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TRADING OF AGRICULTURAL COMMODITIES UNDER THE IPR REGIME : PBRs AND FRs IN INDIA

DR. V. B. JUGALE

Historical Perspectives

The invention or the utility models for industrial and commercial enterprises have been encouraged during the Second World War.
In India, protection to IPRs was first evidenced way back in 1911
by Design Act. Later the patenting was modified in 1970. IPRs refers
to the creation of the human mind, of human intellect. It is infact,
is a product of mind for which right to use to its creator is given.

Like patents there exists an international convention, like Paris Convention (1967) also known as UPOV; a French acronym of Union International Pour la Protection des Obtensions Vegetates (UPOV), which exists since 1968. It was amended in 1972, 1978 and 1991. The basic right conferred on the plant breeder by the UPOV Convention in its 1978 version was exclusive “commercial” right i. e. to say exclusive right for the production of commercial marketing, of propagating material of the new variety. It means farmers had the privilege to use the farm saved seed
of the protected variety for growing subsequent crops on his land or for non commercial changes. The 1991 version of the UPOV has shifted the “exclusive right” from ‘commercial right” to ‘exploitation right” i. e. more akin to patent rights. The principal provisions under it are:

  1. The new variety must be stable, distinguishable and homogeneous in its essential characteristics.
  2. It must have a designation which adheres to the international Code of Nomenclature.
  3. PBRs can be granted for all varieties of botanical genera and species.
  4. The authorisation of the holder of the right is not necessary if the new variety is used as a basic material for the creation of other new varieties e. g. using a protected inbred line for the production of hybrids. It also provides exemptions to researchers, farmers and Government.
  5. The right to the breeder is authorised to commercially produce and sell propagation material.
  6. The minimum period of protection is 15 years for vines, forest trees and fruit trees and 18 years for ornamental trees including their rootstock.
  7. PBRs apply after 1994.

    (The countries grant these rights are EECs, Australia, New Zealand, Hungery, Israel, Sweden, Switzerland, Japan, South America and the USA.)

The PBRs is a milder form of IPR in which minimum support given to breeders of new plant varieties under UPOV 1991 are made applicable. UPOV 1978 conventions are known as effective Sui generis system, which means an internationally accepted convention for patenting plant varieties rights. UPOV 1991 conventions have been recently introduced by the member countries, but this convention has not been so far ratified in UPOV member countries themselves. Accordingly, plant protection provisions have to be implemented prospectively and not retrospectively
i. e. only plant varieties developed after 1994 are protected under PBRs.

            As per PBRs a plant breeder or a seed production company
by developing the seed material of a new variety and selling the seed
to the farmers can obtain a permission or licence from the agency for trading the same. However, some exemptions are permitted. For example researchers can use a new variety for the purpose of research (for further development and improvement). Another crucial exemption is that the existing material can be regenerated for planting for their own use. But the controversy lies in the exchange of seeds from one farmer to another, which is restricted by UPOV 1991 convention. Certified seed have to be developed from foundation seeds. The plants in fact are non-patentable under IPA 1970. Hence, the Patent Act has to be replaced by a new Act. Many seed companies are trying to develop a new seed variety from the foundation seeds. The essential genomine is being adopted through terminatery genes so as to use the seeds once, of which the reproduction of (sowing) next generation is not possible. This automatically renders
an opportunity to charge higher price, royalty and a monopoly benefit. Other disadvantages are unequal capacity in R & D between large and small seed companies, maintenance of trade secrets, similar other informal arrangements and possibility of duplication of the efforts.

However, the advantages will be as indicated below:

  1. Greater R & D efforts in seed and plant breeding.
  2. Exchange of germ-plasmae and genetic modifications.
  3. Reduction in the dependency an public institutions for provision of plant material.
  4. Better quality products to the farmers.
  5. Different varieties evolved for different agro-climatic conditions.

In 1981, when an issue of plant genetic resources was emerged
in FAO, International Undertakings (IU) and later voluntarily agreed upon in 1983 as a heritage of mankind to be preserved and freely available. TRIPs came up as a Biological Diversity need for revising the IU. In 1995, FAO’s Commission on Genetic Resources for Food and Agriculture began the task of revising IU. In July, 2001 over 100 countries decided
to a version of the IU. The IU aims to set up:

  1. A specified list of 35 crops and 29 forage species have been drawn up on which rules for access and benefit sharing has been agreed upon. Under this, the multilateral system has been applied to these crops, which are under the management and control of parties and are in the public domain and are in the ex situ collections of the International Agricultural Research Centres of the Consultative Group
    on International Agricultural Research (CGIAR).
  2. Under IPRs, after enormous debate, the countries agreed on, “recipients (of germplasm) shall not claim any IPRs
    or other rights that limit the facilitated access to plant genetic resources for food and agriculture or their genetic parts and components in the form received from multilateral system.
  3. Any one who commercialise shall pay the financial mechanism; a share of the benefits arising out of it. Benefits out of it should be given back to the farmers.
  4. Farmer’s rights rests with the national governments to decide.

