PepsiCo agrees to withdraw lawsuit against potato farmers in Gujarat

Government assures long term resolution over seed protection, company says after popular backlash.

PepsiCo India Holdings Ltd. (PIH) said on Thursday it will withdraw cases against potato growers in Gujarat after discussions with the government. The company had sued potato farmers in Gujarat for allegedly buying seeds and selling potatoes of the FL 2027 variety registered by PepsiCo. The said variety is used by PepsiCo for making 'Lays' chips.

The company said that it had held discussions with the government in which it was assured of "long-term" and "amicable resolution" of all issues around seed protection by the government. "The company remains deeply committed to the thousands of farmers we work with across the country and towards ensuring adoption of best farming practices," as per the PepsiCo India spokesperson.

Gujarat deputy chief minister Nitin Patel, who had earlier announced the government's intention to be a party to the legal case to "protect farmers' interests", could not be reached for a comment.

PepsiCo uses FC5 variety of potato for making chips. For this, PepsiCo had also entered in to an exclusive buyback arrangements with farmers in India. It is learnt to have engaged 1,200 farmers in Gujarat for sowing and producing the FC-5 variety of potato for its snacks division.

However, PepsiCo had found potato growers not under such an arrangement with the company, buying seeds and selling the FC5 variety of potatoes, following which it had filed suit against them.

Under the suit, PepsiCo had claimed exclusive rights over the said variety under the Protection of Plant Varieties and Farmers’ Rights (PPV&FR) Act, 2001, seeking damages worth Rs 1 crore from at least four farmers. The hearing at the local commercial court in Ahmedabad had been scheduled for June 12. 

Commenting on the case, the PepsiCo spokesperson said that the move was made in order to "safeguard the larger interest of farmers". "PepsiCo India was compelled to take judicial recourse to protect its registered variety," the spokesperson stated.

The case has attracted global attention, with the food giant facing backlash from farmer groups across the country. PepsiCo's decision to withdraw the case after its discussions with the government comes at a time when farmer organisations, led by RSS-affiliate Bharatiya Kisan Sangh (BKS), recently sought government intervention in establishing legal rights for farmers over seeds of any crop variety.

Earlier, PepsiCo had also suggested a possibility of an out-of-court settlement during a hearing at the commercial court in Ahmedabad last week. "PepsiCo from the very start had also offered an amicable settlement to farmers," the spokesperson added. 

In another case, filed at the Gujarat High Court, two other potato growers had objected to PepsiCo’s plea to allow a court commissioner to visit and inspect their premises and cold-storage, with the purpose of taking stock of the alleged infringed potato product, as part of a probe ordered by a city-based commercial court. 

While the court had allowed the commissioner to carry out inspection at the farmers’ premises but not at the cold-storage to assess inventories of the infringed potatoes, PepsiCo had filed a plea with the High Court seeking inspection of cold-storages as well.

However, earlier on Monday, the legal counsel appearing for the two farmers sought a stay over the HC's order on the grounds of approaching the Supreme Court. The Gujarat HC had refused both the plea and placed the matter for further hearing on June 12.