Why There Is A Fight Over The Potatoes Used To Make Lay's Chips

International IPR conventions seek to give plant variety breeders the right to enforce patents they hold on plant varieties. The market for plant variety breeders, activists say, is increasingly dominated by a handful of large corporations both globally and in India. Developing countries like India want to protect their farmers' rights to use, sow and sell the harvest, including seeds, of any plant variety they produce, even IPR-registered ones.

On September 12, 2022, the Delhi High Court heard an appeal by PepsiCo India against a December 2021 order by the Protection of Plant Varieties and Farmers Rights Authority (PPVFRA), which had granted Kuruganti's application for the revocation of PepsiCo India's registration of the potato variety FL-2027, used to make its Lay's potato chips. The registration had been granted in February 2016 under India's Protection of Plant Variety and Farmers Rights Act, 2001 (PPVFR Act, 2001); the PPVFRA is a statutory body under the Act. PepsiCo India asked the High Court to reinstate their registration of FL-2027, a company spokesperson told IndiaSpend in an email.

Kuruganti's application had come in wake of PepsiCo India lawsuits filed against nine farmers in Gujarat in April 2019, which had alleged that these farmers were "illegally" growing the FL-2027 potato variety without licence or permission from the company, in violation of its rights under the PPVFR Act, 2001. The lawsuits had altogether demanded damages of over Rs 5 crore. PepsiCo India had held an 'Extant Variety' registration over the FL-2027 variety under the Act, meaning that production of the seed variety pre-dated its registration by PepsiCo India and there was common knowledge about it among Indian farmers, per the PPVFRA.

"In principle, India does not allow exclusive patent rights on life forms, particularly agricultural seeds, but to set up a structure that would more or less reflect the international patent regime, India came up with the PPVFR Act in 2001 to allow for the registration of plant seeds," said Kiran Kumar Vissa, a Hyderabad-based activist with the Association for India's Development volunteer movement, which promotes sustainable, equitable and just development, and an activist with Rytu Swarajya Vedika, an independent farmers' organisation based in Andhra Pradesh and Telangana.

Unlike exclusive patents, however, India's PPVFR Act gives farmers the right to save, use, sow, resow, exchange, share or sell their farm produce, including seeds, even of varieties registered under the Act. The Act only restricts farmers from selling seeds of a protected variety in packages or containers with labels bearing the brand name of a protected variety.

The farming system in developing countries is characterised by small-scale farming, which relies heavily on the informal seed system, Vissa explained. The lawsuits against the Gujarat farmers were withdrawn by PepsiCo India the same month they were filed.

Kuruganti, in a letter to the PPVFRA after the lawsuits were filed, had accused PepsiCo India of going against farmers' rights over plant varieties. The PepsiCo India spokesperson told IndiaSpend that the company wants the High Court to restore its registration of the FL-2027 variety in order to safeguard the interests of thousands of farmers who grow the variety in contract with the company, through its collaborative farming programme.

Farm activists dismiss this argument, saying the case shows how companies which have registered plant varieties use coercive tactics against farmers to protect their interests. Legal experts, however, counter that IPR protection is important to incentivise the development of new plant varieties, a process which takes several years, for better harvests. PepsiCo India's case has been listed for the next hearing on November 2, 2022.

Ahead of that date, India will host the Food and Agriculture Organization's International Treaty on Plant Genetic Resources for Food and Agriculture Conference, from September 19-24. The 148-member country treaty, which came into force in 2004, has specific provisions to recognise farmers rights to plant genetic resources for food and agriculture.

IndiaSpend has asked the Ministry of Agriculture and Farmers' Welfare for their views on the clash between rights of India's farmers over the seeds they produce and corporations' IPRs. We will update the story when they respond.

How PepsiCo lost its registration of the Lay's Chips potato variety

In 2009, PepsiCo India Holdings Pvt Ltd, a subsidiary of American multinational food and beverage corporation PepsiCo, Incorporated, imported the FL-2027 potato variety from the US and started commercially using it in the Indian market, through a contract farming arrangement with farmers. The company supplied FL-2027 potato seeds to these farmers and bought back the potato harvest at pre-agreed rates, per the contract.