Protection of Plant Varieties and Farmers Rights Act

Based on the UPOV model, the Bill was introduced in Lok Sabha on December 12, 1999, and later referred to 30 member Joint Parliament Committee of both the Houses under the Chairmanship of Sahib Singh Verma, for redrafting the Bill; which was due to inadequate provisions
to protect the interests of the farmers, registration of extinct varieties and tribunals for speedy settlement of disputes etc. The JPC redrafted the Bill, thus incorporating a chapter on farmer’s rights,  as per the IU July, 2001, which is a unique feature. The original Bill authorised only the High Court to hear appeal against order of decisions of the authority or register.
The new Bill recommended constitution of Tribunal for the purpose. It also incorporated changes in the provisions for plant varieties and farmer’s rights authority, registration of plant varieties, benefit sharing and infringement etc.

The PVRs and FRs Bill has been passed by both the Houses of the Parliament in August, 2001 after a long and arduous struggle for the recognition of the rights of the farmers. The demand has been for a FRs that would allow the farmers to retain the same control over seed production and use that they have always had. As against the generally articulated demand that FRs should constitute the right to save seed from the harvest to sow the next crop. Gene campaign maintained that plant back rights were no rights only exemptions, which is known as farmer’s privilege granted by breeders under UPOV. Indian law insisted on to grant rights not provide exemptions to its farmers. Besides it also provides compensation for the farmer, if poor quality spurious seeds led to crop failure.

Section 39 Clause (iv) reads as the 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 the same manner as he has entitled before 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. 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 verity protected under this Act.”

The Act recognises the farmers not just as a cultivator but also as a conserver of the agricultural gene pool and a breeder who has bred several successful varieties. It makes provisions for such farmers to be registered with the heap of NGO’s. so that they are protected against being scavenged by formal sector breeders. The rights of rural communities are acknowledged as well.

Right to sell (not save or exchange, but sell) ensures the farmers to sell seed in the way he has always done with the restrictions that the seed cannot be branded with the Breeder’s registered name. Both farmers and breeder’s rights are protected in the Act. Farmers in India are the largest producers of seeds by about 87% of the country’s annual requirement with over 6 million tonnes of seeds. Hence, the farmers cannot be denied from right to sell. Moreover, the branded seed companies in India are not large in number. Weak FRs in the legislation will allow seed corporations/companies to dominate the seed market. The strong FRs keeps the farmers alive and control over seed production with food security as a control to seed production.

Apart from the right to sell non-branded seed of protected varieties, the rights of farmers and local committees. There are provisions for acknowledging the role of rural communities as contributors of land races and farmer’s varieties in the breeding of new plant varieties. The breeders who desire to use the farmer’s varieties for creating Essentially Derived Varieties (EDVs) has to seek permission of the farmers who are involved in conservation of such varieties.

The EDVs are more or less the same as the patented variety but with very minor changes, like change in single character, which otherwise reaching more or less identical to the patent variety. The genetically modified (GM) varieties are EDVs e. g. Bt (Bacillus thuringensis) cotton variety, which is identical to its patent with single difference of containing a bactorial gene from Bacillus Thuringnesis.

There is also a provision in the Act to register a community’s claim duly recorded at a notified centre enabling the registration of farmer’s varieties even if the farmers cannot do this due to illiteracy or lack of awareness. If the claim is found genuine, the profits made from the use of a farmer variety in a new variety goes into a National Gene Fund.

Other details in the Act are; (1) The explicit and detailed disclosure requirements in the passport data required at the time of applying for
a Breeder’s Certificate. Concealment of such data results in the concellment of the Breeder’s certificate. (2) The Breeders have to submit an affidavit that their variety does not contain a Gene Use Restricting Technology (GURT) or terminator technology. (3) If farmers wish
to examine documents and papers or receive copies of rules and decisions made by the various authorities, they will be exempted from paying any fees, but payable by all other people. (4) The benefit sharing between farmers and the breeders after receiving a claim and examining the case, an authority may decide the amount of compensation that the breeders must pay, which is deposited in National Gene Fund. (5) Farmer cannot be prosecuted for infringement of rights specified in the Act, if he can prove in court that he was unaware of the existence of such right.
(6) Breeder’s right include right to produce, sell, market, distribute, import or export a variety, in short, full control over formal marketing. (7) Violation of Breeder’s Right are punishable with substantial fines and jail terms. Penalties ranges from Rs. 50,000 to one million rupees, as well as jail term ranging from 3 months to 2 years depending on the severity of the damage caused. For repeated violations fine can be doubled and a jail term by 3 years. (8) Authorisation to the Researchers, Scientist and Breeders for research (creating new varieties) is compulsory.

