PepsiCo Offers to Settle With Indian Farmers After Suing Them for Growing Potato Used to Make Lay’s Chips

An Indian farmer harvests potatoes at a field at Nadol village of Dehgam Taluka, India, on Feb. 27, 2013. (Sam Panthaky/AFP/Getty Images)

PepsiCo has offered to settle a lawsuit against a group of Indian farmers who the company alleges grew a patented variety of potato used in its Lay’s chips without permission.

The U.S. food, snacks, and beverage company initially demanded $143,000 in damages from each of the four farmers. PepsiCo said the farmers illegally sourced and sold the FL-2027 strain of potato, which it says it has owned the exclusive rights to since 2016.

However, when farmers groups and activists expressed outrage after the case went to court in the western Indian city of Ahmedabad on April 26, PepsiCo said it will try to settle the dispute “amicably” with those involved.

“PepsiCo India has proposed to amicably settle with people who were unlawfully using seeds of its registered variety,” a PepsiCo India spokesman told Business Insider. “The company was compelled to take the judicial recourse as a last resort to safeguard the larger interest of thousands of farmers that are engaged with its collaborative potato farming program.”

Activists and farmers groups are concerned the multi-billion dollar conglomerate is interfering with India’s food supply using its power, the Guardian reported.

One of the farmers sued by PepsiCo, Bipin Patel, told Reuters, “We have been growing potatoes for a long time and we didn’t face this problem ever, as we’ve mostly been using the seeds saved from one harvest to plant the next year’s crop.”

Defending the four farmers, activist Kapil Shah told the publication, “It’s a question of India’s seed sovereignty, food sovereignty, and country sovereignty.”

“It’s spreading panic among the farmers.”

PepsiCo has a collaborative potato farming program that allows farmers who take part to receive supplies of the potato variety, as long as they then sell the produce back to the company at a fixed price.

The company has argued that the four farmers growing the FL-2027 strain are infringing PepsiCo’s rights under Section 64 of the Protection of Plant Varieties and Farmers’ Rights Act 2001.

However, farmers’ groups have cited Section 39 of the same act which states that a farmer can “save, use, sow, resow, exchange, share, or sell his farm produce including seed of a variety protected under this Act,” if he or she does not sell “branded seed,” The Hindu reported.

In a joint letter to the Indian Ministry of Agriculture, more than 190 activists lashed out at the move to sue the farmers, calling PepsiCo’s lawsuit “false and untenable,” reported India Today.

Farmers groups also sent a letter to the Protection of Plant Varieties and Farmers’ Rights Authority, asking it to fund legal expenses through the National Gene Fund and make a submission on their behalf in court, according to The Hindu.

“These farmers are small, holding around 3–4 acres on an average, and had grown a potato crop from farm-saved seed after they accessed the potato seed locally in 2018,” part of the letter read.

PepsiCo, which owns Pepsi, as well as other brands such as Lay’s, Gatorade, and Quaker Oats, offered to drop the lawsuit if the farmers become part of its collaborative potato farming program.

The farmers would have to purchase the potato seeds from PepsiCo and subsequently sell the produce back at predetermined prices, the company said.

“In case they do not wish to join this program, they can simply sign an agreement and grow other available varieties of potatoes,” PepsiCo said, according to USA Today.

The farmers’ lawyer said they will take time to consider the company’s offer, and the next hearing has been set for June 12.

“We will fight it out, no matter how big the company,” Shah told CNN. “Pepsi has made a huge mistake.”