Seedy business

Andhra Pradesh (ap) is the gauge for India's private sector seed business (see table: India's seed capital). Industry is concentrated here due to the state government's encouragement since the sector liberalised in the mid-1990s. But in 1997-1998 the state witnessed the first spate of farmers' suicides (see 'Abetment to suicide', Down To Earth, February 28, 1998), and one reason for crop failures was spurious seed. This led the state government, then under the Telugu Desam Party leader N Chandrababu Naidu, to create a system of signing memoranda of understanding (mou) with seed companies to ensure accountability -- this was the biggest admission of the fact that the Consumer Protection Act, 1986, was failing to provide liability. Meant to provide some guarantee to the farmer against deficiencies in seed quality (without the technical processes of certification), the move actually gave the farmer no legal basis to challenge companies in case of substandard products. Typically, the mou system was invoked after farmers went into an agitation mode.

Farmers' suicides contributed to Naidu's defeat at the 2004 polls (see 'Inevitable tragedy', Down To Earth, July 15, 2004). But the suicides continued after the new Congress government assumed power. The new government was under increasing pressure to show results. After cases of crop failure reported in the 2004 kharif season, it asked companies such as the Maharashtra Hybrid Seed Company (Mahyco; in association with Monsanto it sells Bt cotton varieties) and eid -Parry (which sells maize) to pay damages. The companies refused and have moved the high court. For Mahyco, it isn't just about Rs 4.5 crore in damages; it is about reputation. The company denies crop failure was due to bad seed quality; it points to farmers' faulty management practices. The government has responded by blacklisting Mahyco's Bt cotton varieties.

Another company, Nuziveedu Seeds, presents a contrasting case. Chief minister Y Rajshekhar Reddy, while inaugurating Nuziveedu's new facilities at Sangareddy on May 2, 2005, said: "While we will encourage companies like Nuziveedu Seeds who have done good work, we will not allow firms like Mahyco to sell their Bt cotton seed in any part of the State." Nuziveedu launched its own version of Bt cotton in the 2005 kharif season. There were complaints of seed failure from Khammam district. Like Mahyco, Nuziveedu too doesn't accept crop failure happened due to substandard seed. It says all 110 samples taken by the agriculture department passed germination tests. Besides, it claims, farmers used fewer seed than they ought to have, because the seed is expensive, which in turn is due to the high technology fees Monsanto charges for providing the Bt sequence. But the company has still paid up to honour the mou it signed with the government; it says that it cares for its relationship with the farmer and the government. It is paying only farmers who have complained in Khammam, that too only after joint field visits by officials of the agriculture university, department of agriculture and others. According to the agriculture commissioner's office, it has already paid up more than Rs 20 lakh and replaced more than 8,000 packets of seeds.

In 2004 itself, ap decided to scrap the mou system -- which even moa had discouraged -- and began work on a new legislation. This was the ap Seeds Regulation Bill 2004, cleared by the ap cabinet in October and sent to the Union government for concurrence. "The Union minister for agriculture, Sharad Pawar, complimented us for a very well drafted bill," N Raghuveera Reddy, ap agriculture minister, told Down To Earth, adding, "Unless it is accepted in toto , we'd be doing a great injustice to the farming community." While it resembles the draft national Seeds Bill, its punitive and compensation clauses are harder (see box: Andhra Pradesh's draft). ap 's civil society labelled the bill 'progressive'.

Yet this isn't the first time a state has moved in this direction. Karnataka and Maharashtra were dissuaded from doing the same earlier by moa; they were told a Central legislation was on the cards. So now that the Seeds Bill 2004 is with Parliament, the ap bill doesn't stand a chance of approval. The Parliamentary committee is looking at the ap bill also for clauses that can be brought into the Seeds Bill 2004. But events in the state bring out clearly how farmers' interests are in conflict with those of seed companies. The only way to settle this is a clear legislation that leaves nothing to the imagination.

Can Seeds Bill 2004 solve this mess?
Unlikely, though the real picture will emerge only two years after the bill is passed and the rules are notified. But the notification of rules depends on the clarity in the legislation. Even if the punitive clauses are made harder than what they are at present, how will the liability of the company be established? The ap case study shows that even when the government has the political will to penalise offending seed companies, the law doesn't allow the accountability to be fixed.

Seed inspectors complain they often don't know how to interpret the procedures for obtaining samples. Even judges struggle to interpret the law. What is required of a Seeds Bill amendment is to lay down the requirements of registration with no ambiguity, so accountability can be fixed. The registration process the bill proposes lacks clarity. For instance, section 14 (2) says: "On receipt of any such application for the registration of a kind or variety of seed, the Registration Sub-Committee may, after such enquiry as it deems fit and after satisfying itself that the kind or variety of seed to which the application relates conforms to the claims made by the importer or by the seller...register the kind or variety...of the seed on such conditions as may be specified by it.... (emphasis added)". The drafting is vague; it doesn't lay down criteria to register. If registration requirements aren't clear, it becomes difficult to fix liability in case of failure of seed a company sells. Even if the liability clause was clear, compensation, if any, is left under the Consumer Protection Act, 1986.

Typically, consumer laws work only when there is awareness among consumers about their rights and about the evidence they are required to produce. Given the literacy levels in rural India, to leave the farmer to the consumer court is tantamount to leaving them at the seed companies' mercy. A consumer forum expects the farmer to produce proof of purchase of seed from authorised dealers with full details on the bill, and with reports from an agriculture scientist or official connecting losses due to poor germination or performance to the quality of seed sold. It is well known that seed dealers in India double up as creditors and extension agents, with indebted farmers under their thumb. Receipts are almost never given for seeds sold on credit. Even if a farmer takes all precautions, a consumer forum relies on some kind of credible mechanism/report to verify the farmer's claim -- field visits and laboratory testing, for instance. This has to be laid down in the Seeds Act. Even after liability is established in a consumer court and the farmer gets compensation, there are no penal measures to deter future violations.

The moot question, therefore, is: if the farmer has to go to a consumer court, why have a Seeds Act?