Hot potato: Abandon PepsiCo immediately

    With more and more people becoming aware of the indecent intervention of a Multinational Giant in the “snacking” business, it is time for the Civil Societies to get their act together. The PepsiCo juggernaut started off in 1893 and in 1909, automobile race pioneer Barney Oldfield was the first celebrity to endorse Pepsi-Cola, describing it as “A bully drink…refreshing, invigorating, a fine bracer before a race.(Wikipedia)

    Oldfield was prescient as he rightly used the word “bully” –  a person who uses strength or influence to harm or intimidate those who are weaker! Maybe he used it for the drink named Pepsi, but the character of the company itself turned out to be identical.. or so says the potato farmers of Gujarat.

    PepsiCo claims that the farmers are cultivating its proprietary FC5 potatoes, which are designed to be lower in moisture than other spuds, without permission

    In the year 1989, when PepsiCo entered the Indian market, it set up a Research arm in Sangrur, Punjab. It is from this lab, the potato saplings were supplied to the contract farmers across India and they did export it to various countries. Now, with the help of foreign agencies, like Breeders Trust, they have brought new varieties which they claim has low moisture content and lower sugar for making chips. Fair enough!

    PepsiCo tried suing four farmers in India for patent infringement. The company claims that the farmers are cultivating its proprietary FC5 potatoes, which are designed to be lower in moisture than other spuds, without permission. “In this instance, we took judicial recourse against people who were illegally dealing in our registered variety,” is what a company spokesperson told in a press meeting before they understood the backlash and retreated.

    The giant had demanded Rs. 1.05 Crore from each of the allegedly infringing farmer. The company filed a case against these hapless farmers to coerce them to bring them under their contract, without knowing that the nation will stand up for its farming rights!

    Contract Cultivation

    The farmers who are agreeable with the terms and conditions of PepsiCo are supplied with “superior” variety of tubers and the produce are bought back by the company for the manufacture of Lay’s Potato Chips. The production also is outsourced to contract manufacturers, which the company markets – a standard operating procedure for every MNC to avoid overheads and business risks.

    Applicable Legislation

    It is a common misconception that the plant variety which is in dispute is covered under the IPR Act. It is not. It is governed under the Protection of Plant Varieties and Farmer Rights (PPVFR) Act. Thus, the narrative that the Indian Farmers have violated the IPR of the Company is false propaganda.

    If the company has indeed registered this particular variety of potato under section 24 of the PPVFR Act, which needs to be validated, they are conferred with rights under section 28 of the Act. The Owner or Breeder is the rights holder under this law.

    This means that no other person or company is allowed to produce, market or sell the “seed material” to any other person using the registered denomination, assigned to the variety or under a different brand name.

    However, Section 39(1)(iv) of the PPVFR Act provides an exemption to the farmers from the above provisions of the Act even in the matter of a plant variety, registered under the PPVFR Act. Section 39(1)(iv) reads as follows

    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.

    The only prohibition is that the farmer cannot sell branded seed of a protected variety.

    Bound by Contract?

    The farmers who have signed the contract with PepsiCo are bound by the document signed by them and that too under the Indian Contract Act. This too is a matter of civil dispute, and if the company has made the farmers sign the agreement with clauses that are violative of laws of the land, it becomes unenforceable, as contracts contrary to law are void.

    Allegations against Farmers

    From the reports, it is presumed that PepsiCo is using the provisions of the Contract Act and the PPVFR Act to sue the farmers. Here there is no contractual relationship with the farmers who allegedly used their registered seed variety and the applicability of the Contract Act is not found tenable. Also, the exemption given to farmers under section 39(1)(iv) of the PPVFR Act will protect the farmers from the bogus claims of PepsiCo.

    Section 92 of the Act provides that “The provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the first time being in force or in any instrument having an effect by virtue of any other law other than this Act.” Hence, no action can be taken invoking any other law in the matter. The Act is for protecting the “farmers rights” too.

    Going by the interpretation of the provisions of the PPVFR Act, it is clear that there is no violation by the farmers in procuring seeds from anyone and using it as a seed and cultivate this variety of potato and sell the produce. Period!

    It may also be noted that there is no provision under the Act to prevent a farmer from selling his produce which he produced invoking his right under S. 39(1)(iv) as stated above. PepsiCo has obtained an injunction from the court by not presenting the whole facts before the court of law. This may amount to even preventing the farmer from exercising his legal right to cultivate and could invite more trouble to this multinational corporation. This act can only be seen as a bully to bring the farmers under their ‘contract’ and monopolise the market.

    PepsiCo did agree to the Government that they are withdrawing the case. However, it cannot be seen as a withdrawal just because of the dissent that is gathering momentum and the damage to the brand

    Let us be clear in the matter. Even if PepsiCo has entered into a contract with a farmer to produce potatoes of FC5 variety, the farmer cannot be stopped from raising the same crop of the variety in the next year. All it can do it to bar him from selling his produce to a competitor as per the contractual obligation for that year. In the subsequent years, the farmer can cultivate and sell his produce to anyone of his choice. Did PepsiCo do the right thing in rushing to the Court?

    What Next?

    The company could have attracted farmers by offering a higher return for their produce which can be pegged to the Market Price. This will encourage the farmers to choose the company over any other to sell. This was not the case. This multinational conglomerate thought of hoodwinking the farmers and making profits far in excess of what is due.. maybe!

    Above all, the company which has global presence had to hire an agency to check out on small and marginal farmers and see if they have violated the rights. The intention is certainly not to get the punitive damages from these small farmers. The intention is certainly to make sure that they scare the farming community and bring the entire production under its control. But, today, it is a New India and we understand Trade is War!

    Hasty Retreat

    As the voice of protest and call for a boycott has built up, PepsiCo did agree to the Government that they are withdrawing the case. However, it cannot be seen as a withdrawal just because of the dissent that is gathering momentum and the damage to the brand. It may also be due to the legal position that they are in and wise advise of someone from the legal fraternity that they may not win in the court of law due to reasons discussed above. However, I still feel that there has to be immediate intervention from the part of the Government to invest heavily in research so that we can indigenously develop various high yielding plant varieties rather than be at the mercy of these multinationals.

    Even if the case was withdrawn, I will certainly not forgive PepsiCo for what they have done! Do we need such a company to sell us snacks? #BoycottPepsiCoProducts – Let it trend!