The spokesman of PepsiCo Company, on May 2, 2019, made a statement that the company is withdrawing the case against farmers of Gujarat. For the past some time the company was maintaining that the farmers have infringed upon their intellectual property by using FC-5 variety of potato seeds material (tubers) to cultivate potatoes and selling them to other people. The company had sued the farmers and sought injunction to stop farmers from producing that variety. Further the company had demanded penalty of Rs 1.05 crore from each farmer. The question arises that if the PepsiCo was right then why did it decide to take back the lawsuit? It is worth noting that during this period, the headquarters of PepsiCo had expressed concern over the move of the local unit of the company, which has caused anger not only among the farming community but also general public and the civil society organisations. The demand for boycott of the company’s products was gaining momentum on social media.
Profiteering by companies, especially, foreign companies and their fleecing of the farmers is nothing new. We have seen that millions of cotton farmers have been badly exploited by Monsanto, and so far more than Rs 7000 crore have been extracted from the poor farmers as royalty (in the name of patent on Bt Cotton seed, which perhaps didn’t exist) for a technology which has virtually failed after a few years of mild success. Despite curbs by the government, the exploitation by the company continues unabated.
Present issue relates to PepsiCo, a beverage company, which also makes Lay’s potato chips and other types of snacks. It is worth mentioning that the company engages farmers in some parts of the country, for ‘Contract farming’ of a potato variety named FC-5. This variety of potato is grown by contract farmers and is sold at a certain price by the farmers to potato chips manufacturers as per the instructions from the company to the farmers as per the contract. PepsiCo in turn purchases potato chips from the manufacturers. Potato chips are finally marketed by PepsiCo throughout India. This is the typical model of multinational companies, in which both production of raw materials and manufacturing is outsourced by the company and therefore risks from both sides are tried to be minimised. Obviously, PepsiCo makes a huge profit in this way, because the potatoes are bought from farmers at less than Rs 5/kg, potato chips are bought from manufacturers at a price in proportion to the price of potato so procured and potato chips are sold at price of a more than Rs 200 per kg. The issue was that the company organised a sting operation by sending detective to the fields of some farmers of Gujarat, and took potatoes from those farmers and alleged that the sample so procured are of FC-5 variety, and filed a law suit against 11 farmers on the plea that the farmers are growing potatoes of FC-5 variety of the company, which company claimed to have registered. The company had alleged that these farmers have bought the seed material from the farmers of Punjab, who had contract with PepsiCo. The company alleged that since this seed has been registered by the company, farmers selling the produce (potato) to other potato manufacturers have infringed the company’s intellectual property rights. PepsiCo sought a ban on production by farmers by filing a suit in the commercial court of Ahmedabad, as well as demanding the recovery of huge damages from each of the four farmers for the violation of their intellectual property rights. Most unfortunate part of the story is that Commercial Court also gave interim decision in favour of the company, supposedly misreading the law. Intellectual property law experts and legal experts generally believe that the decision of the Commercial Court was not correct, because in reality the farmers did not violate the company’s intellectual property rights in any way. In accordance with India’s intellectual property laws, patent law does not really apply to seeds, plants and lives.There is another law, exclusively for seeds and plants, known as Protection of Plant Varieties and Farmers Rights (PPVFR) Act, 2001. According to this law, a person or business unit can register any seed or plant variety, barring other entities to sell the same variety of product with that brand name. However, the rights of farmers are protected under section 39 (1) (iv) of this Act, which reads as follow: “A farmer shall be deemed to be entitled to save, use, sow, re-sow 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”. Accordingly, it’s clear to all, including the company that interests of the farmers are very well protected under the law. Therefore, the question arises why the company deliberately sued the farmers. The reason for this is clear that company was trying to intimidate the farmers with its financial muscles and restrict them to produce FC-5 potatoes to foster its economic interests and also force farmers to produce the variety exclusively for the company, forcing the contract on them. This became apparent in the court, when the counsel of the company gave the proposal that company would withdraw the case, once farmers enter into contract with the company, to produce exclusively for the company. On the other hand, the Gujarat government also was seen standing in favour of the farmers. Importantly, agriculture is the state subject and therefore the task of interpretation of the law his with the state government. When this company was surrounded by the controversy on the issue, its headquarters stepped in and instructed its Indian arm to quickly settle the issue with the farmers to avoid anger of farmers’ unions and the public. There are also people who say that the company has spent millions of dollars to develop the variety, so they have the legitimate right to profit from the same. Regarding this we need to understand that the FC-5 variety, which was registered by PepsiCo, had been registered as an ‘extant variety’; that is the already available variety. This means that the variety, which is registered as FC-5, was already available and was registered in 2016. That is, not only legally, company’s law suit is weak even morally. People who are advocating on behalf of the company must understand that their argument is legally not tenable. If company is allowed to have its way, it would increase company’s stranglehold over the farmers, making them even poorer. Advice to the companyAny foreign company working in another country has to adhere to the laws of that country. PepsiCo will have to understand that Indian laws will not change for them; PepsiCo will have to change its attitude. Now that PepsiCo has withdrawn its law suit, it has become clear that the company cannot force the farmers to sell potatoes exclusively to them. Yes, if PepsiCo wants to buy potatoes, then they can do by paying a better price to the farmers. Now this is the only option for PepsiCo.(The writer teaches at PGDAV College, University of Delhi)