Value Added Article: Caught in the Potato Skirmish | EPW

Relevance: GS Paper III 

Source

Agriculture


Introduction

PepsiCo’s lawsuit against a few farmers in Gujarat for alleged infringement of the company’s patents over a certain potato variety had generated a furore.


The Reality of Potato Farmers

  • Why did farmers choose a variety that has high marketing barriers, if there was no assured buyer in their backyards?
  • Farmers collaborating with PepsiCo have frequently mentioned the higher costs of production and lower rate of productivity of the company’s processing variety in comparison to the conventional cultivars.
  • Yet, the number of farmers entering supply agreements with PepsiCo has increased by almost seven times over the past decade.
  • These evidences act as eye-openers to the ground-level realities. Realities that indicate the dearth of marketing opportunities for the farmers and subsequently explain why they ascribe precedence to “certainty” rather than the “level” of income.
  • Over the past three decades, potato production has increased by 227%, while consumption has evidenced only 22% rise in per capita terms.
  • The consumption demand for potatoes constitutes barely 50% of the current production.
  • The perils of supply management are further exacerbated by a general lack of market intelligence services and infrastructure facilities such as cold storages.
  • The food processing sector in India contributes only 8.39% of the gross value added in agriculture, ­indicating the dominance of low value-added production.
  • Even policies are in tandem to such production activities. The reforms for 100% FDI liberalisation is targeted towards ­primary processing, or more specifically, for mere food retailing.
  • In the potato processing sector per se, technology transfer, capital inflow and assured marketing of the produce are restricted by the preponderance of informal, small-scale players, who hold more than half of the market share.

Both corporations and the state are at fault

  • While entering a contractual agreement with the limited number of organised players can ensure all three criteria, it is also potent that the big corporations will exert their bargaining power to maximise their profits and pay the farmers just their labour costs. But, it is not the truth in entirety.
  • Through the selective use of the Agricultural Produce Market Committee Act—whether by allowing collaborative farming arrangements bordering on contract farming where it is not legally permissible (as in West Bengal) or in facilitating the setting up of contract where permissible (as in Gujarat)—the state, too, is party to rent-seeking.

Conclusion

PepsiCo’s retraction of the case is not to be seen as a triumph of India’s laws on protection of plant varieties and farmers’ rights, forthere were perhaps no real “farmers” involved in the case. And in answering the activists’ allegations against multinational corporations of ruining the agrarian diversity of this country, one should not lose sight of the government’s failure.