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Pepsico and FC5 potato row; Iran warns to shut Hormuz Strait - Current Affairs

PepsiCo has sued the farmers for cultivating the FC5 potato variety, grown exclusively for its popular Lay’s potato chips.

Apr 29, 2019 17:10 IST
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Story 1: PepsiCo sues Indian farmers over the FC5 potato row

PepsiCo Inc has sued four Indian farmers on April 29, 2019 for cultivating a potato variety that the snack food and drinks maker claims infringes its patent. PepsiCo has sued the farmers for cultivating the FC5 potato variety, grown exclusively for its popular Lay’s potato chips. The FC5 variety has a lower moisture content required to make snacks such as potato chips.

Farmers believe that section 39 of the Protection of Plant Varieties and Farmers’ Rights (PPV&FR) Act, 2001 allows farmers to grow and sell any variety of crop or even seed as long as they don’t sell branded seed of registered varieties.

PepsiCo’s view

  • PepsiCo has invoked Section 64 of the Protection of Plant Varieties and Farmers’ Rights (PPV&FR) Act, 2001 to claim infringement of its rights.
  • The section prohibits anyone other than the breeder of seeds or a registered licensee of that variety to sell, export, import or produces such variety.
  • The farmers were allegedly growing a variety of potato namely FL 2027, also called FC5, on which PepsiCo claimed exclusive rights by virtue of a Plant Variety Certificate (PVC).

What is FC5 potato?

FC5 potato is a variety of potato grown exclusively for PepsiCo's popular Lay's potato chips. Humidity in this variety of potato is relatively low, due to which it is used in making potato chips.

Plant Varieties and Farmers’ Rights (PPV&FR) Act, 2001

  • Objective of the act is the establishment of an effective system for the protection of plant varieties, the rights of farmers and plant breeders and to encourage the development of new varieties of plant.
  • Protection of innocent infringement: a right established under this Act shall not be deemed to be infringed by a farmer who at the time of such infringement was not aware of the existence of such right; and
  • a relief which a court may grant in any suit for infringement referred to in section 65 shall not be granted by such court, nor any cognizance of any offence under this Act shall be taken, for such infringement by any court against a farmer who proves, before such court, that at the time of the infringement he was not aware of the existence of the right so infringed.
  • Researcher can use any of the registered variety under the Act for conducting an experiment or research. Researchers can use the initial source of variety for the purpose of developing another variety but repeated use needs the prior permission of the registered breeder.
  • A farmer can save, use, sow, re-sow, exchange, share or sell his farm produce including seed of a variety protected under the PPV&FR Act, 2001
  • However, the farmer shall not be entitled to sell branded seed of a variety protected under the PPV&FR Act, 2001.
  • There is also a provision for compensation to the farmers for non-performance of variety.

PepsiCo’s Proposal

PepsiCo India has proposed to amicably settle with people who were unlawfully using seeds of its registered variety. PepsiCo has also proposed that they may become part of its collaborative potato farming programme.

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Story 2: Iran warns to shut down strategic Hormuz Strait

Iran's top general Mohammad Bagheri has warned that Tehran could close down the strategic Hormuz Strait tension arises further. Recently, USA has imposed some sanctions and lifted off Significant Reduction Exceptions (SREs) waivers.

Iran added that it will continue to sell its oil and use the Strait of Hormuz. But if Iran is prevented from doing that it will close the strait. The Strait of Hormuz, a vital shipping route linking Middle East oil producers to markets in Asia, Europe, North America and beyond, has been at the heart of regional tensions for decades.

About Hormuz Strait

The waterway separates Iran and Oman, linking the Gulf to the Gulf of Oman and Arabian Sea. The Strait is 21 miles (33 km) wide at its narrowest point, but the shipping lane is just two miles (three km) wide in either direction.

Importance of Hormuz Strait

  • The U.S. Energy Information Administration estimated that 18.5 million barrels per day (bpd) of seaborne oil passed through the waterway in 2016. That was about 30 percent of crude and other oil liquids traded by sea in 2016.
  • About 17.2 million bpd of crude and condensates were estimated to have been shipped through the Strait in 2017 and about 17.4 million bpd in the first half of 2018, according to oil analytics firm Vortexa.
  • With global oil consumption standing at about 100 million bpd, that means almost a fifth passes through the Strait.
  • Most crude exported from Saudi Arabia, Iran, the United Arab Emirates, Kuwait and Iraq — all members of the Organization of the Petroleum Exporting Countries — is shipped through the waterway.
  • It is also the route used for nearly all the liquefied natural gas (LNG) produced by the world’s biggest LNG exporter, Qatar.
  • Iran agreed to rein in its nuclear programme in return for an easing of sanctions under a 2015 deal with the United States and five other global powers. Washington pulled out of the pact in 2018. Western powers fear Iran wants to make nuclear weapons. Tehran denies this.

Impact

Crude oil prices can be surged due to supply concerns and unsettled stock markets. The closure may also have serious geopolitical repercussions as United States Navy’s Central Command is located in the Persian Gulf. Any confrontation between the US and Iran may escalate and will have larger security implication in the whole region.


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