Hot potato

Pepsico has unfairly targeted Indian farmers

PepsiCo’s move to sue four Gujarat farmers for alleged illegal cultivation of its registered potato variety has boomeranged. PepsiCo India Holdings, which owns the proprietary rights for the FC-5 potato variety, used for making its Lay’s brand of chips, alleged that these farmers were unlawfully growing the variety by obtaining the seed from the licensed farmers of Punjab. Though the Ahmedabad city commercial court has passed an ex-parte ad-interim order restraining the farmers from growing this strain, the backlash generated by the lawsuit seems to have unnerved PepsiCo, forcing it to offer an out-of-court settlement. Unsurprisingly, farm unions, farmers’ rights activists and political parties have been quick to lend support to the farmers. They maintain the company has unfairly targeted the cultivators who have been merely following the age-old practice of sowing unlabelled seeds sourced informally from other growers.

The mere presence of the FC-5 potato variety’s DNA in these seeds, as claimed by PepsiCo quoting test results from public sector laboratories, does not make the growers guilty of infringing PepsiCo’s rights. Many of the farmers’ sympathisers have, notably, warned PepsiCo that if it does not retract its step straightaway, they will call for boycotting the company’s products. If that happens, it will cost the multinational company dear. The executives at PepsiCo’s headquarters and its Asia-Pacific office have reportedly taken a serious note of the potential adverse fallout of this event on the company’s business prospects and have counselled its Indian subsidiary to resolve the issue at the earliest. Little wonder, therefore, that PepsiCo India has softened its stance and has expressed willingness to settle the issue if farmers refrain from using the registered variety or obtain a licence from it to continue its cultivation.

However, the farmers, buoyed by public backing, have turned down this conditional deal. Launching a counter-offensive, they have, in fact, accused PepsiCo of violating the Protection of Plant Varieties and Farmers’ Rights Act (PPV&FRA), which aims, among other things, at encouraging the development and cultivation of improved plant varieties. Unlike the plant variety protection laws of many other countries, the sui generis legislation enacted in India for this purpose is unique in several respects, particularly in preserving the traditional rights of the farmers and the age-old practices followed by them. This, significantly, has been done without infringing the global agreement on Trade-Related Intellectual Property Rights (TRIPs). Section 39 of the PPV&FRA specifically allows a farmer “to save, use, sow, re-sow, exchange, share or sell his farm produce including seed of a variety protected under this Act”. The only caveat is that the self-grown seeds cannot be sold under the registered brand names. Equally importantly, Section 42 of this statute insulates the farmers against “innocent infringements” attributable to lack of awareness about the registration of the variety. Keeping these stipulations in view, PepsiCo will be well-advised to review its action against the farmers and withdraw the case unconditionally. Otherwise, it will not only undermine the company’s own business interests but will also sully the atmosphere for other corporate houses wanting to engage with the farmers for mutual gains.