There is a separate clause on Public interest, which includes exclusion of certain varieties from protection and grant of compulsory licensing. Certain varieties may not required registration, if it is felt that prevention of commercial exploitation of such variety is necessary
to “protect order or public morality or human, animal and plant life and health or to avoid serious prejudice to the environment.”
The Act also provides for the compulsory license to a party other than the Breeder’s, if it is shown that the reasonable requirement of the public for seeds have not been satisfied or the seed is not available to the public at a reasonable price.

Difficulties

There are so many complications in implementation of PVRs and FRs. Most of the developed countries are interested in acquiring patents on Indian varieties. Consequently India has to fight for retaining the patents with it or it has to file the applications for patenting. India is rich in bio-diversity, but it is in the hands of the poor people. India is a knowledge domain country. If these are freely available, corporations form advanced countries would be able to access these resources without payment and utilise them to create patentable products. Besides communities and farmers in India are the rightful owners of these resources and should be able to claim compensation for use of the resources.

Before 1990s, India was filing only 3500 applications for patenting, which has now gone up to 10,000 every year. Japan has applied for
4.4 million patents whose BoP value goes to 4.1 trillion yen or GDP, valued to 3781 billion yens. The share of herbal patents is highest (52%) in Russia and that of China is 45% and Japan is at 22%. While getting the claims for compensation for use of Indian resources, one has to go case by case, because their centre of origin in identification as India is difficult. Most of the genetic resources have been collected and placed in CGIAR (1971) centres (16) as these resources (6000 accessions of more than 3000 crops, forage and pastroe species) remain as the public domain. India has donated some of its resources into the CGIAR. Some of the collections reveal that India was the destination country of 170 material transfers from all centres in 1997 alone. Besides India has to spend a great deal of legal powers and financial resources to track and prove use of resources from India and negotiate compensation.

It is very difficult to determine on any single country’s Act who did not have similar system of rights. The concept of farmer’s right is still weak. The farmer’s right in African Model Legislation include right to : “the protection of their traditional knowledge, relevant to plant and animal genetic resources; obtain an equitable share of benefits arising from the use of plant and animal genetic resources; participate in making decisions, including at the national level, on matters related to the conservation and sustainable use of plant and animal genetic resources; save, use, exchange and sell farm saved seed/propagating material of farmers’ varieties; use a new breeders’ variety protected under this law to develop farmers’ varieties, including material obtained from gene banks or plant genetic resource centres; and collective save, use, multiply and process farm saved seed of protected varieties.” Hence, multilateral system is difficult to establish in such a global system. The US and Japan at the time of treaty abstained during the vote, Canada and New Zealand also opposed to the treaty. International Association of Plant Breeders and Plant Varieties (ASSNEL); an association of seed companies  established in 1998, agreed to pay a proportion of their royalties into
a common fund for global seed preservation. G-77 (African countries majorly) and EU have agreed on the treaty.

The issue of ownership rights is not so important in the agricultural resources but also attempting to bring to the fare food security issue, which will be discussed in the World Food Summit, to be held in June, 2002.

The use of Gene Fund should not be restricted to conservation or for maintaining ex-situ collections. Farmers should have right to decide, how this money will be spent. Simultaneously the method of benefit sharing be made simpler and easier to implement.

The Plant Variety Authority has to deal with poor quality seeds leading to crop failures and has to fix the compensation. This will lead to arbitrary decision. The compensation should be large with addition of a jail term. The amendments have to be made in this direction.

There will be many cases of unknowing infringements of breeders’ rights under Section 43. But it is very difficult to prove unawareness of the existence of such right in the court. The Act allows the farmers to sell generic seed of the variety protected by Breeder’s Right. The farmers have to introduce the proof of unawareness, which is difficult to constitute.

The breeder’s right includes a full control over the formal marketing (produce, sell, market, distribute, import or export etc.) of seeds. Consequently a sort of monopoly may be created by the breeders which is harmful to the farmers. Farmers are normally unknown of their rights, whereas, the breeders are akin in their rights. The gap between these will widen and deepen the exploitation of the farmers.

