UPDATE 2-Arkansas to ban dicamba weed killer after drift complaints

(Adds Monsanto comments, background on Monsanto dicamba facility)

July 7 (Reuters) - Arkansas will temporarily ban the use and sale of the weed killer dicamba after a rise in complaints that the agricultural chemical is drifting into neighboring fields and damaging crops, the state's agriculture department said on Friday.

The emergency 120-day ban of dicamba, produced by Monsanto Co, Germany's BASF and others, will go into effect as soon as paperwork is filed with the Arkansas Secretary of State, said agriculture department spokeswoman Adriane Barnes.

Monsanto, which sells dicamba-tolerant crop seeds but does not have a dicamba formulation approved for sale in Arkansas, called the ban "premature."

"It's not been clear to us that the investigation has been completed and that there is an understanding of what's going on," said Lisa Safarian, Monsanto's vice president of North America. "This puts Arkansas farmers at a competitive disadvantage."

The ban will not have a material impact on Monsanto earnings, she said.

The Arkansas Plant Board and Governor Asa Hutchinson recommended the ban after a spike in complaints that dicamba is drifting into neighboring fields and damaging crops.

The state has logged nearly 600 complaints of crop damage as of Friday, according to the Arkansas Agriculture Department.

The state's House and Senate Agriculture Committee voted on Friday to follow those recommendations. The Arkansas Legislative Committee elected to take no action, meaning the ban could go forward.

Officials also approved an increase in fines for illegal use of dicamba to up to $25,000, from $1,000 currently, effective Aug. 1, Barnes said.

Monsanto's newest biotech varieties of soybeans and cotton, sold under the Xtend name, are engineered to tolerate the herbicide. But most farmers in Arkansas do not plant the varieties so their crops are vulnerable to off-target drift.

Supporters say dicamba is needed to control difficult-to-kill weeds. Opponents say it is prone to drifting and can damage crops not engineered to tolerate it.

The ban is the latest regulatory headache for Monsanto after officials in California announced last week that the company's flagship herbicide glyphosate would be labeled as a probable carcinogen in the state.

Monsanto has invested more than $1 billion in a dicamba facility in Luling, Louisiana, to supply demand it expects will blossom. Monsanto's dicamba formulation is approved for use in 33 other states.

It has said the Xtend platform will be its largest-ever technology launch, with 20 million U.S. acres of Xtend soybeans this year expanding to about 55 million by 2019.

(Reporting by Karl Plume in Chicago; Editing by David Gregorio and Cynthia Osterman)