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Farm groups protest as PepsiCo sues Gujarat farmers for growing potato variety used to manufacture Lays chips

Not for the first time, farmers in Gujarat are in trouble over the question of seeds. Earlier in 2001-02, it was illegal Bt cotton seeds. This time it’s the potato farmers in North Gujarat who are being sued for Rs 1 crore under the Protection of Plant Varieties and Farmers’ Rights Act, 2001, (PPV AND FR act for short), filed by the Indian arm of the multinational giant PepsiCo India Holdings pvt ltd for growing a potato variety it uses to manufacture Lays chips. On 8 April this year, Judge Moolchand Tyagi of the commercial court at the Ahmedabad city civil court, granted an ex parte injunction in favour of the company, without hearing the farmers

The order relied on the provisions of sections 64 and 65 of the PVP Act and said that the company has a prima facie case in its favour as also the balance of convenience. The court said if PepsiCo is not granted the ad interim injunction, then it would suffer “irreparable loss”. Also, any delay in granting an ad interim injunction in the company’s favour would defeat justice.

PepsiCo sought an injunction, restraining the farmers from growing the same potato variety it supplies to 24,000 farmers in 10 to 12 states on contract to grow it. The company’s case is that the farmers (nine of them), were growing a potato variety it registered in February 2016 as 'FL 2027' (commercial name FC5) under the PVP Act. The potato chips are sold under the brand name Lays. The counsel for PepsiCo submitted that the farmers were illegally growing, producing and selling it without permission of the company in violation of its statutory right granted under sections 64 and 65 of the Act. It was submitted that the Registered Variety is the hybrid of FL 1867 and Wischip varieties. In 1999, the denomination FL 2027 was coined and assigned to the said variety. In India, the Registered Variety was first put to commercial use in 2009 and has been traded under the trademark FC5 by the company which registered it on 2 February, 2016 under the PPV And FR Act. The company granted license to some farmers, firstly in Punjab, to grow potatoes of this variety on a buyback system.

 Farm groups protest as PepsiCo sues Gujarat farmers for growing potato variety used to manufacture Lays chips

Representational image. Image courtesy: Reuters

The company learnt about farmers growing this potato variety on 3/5 January, 2019 and collected samples from the premises of the farmers which were sent for verification to the in-house laboratory of the company as well as the central government’s laboratory in Shimla. The DNA of the samples matched the DNA of the company’s potato variety. The company said the farmers were infringing the company’s right under the PVP Act and demanded an injunction against them for growing the crop as it would face irreparable losses otherwise.

However, at the hearing on 26 April, the farmers were represented by their lawyer, Anandvardhan Yagnik, who sought time to reply to the matter. PepsiCo has submitted a proposal to settle with the farmers by suggesting that either the farmers given an undertaking that they shall use the registered variety or they should enter into an agreement with PepsiCo to purchase seeds from the company and thereafter sell the produce also to it on the terms and conditions which PepsiCo has been offering to farmers in Gujarat. Mr Yagnik has submitted that the proposal will be put to the farmers and based on their decision, a reply will be sent to PepsiCo. The next hearing is slated for 12 June.

Reacting to the proposal, Kapil Shah of the NGO, Jatan, said that PepsiCo should withdraw the case and pay the costs to the farmers. Kavitha Kuruganti, of the Alliance for Sustainable and Holistic Agriculture (ASHA), told Firstpost that PepsiCo, after filing a suit, has now been put on the backfoot, and it is offering a settlement. The company does not acknowledge that farmers’ rights are upheld by the law in India and it was wrong in suing the farmers in the first place. She said it was an arrogant proposal because PepsiCo is trying to negotiate with farmers on its own terms and conditions whereas it has wrongfully sued them. It is only a matter of time before it is asserted that it had sued them wrongly, she added.

PepsiCo gives out the potato variety to farmers on contract. However, according to the PPV And FR Act, even if farmers grow a registered variety, it was not illegal as long as they don’t brand it. Under Section 39 of the PPV And FR act which specifically deals with farmer’s rights, “Notwithstanding anything contained in this Act, a farmer shall be deemed to be entitled to save, use, sow, resow, exchange, share or sell his farm produce including seed of a variety protected under this Act in the same manner as he was entitled before the coming into force of this Act: Provided that the farmer shall not be entitled to sell branded seed of a variety protected under this Act. Explanation.—For the purposes of clause (iv), “branded seed” means any seed put in a package or any other container and labelled in a manner indicating that such seed is of a variety protected under this Act.”

“You are talking of irreparable losses to a giant company from small farmers who barely own three to four acres. PepsiCo is trying to wipe out competition to its potato chips by using this route. One of the lines of this hybrid potato variety is from the University of Wisconsin, a public institution, so somewhere the farmer has developed this strain over which now the company is staking a right,” Ms Kuruganti pointed out.