Potatoes are among the 172 crop species that are open for registration for IPR protection under the PPVFR Act. As of August 2022, a total of 42 potato varieties have been registered. Of these, 17 varieties have been registered by the Indian Council of Agricultural Research, a central government body under the agriculture ministry; one is registered to an individual farmer; and the rest are registered by private companies including PepsiCo India, French corporation Germicopa SAS and Dutch corporations HZPC Holland B.V. and C Meijer B.V.

In 2019, Kuruganti, convenor of the Alliance for Sustainable and Holistic Agriculture (ASHA) network, which comprises more than 400 sustainable and viable farm livelihoods organisations, alleged in a letter to the PPVFRA that PepsiCo India had employed a private intelligence agency to pose as interested buyers and visit the fields of some potato farmers in Gujarat between January and February 2019. The company claimed it had subsequently tested the potatoes grown by these farmers, who had no contract with the company, and found these to be of the FL-2027 variety. PepsiCo India then brought individual lawsuits in the Ahmedabad civil court in April that year, to stop these farmers from growing this potato variety, Kuruganti's letter alleged.

Kuruganti had said that the Gujarat farmers may not have been aware that they were infringing the exclusive rights of any corporation, and averred that even if they were, that this was immaterial per provisions of the PPVFR Act, 2001, which upheld farmer's rights to save, use, sow, resow, exchange, share or sell farm produce, including seeds, even of varieties protected under the Act. Sometimes traders put potato tubers that are too small for processing into the farming grey market, without the original name or brand that is protected, and the farmers who buy these tubers run the risk of being at the receiving end of IPR infringement actions, explained Shalini Bhutani, a legal researcher and policy analyst based in New Delhi, who tracks agriculture and biodiversity issues.

Reportedly, PepsiCo India withdrew all the lawsuits against the farmers within days. But in June 2019, Kuruganti moved the PPVFRA, to revoke the food giant's registration over the FL-2027 potato variety. In her petition, Kuruganti averred that registration of the variety was granted on the basis of incorrect information furnished by the breeder, PepsiCo India, that PepsiCo India had not complied with the provisions of the PPV&FR Act, 2001 or rules and regulations, and also that the grant of certificate of registration was not in public interest.

In December 2021, the authority ruled in favour of Kuruganti, and revoked PepsiCo India's registration of the potato variety. The company in May 2022 appealed to the High Court of Delhi, seeking a stay on the revocation order, "to protect PepsiCo's proprietary rights in its potato variety FL-2027", the company spokesperson told IndiaSpend.

Plant variety protection in India and the international patent regime

"The PepsiCo India case is reflective of how companies, when they have rights on seeds, tend to use it coercively to protect their interest, even if it means farmers' interests are compromised," said Vissa. India's legal arrangements around plant variety rights, however, mean farmers' rights cannot be superseded by those of corporations, say legal experts.

In the 1960s, developed countries had demanded that plant varieties be protected by private property rights under an act, whose framework was delineated in the International Union of the Protection of New Varieties of Plants (UPOV), adopted in 1961. The UPOV ensured that plant variety breeders acquired sole rights to produce and sell new varieties. Organisations in developing countries protested against the UPOV convention, saying it would adversely affect small farmers and their right to decide what they want to do with the seeds they produce. India is not a signatory to the UPOV convention.

India, however, is a World Trade Organisation (WTO) member and adopted the WTO's Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement, introduced in 1994. The TRIPS agreement dictates that member countries provide some form of patent protection to plant varieties, either through a domestic law that reflects the agreement, or with their own sui generis (unique) legal system. India took the latter route and came up with the PPVFR Act in 2001, Suman Sahai, founder and chairperson of Delhi-based research and advocacy organisation Gene Campaign, which works on food and livelihood security of rural communities, told IndiaSpend.

"The UPOV system is really a platform for the seed industry, who are the breeders. In the UPOV system, rights are granted only to the breeder, there are no rights for the farmer. In India, the position is very different. We do not have big seed companies in major seed sectors, such as rice, wheat, corn, pulses, and our seed producers are largely farmers and farming cooperatives," said Sahai, who was also part of the expert committee which drafted the PPVFR Act.

The United Nations Declaration on the Rights of Peasants and Other People Working in Rural Areas, adopted in 2018, contains a very clear directive to countries to "ensure that seed policies, plant variety protection and other intellectual property laws, certification schemes and seed marketing laws respect and take into account the rights, needs and realities of peasants and other people working in rural areas".

