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PepsiCo Tells Farmers: 'Join Us or Grow Other Potatoes'

How plant patents work in the U.S. and India.
PepsiCo contracts more than 24,000 farmers to grow potatoes and rice for its chips.

PepsiCo contracts more than 24,000 farmers to grow potatoes and rice for its chips.

After PepsiCo sued a group of small farmers in the western Indian state of Gujarat this month, reports say the company has agreed to settle—for the price of $143,000 per farmer. The farmers, PepsiCo claims, had obtained seeds that did not belong to them: the seeds of the corporation's patented FL2027 potato, known to the rest of the world as a crucial ingredient in Lay's chips.

A coalition of farmers' unions, activists, non-governmental organizations, and lawyers criticized the lawsuit in a letter to the Indian Ministry of Agriculture this week, claiming it targets farmers who have been "bullied by seed and food corporations," India Today reports. Meanwhile, PepsiCo says it obtained exclusive rights to grow the potato in India in 2016. It's allowed hundreds of farmers to grow its potato, but they must be approved. "Either join us or grow other potatoes," a PepsiCo spokesperson told CNN.

While the lawsuit has enraged critics in India, who are defending the farmers' right to grow their own crops, similar lawsuits have been underway in the United States for decades. Three U.S.-based corporations now dominate the global seed market—and plant patents helped make it happen.

Global Seed Domination

Under a 1970 property law, U.S. plant breeders—including individuals, universities, and corporations—can patent new varieties of seeds and tubers, as well as certain genes, traits, and methods for producing plant varieties. The patents, recognized worldwide, give the owner exclusive legal rights to reproduce and market that variety for 20 years. (In some cases, farmers can grow and save patented seeds for the future, if they do not sell them.)

According to the U.S. Department of Agriculture's Agricultural Marketing Service, this protection is intended to promote "the development of new varieties that can increase yield and crop productivity." The Plant Variety Protection Office's database contains 398 varieties of potato alone (with names like Red Snapper, Pomerelle Sunset, and Emma), each certified by the USDA.

But as biotechnology firms began patenting genetically engineered insect- and pesticide-resistant seeds, these innovations led to lawsuits that further solidified the seed companies' monopolies. The agri-tech giant Monsanto (now part of Bayer) has been suing American farmers over seed patents for decades. According to a statement from the corporation, Monsanto has filed 147 suits against farmers in the U.S. since 1997. Only nine made it to trial, but Monsanto won every one.

Effects on Small Farmers

Although the courts have consistently upheld corporations' intellectual property rights, advocacy groups argue these legal protections—coupled with the increasingly consolidated seed industry, which controls 60 percent of the market—harm small farmers.

A 2005 analysis from the environmental non-profit group Center for Food Safety found that, during in the corporation's litigious peak, Monsanto was awarded as much as $3 million in one patent lawsuit. Some of the farmers who wound up in court had not planted Monsanto's biotech seeds intentionally, but were still held liable for those that drifted into their field.

Experts agree that the seed industry's patents have made it harder and more expensive for farmers to buy and save commodity seeds. "[S]ynergies between stronger intellectual property protections and consolidation have further reinforced the dominance of top firms at the expense of a freely competitive industry," wrote Michigan State University professor Philip Howard in a 2015 report on intellectual property in the seed industry.

Contract Farming, Contract Seeds

In India, the world's second-highest potato-producing country, PepsiCo contracts more than 24,000 farmers to grow potatoes and rice for its chips. In return, these farmers are protected from risk. Although the contract farming system is believed to be mutually beneficial, the corporation has also been criticized for depleting India's water resources amid the country's growing agricultural crisis.

It also restricts what farmers can do with the seeds: In the U.S., for example, those who want to grow Monsanto's patented seeds have to sign agreements requiring farmers to repurchase the seeds instead of saving them.

And yet these are the farmers PepsiCo says it's suing to protect. In a statement to Business Insider, the company said the lawsuit was "a last resort to safeguard the larger interest of thousands of farmers that are engaged with its collaborative potato farming program."