For the first time since the PPV And FR Act was enacted, Intellectual Property Rights (IPR) infringement cases have been filed against farmers. This is a test case for implementation of farmers’ rights under the PPV act, according to Shalini Bhutani, legal researcher and policy analyst on IPR and agriculture. Section 39 of the Act specifically guarantees farmers’ rights and it is meant to safeguard the farmer’s inherent seed freedoms irrespective of breeder’s rights. India’s PPV law is unique in that sense. It may be recalled that the biggest opposition to signing the World Trade Organization agreement was the farming community because they feared an intellectual property rights regime would stifle them. India’s PPV law is WTO-compliant.

The question now is how is the court going to interpret this law as the legislative intent is quite clear that farmers cannot be harassed. The court will have to balance the farmers’ rights under section 39 and the breeder’s rights under section 28 of the PPV Act, Ms Bhutani explained.

In this case, Ms Bhutani said the company is using its own variety shipped from the United States. It does its own seed multiplication under contract farming with farmers. However, the company is subject to Indian laws and section 39 clearly is over and above any other provision in the PPV Act. It is now up to the government also to ensure that the courts do not distort or dilute the farmers’ freedoms. Legally there are spaces within the law to allow the farmer to use, sow and resow a registered variety and the courts should interpret the law favourably to the farmer, she said.

The other important question is why do such issues surface in Gujarat- is there a grey market which needs investigation? she asked. None of the farmer-friendly measures in the PPV Act are implemented. Moreover, the honeymoon period of the PPV Act in which farmers’ varieties were registered, is coming to an end; the farmers need a clear interpretation of the law for the days ahead when companies wedded to their IPRs will aggressively defend them. Another issue is why allow companies to bring in varieties from outside and grow them in India when there are perfectly good ones suiting each agro-climatic region in the country’s public collections.

The case has drawn protests from many farmers unions, farmers’ rights advocacy groups and individuals who held a press conference in Ahmedabad on 24 April, demanding that PepsiCo “immediately withdraw all the legal suits it has slapped on many potato farmers in different districts of Gujarat. The Indian subsidiary of the US MNC, namely PepsiCo India Holdings (PIH) Pvt Ltd has filed cases of IPR infringement through 2018-2019 against farmers whom it claims are using its potato variety FL 2027/FC5 without permission."

A press statement said that the Government of India and the Government of Gujarat should step in immediately to protect farmers’ rights as already enshrined in relevant laws of the country, particularly the PPV act. A separate letter signed by eminent citizens, activists, farmer unions and other organisations was sent to the Chairperson and Registrar General of India’s Protection of Plant Varieties and Farmers’ Rights Authority under the Ministry of Agriculture and Farmers’ Welfare, with copies to the Union Agriculture Minister Radhamohan Singh and others, demanding immediate intervention from their side, which include issuing a submission to the Commercial Court and High Court in Ahmedabad where the farmers are being sued, explaining the farmers’ rights as enshrined in the PPV Act, 2001, writing to PepsiCo India Holdings, asking it to withdraw its false and untenable cases against the farmers and issuing a notification that no company can trespass into a farmer’s field without due intimation of the local district agriculture office and the farmer’s prior informed consent.

“PepsiCo apparently got a tip-off that the farmers were growing 'its registered variety' of FL-2027 and in a completely unacceptable manner, hired a private detective agency to pose as potential buyers to the farmers, to take secret video footage and collect samples from farmers’ fields without disclosing its real intent,” according to the letter issued by eminent citizens.

Ms Kuruganti and other activists are emphatic that this is a clear case of harassment and intimidation of farmers to wipe out the competition, while ignoring the law. It’s a question of seed sovereignty, and is also a question of impacting livelihoods. This potato variety has been grown in India since 2009, while the company registered it only in 2016, she said. The farmers said they have been reusing the seeds over the years and even it’s a hybrid, and some characteristics may be lost over time, they are getting a crop. It is an extant variety and in use, she added.

A company spokesperson for PepsiCo shared a statement that read:

"PepsiCo India has proposed to amicably settle with people who were unlawfully using seeds of its registered variety. PepsiCo has also proposed that they may become part of its collaborative potato farming programme. This programme gives them access to higher yields, enhanced quality, training in best-in-class practices and better prices.

In case they do not wish to join this programme, they can simply sign an agreement and grow other available varieties of potatoes. It is significant to note that the company’s collaborative potato farming programme is best in class and is built on strong backward and forward linkages that improve livelihoods by using protected seeds.

The company was compelled to take the judicial recourse as a last resort to safeguard the larger interest of thousands of farmers that are engaged with its collaborative potato farming programme. PepsiCo India remains deeply committed to resolving the matter and ensuring adoption of best farming practices.”

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Updated Date: Apr 27, 2019 00:54:34 IST