By limiting the saving, exchanging and selling of farmer-produced seeds of protected varieties, IPR may reduce the effectiveness of informal seed systems, which are the primary source of seeds in developing countries, a 2005 World Bank-commissioned study investigating the impact of the strengthened IPR regime on the plant breeding industry, had noted. More recently, a 2018 European Parliament Report called for "the need to prevent the potentially negative impact of IPR clauses" in trade agreements on food sovereignty, such as clauses that will lead to seed privatisation.

"Logically, our law will have to concentrate on protecting the interests of the farmers in their roles as producers as well as consumers of seeds," said Sahai. Thus, India's PPVFR Act allows for three different varieties of plants to be registered: farmers' variety (traditionally cultivated and developed by farmers in their fields), extant variety (whose production by farmers pre-dates its registration by a breeder), and new variety, said Sahai.

"Since globally, laws on plant variety protection differ, PepsiCo India's decision to enforce their right was in line with UPOV's principles. However, India is not a member of UPOV. And in India, breeder's rights cannot supersede farmers' rights. Therefore, PepsiCo India's decision to enforce its rights and sue farmers was not correct," Sarah Hasan Usmani, a Netherlands-based lawyer working with Corsearch, a multinational brand protection company which works with corporate clients to protect against IPR threats, told IndiaSpend. As said earlier, the cases against the farmers were quickly withdrawn.

"The 2021 [Kuruganti v/s PepsiCo India] case established that if the registration granted to a company is used to harass and intimidate farmers, then the registration itself should be revoked. This stance had never been taken before by the PPVFR Act," added Vissa.

Usmani, however, says IPR protection for plant varieties is important. "The idea behind protecting plant varieties (through IP) is to promote the development of new varieties of plants and better quality seeds. Since it takes years to develop a new plant variety, protection provides incentives for the efforts of the breeder. If there is no protection, anyone could sell the new variety on a commercial scale and the breeder would not accrue any benefit," said Usmani.

Farmer's rights over their seeds must come before corporations' rights, say activists

Globally, India is the fifth largest market for seed varieties, with a market size estimated at $3 billion (Rs 22,500 crore), according to the National Seed Association of India, a seed industry body. More than 500 private seed companies operate in India at different levels.

Globally, just a handful of multinationals control the seed market, due to factors like consolidation through mergers and acquisitions, which "has led to the disappearance of most of the small and medium-sized seed companies and a reduction in the range of varieties that are being developed", per a 2016 report by the International Panel of Experts on Sustainable Food Systems, an independent panel studying transitions to sustainable food systems around the world.

"India's largest seed producer has been the farming community, but that changed gradually with the development of hybrid seeds," said Sahai. Hybrids are products of two or more inbred parent seeds. "Now, the seed industry also knows that hybrids are a way to bypass the patents that they couldn't get. What they wanted to achieve with the patent was that farmers had to go back and buy seeds fresh from them, every time," said Sahai.

"The seed industry is consolidating and pyramiding into mega mergers, so on the top there are just about a handful of three-four companies worldwide which are taking patent rights and monopolising planting material," said Bhutani. These include Bayer (which bought out Monsanto in 2008), Corteva, BASF and Syngenta, per a June 2021 report in the Nature research journal. These multinational corporations also hold a significant presence in India.

"A downside of this concentration is it reduces genetic diversity of crop species and varieties," said Bhutani

The farmers rights clause in the 2001 Act, which talks of farmer's rights to sow, use and save seeds even of an IP protected variety, among other rights, has been a subject of constant tussle with the seed industry who demand a UPOV-style plant breeder rights to protect their innovation and claim compensation for producing/ re-producing, selling, stocking, exporting/ importing the variety, according to experts. Seed companies want a strengthened IP regime, per the Federation of Seed Industry of India, but that comes with several implications.

If the farmers are to be stopped by law from selling seed, the market automatically becomes available to the next alternative, the multinational corporations, said Sahai. "If the seed supply system only creates a supportive environment for seed companies to sell their seed varieties, how are farmers going to benefit from this system of registration if they cannot multiply their [own seeds], package and sell it in competition with the same company?" Bhutani added.

Weak farmers' rights will allow seed corporations to dominate the seed market, while strong farmers' rights keep the farming community alive and as viable competitors in the seed market, noted Sahai. "Control over seed production is central to self-reliance in food."

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