Explained | What will be the impact of PepsiCo verdict?

Why are experts calling for a need to find a balance between farmers’ rights and encouraging seed innovation?

Updated - December 19, 2021 11:22 am IST

Published - December 19, 2021 03:55 am IST

The story so far: The Protection of Plant Varieties and Farmers’ Rights Authority (PPV&FRA) revoked PepsiCo India’s registration of its potato variety used to make Lays chips earlier this month, more than two years after the multinational food giant sued Gujarati farmers for allegedly infringing its rights by growing and selling its registered variety. The wider implications of the verdict for intellectual property rights in the agricultural sector are being examined by farmers’ groups as well as seed developers and industrial agriculture companies, both international and Indian.

What does the verdict mean for farmers’ rights?

Although the PPV&FRA verdict largely depended on procedural errors and shortcomings of PepsiCo and the registrar with regard to documentation and transfer of rights between the plant breeder and the production company, it does touch briefly on the protection of farmers’ rights and public interest. “[F]armers have been put to hardship including the looming possibility of having to pay huge penalty on the purported infringement they were supposed to have been committing,” said the judgment, noting that PepsiCo had claimed damages of more than ₹1 crore each from small farmers. “This violates public interest,” it added, allowing farmers’ groups to claim that the verdict sent a strong signal to those who hold intellectual property rights for seeds that the unique rights that the PPV&FR Act provides Indian farmers are not to be transgressed.

Also read | Chips at stake in the PepsiCo-farmers fight

Kapil Shah of the Kisan Beej Adhikar Manch, one of the Gujarat activists who spearheaded the initial protests, also emphasised the difference in rights provided under law to farmers and breeders.

‘Producing from a variety’, including a farmer saving seed and using unbranded seed from a harvest, is very different to ‘producing a variety’, which involves breeders following complex technical procedures that farmers largely do not have the skills for. There is no risk of commercial competition for the IPR owner in the first case, when harvests are meant for consumption, processing and the grocery market, unlike in the latter case when harvests are meant for further planting and multiplication of the genome or to generate heterosis in hybrid varieties, he said.

Does the PPV&FR Act encourage innovation and protect intellectual property rights of seed developers?

The biggest problem with the law is the lack of proper enforcement, according to the seeds industry. “There must be a mechanism to catch and punish those who illegally sell the variety, but enforcement is left to States and is patchy at best,” said Federation of Seed Industry of India director general Ram Kaundinya to The Hindu , pointing to the rampant spread of unauthorised and genetically modified HTBt cotton seeds as an example of this.

He added that the unique protections provided to farmers in India can act as an enforcement loophole given the grey area between farmers and aggregators. “A farmer is allowed to grow protected varieties, sell the produce, even sell the unbranded seeds under the law, and that intention is good. But what happens when many farmers sell registered seeds to an aggregator who collects it and then sells it in a branded fashion, or sells to a competitor? If the aggregator owns an acre of land somewhere, he may also call himself a farmer,” pointed out Mr. Kaundinya, adding that pilferage of the parent seed from farmers’ fields is also a concern.

Other issues with PPV&FR implementation which obstruct innovation include the slow turnaround time for registration of varieties and the requirement that companies submit parent seeds when applying for registration. “Forget foreign investment, even domestic investment in innovation is low because of lack of protection of IPR. The Indian seed market has annual revenues of ₹20,000 crore, but less than 3% or about ₹500-600 crore is ploughed back into research, in contrast with 10-12% which is the global standard,” he noted.

How does contract farming law impact the issue?

With the first national contract farming law passed by Parliament last year being repealed last month under pressure from protesting farm unions, there is no uniformity among the few State laws that exist. The seed industry, which depends on farmers for seed production, prefers to deal with local contractors rather than sign direct contracts with farmers.

“If a contract is violated, there is no way for us to enforce it at the village level, so it is better to deal with a local player and form tripartite agreements. It is inconceivable for any company to sue a farmer,” said Mr. Kaundinya, noting that PepsiCo and Monsanto have faced political and public backlash for doing so.

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