Infringement will be established even if the packaging is same or similar. The use of similar name or denomination will be considered, but packaging may not differ in many cases.

The Act has a provision of Researchers’ Rights allowing scientists and breeder to have free access to registered varieties for research.
The breeder cannot stop or limit the innovation, as a result of which new varieties will always repeatedly come in the market.

The GM crop varieties raise several questions. The EDVs should be dealt with in the same way as other conventionally bred varieties,
with the same opportunity to examine and tests for registration of other varieties. The whole exercise is bureaucratic of which no administrative set up is developed yet. Besides it requires independent experts, stakeholder and NGOs having experiences in the field.

Based on the legislation, when India needs to interact with international platform like UPOV, it does not have even the notion
of farmer’s rights. Fortunately the multilateral system has given this to the national goals to decide on by a IU treaty (July, 2001). The farmer’s right would not be acceptable to the UPOV convention. The Gene Campaign has been lobbying against India joining UPOV, pleading that, UPOV conventions are developed for industrially developed countries. The LDCs need to craft their own platform to address their special needs. As a result the Centre for Environment and Agriculture Development has drafted an alternative treaty known as Convention of Farmers and Breeders (CoFaB). This organ reflects the strengths and vulnerability of LDCs and seeks to secure the interests in agriculture and food and nutritional security for their people. The UNDP-HDR (1999) has described CoFaB as a strong and coordinated international proposal which offers LDCs for better alternative to EU legislation with an interest to protect the farmers.

Bio-diversity is a new concept, which relates to, by application of GE and biotechnology in agriculture and food production, human and animal safety becomes a crucial issue. GE allows characters from different organisms, plant, animal and micro-organism, to be combined using re combinant DNA technology (GMOs). Commercially developed GM plant or GM food creates several problematic issues like :

1) health and safety, 2) impact on bio-diversity, 3) ethical questions, 4) development of resistant weed, insects and diseases etc. Bio-safety guidelines have been developed by some countries on the basis of USA, Japan and Australia’s guidelines. The UNEP is initiating
in this respect.

            There is a need to develop capacity building and linkages between research and commercial sectors. Most of developing countries are lacking in skilled personnel in biotechnology and related areas. The research manpower for each 10000 population is available to the extent of two in Thailand and Indonesia one in Malaysia, 20 in Australia, 26 in Korea, 23 in Taiwan, 60 in Japan and 40 in USA during 1997. India has recently introduced bio-technology as a important course curriculum in a few universities.

Patenting is thus difficult to the Indians because of the following reasons.

  1. The fee per product patenting is Rs. 75,000/-.
  2. Difficult to retain monopoly power for patented goods.
  3. Salesmanship is very difficult.
  4. Lack of training to the farmers in a favourable direction.
  5. Sale of patent will be preferred by the patentees.
  6. To prove novelty, distinctiveness, uniformity and stability,
    it requires 7-8 years of constant research.
  7. Illiteracy and ignorance in trading business.
  8. The role of MNCs is disturbing to the farmers.
  9. Difficult to develop Sui generis system.
  10. The fine for illegal trading is large and is based on individual confessions and submission of proofs and evidences.

As a result of which following effects are identical.

  • The MNCs will dominate, they will earn and go back.
  • Seeds, plants, tissue culture patent will cause to decelerate trade volume.
  • Only popular varieties will be developed resulting
    a monocrop culture in the agriculture sector, which may disturb the ecology.
  • Cost of cultivation will go up.
  • Nutritional value will be questionable.
  • Lapse of traditional varieties. India has developed around 50,000 varieties.
  • Control on the use of varieties may not be possible.
  • Radiation technique will be developed.
  • Red tepism will grow up.
  • A culture of “produce yourself for yourself or perish” will develop. Use and throw culture is harmful to environment and ecology.

