000 chicken farmers in the port town of Recife protested this week, passing out starving chickens to housewives, while Agriculture Minister Marcus Vinicius Pratini de Moraes said up to 60,000 farmers would lose their jobs.

"We are the only ones with this type of ban in the world. Why?" Pratini asked, speaking to reporters earlier this week. "The people who suffer are the poor farmers."

Brazil is the second-largest chicken producer and exporter on the planet, ranking only behind the United States.

Pratini argues Brazil's army of chicken farmers are the unwitting victims of a feud between multinationals in the United States, which hold GM patents, and Europe, where most firms brushed off biotech research and favor a GM ban.

"We should not pay the cost of this fight. It penalizes the poorest people," he added.

In a surprise decision late Thursday, a lone judge in Recife allowed a small shipment of Argentine GM corn to be brought onshore. Government officials shrugged off the ruling, saying the amount represents less than 1 percent of the region's corn needs.

But GM-foes worry its sets a dangerous precedent that could jeopardize Brazil's burgeoning niche "GM-free" market in transgenic wary Europe, where consumers don't want to see Mad Cow disease revisited in the form of a DNA-mangled chicken.

The leftist government in southern grains producing state of Rio Grande do Sul plans to swat away GM corn just like it has kept U.S. biotechnology giant Monsanto Co.'s GM "Roundup Ready" soybeans at bay -- through state laws and swift court action.

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