GM Crops and International Trade

            The crops developed by Genetic Modifications have slowly starting with nil in 1995 to spreading over more than 44 million hectares by 2000 throughout the world. USA, Canada, Argentina and Australia were the only countries in 1997, who have initiated in GM technology, but now (2000 A. D.) more than 13 countries have adopted the GM technology for growing the GM crops. GM crops are normally exported to other countries. USA has largest area (30.3 million hectares) under GM crops, whose area was only 8.1 million in 1997. Argentina has also increased
its area from 1.4 million hectares to 10 million hectares, that of Canada from 1.3 million hectares to 3 million hectares, Australia from 0.1 million hectares to 0.2 million hectares, China from nil to 0.7 million hectare, South Africa from nil to 0.2 million hectares during the period from 1997
to 2000. Transgenic Soyabean occupy largest area comprising 36 per cent of all, followed by Maize, Cotton and Reape seed. More than 15 per cent of the area under the above crop is transgenic of which bulk of the produce is traded internationally (James, 2001). HT Soyabean occupies 59 per cent (25.8 million hectares) of total GMOs in the world area under GM crops. Bt Maize occupy 15 per cent (6.8 million hectare), HT and Bt/HT Maize occupies 8 per cent (3.5 million hectare) of land area and that of Bt Cotton  3 per cent (1.7 million hectare), HT and Bt/HT Cotton 9 per cent (2.8 million hectare) in the world area under GM crops. Other crops like Potato, Squash and Papaya also occupies major area under the category of vegetable crops. These GM crops have been tested in laboratories and proved with nutritional values and shelf life; and hence obtain value for trade and consumers throughout the world.

           

Proper value of the GM crops must be identified in terms of health and safety of human and farm animals (food, feed, toxicity and allergenicity) and environment (flora, fauna, pollen flow etc.).             Clear economic benefits of GM products should be identified. China has set some regulations in May 2001. A separate regulatory body known             as Agricultural Administrative Department (AAD) has been set up to deal with,

           

  • Activities relating to Agri-GMO research, testing, production, processing, marketing and international trade.
  • Standardisation of safety evaluation system.
  • Imported products to be considered for the same end use
    as it is in its country of origin.
  • Products to first pass through Agri-GMO safely certificate (AGSC) requirements and then undergo Seeds Registration procedure.
  • Time frame for AAD is 270 days to decide on application.
  • AAD has right to review and revoke approval, if deemed fit.
  • These regulations will be effective from 30th March, 2002.
           

Each country has to set biotech safety approval and variety registration approval to carryout the regulatory procedure for GM crops through a specially set administrative authority. In EU, Director,
Novel Foods deals with the above matters. Canadian Food Inspection Agency encounters the issues related to regulatory procedures. In Japan, Ministry of Agriculture, Forestry and Fisheries and Ministry of Health and Labour Welfare administers the procedure. In Australia, Single Window Office of Gene Technology Regulator deals with the following issues.

           

           
    1. Enforces risk management processes.
    2. Responds to stakeholders and community views.
    3. Provides for widespread and effective consultation.
    4. Separate standing committees to handle specific issues,
      viz. scientific, community related and ethical etc.
    5. Transparency – People’s right to know.

Three-Tier system for assessment of environmental and biosafety is in reform stage in India for regulatory processes of GM crops. Confederation of Indian Industries (CII) has worked out on the issues and a ‘White Paper’ on regulatory reforms has been submitted to the Government of India (See the Chart). Government of India moved
on various steps to introduce the regulatory procedures, viz.

  • ‘Single Window’ for handling of application through a Review Committee on Genetic Manipulation, which will work under the Department of Bio-technology, Ministry of Science and Technology.
  • Pharma applications are also be channelised through RCGM.
  • Processing time is rationalised – for RCGM – 60 days, for GEAC – 90 days.
  • RCGM and GEAC should have more number of experts.
  • Health Ministry should finalise the guidelines.
  • Department of Bio-Technology and Environment Ministry should closely act together.
  • Training to Government and Institutional personnel with regulatory requirements and procedures should be designed.
  • Creation of public awareness is a must.

Chart
Regulatory Process for GM crops in India

 

Conclusions

            The ill effects hidden in implementation of the PVs and FRs Act should be eliminated by an amendment therein. The experiences with the industrially developed countries should be noted carefully. The lobbying
of LDCs may be established at the international platform.
            Before that, Indian farmers are required to be trained in various respects. Besides huge amount of investment has to be made
in infrastructure so as to protect from the post harvest losses.

References
    1. GOI (2000), National Agricultural Policy, July, 2000.
    2. A Note on UPOV Convention & Farmers Rights.
    3. GOI – Plant Varieties & Farmers Rights Act, 2001.
    4. Sahai – SUNS 2001 – http:11 www. twnside.org.sg/title/variety.ltm.
    5. James C. (2001), Global View of Commercialised Transgenic Crops. 2000, ISAAA, Briefs No. 6, ISAAA, Itha cu, New York
Sutal Sriwatanapongse (2002), Commercial Transgenic Crops, national Seminar on Import-Export of Agricultural Produce, 21-22, Jan. 2002, Pune.

 

 
 
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