The Netherlands May Be Failing Its International Obligations by Not Regulating Its Companies’ Monopolistic Activities over Ethiopia’s Teff Grain: A Business and Human Rights Perspective

Bantayehu Demlie Gezahegn

“Very soon Ethiopian food will rule the world…so wash your hands and get set,” read the Mail & Guardian Africa in November 2014. People across the world associate Ethiopian food with injera. Yet Dutch companies claim patent rights to the grain that is its key ingredient, Teff, and are exercising those rights to the detriment of Ethiopian farmers. These companies’ monopoly over Teff contradicts universally accepted principles of business and human rights. As such the situation calls upon all actors directly or indirectly involved in the process to stop the bio-piracy and redress the harm committed against all victims, especially Ethiopian farmers.

Teff is a key part of Ethiopia’s culture and economy. It provides two-thirds of the basic nutrition for the people. With multiple health benefits, it said to have contributed to the success of Ethiopian athletes. Rich in minerals such as calcium, protein, iron, fiber, and amino acids- all in one, it helps fight diabetics and obesity. As a gluten-free grain with all these benefits, it has a promising potential for marketability as the “ next super-food” in the Western world, especially in the United States, replacing quinoa.

How did then Dutch companies come to claim patent rights over this grain? It started with a 2004 benefit sharing agreement signed between the Institute of Biodiversity Conservation (IBC) and the Ethiopian Agricultural Research Organization (EARO) on the Ethiopian side and a Dutch company, Health and Performance Food International bv. (HPFI). This company was part of the Soil and Crop Company, a.k.a. S & C, another Dutch company. Ethiopia agreed to give access to Teff genetic varieties. HPFI agreed to come up with new Teff-based food products. The agreement reserves any intellectual property right over Teff varieties and any related traditional knowledge to the Teff-farming local communities of Ethiopia. Yet any plant variety protections were to be owned by the company and Ethiopia. Moreover, the company agreed to pay a lump sum amount in the amount of a third of its gross net income generated between the years 2007 and 2009. This was to be due in June 2010. It agreed to continue to pay annually a royalty fee of thirty percent of the net profit.

Nevertheless, after the agreement, HPFI took a number of measures contrary to the terms of the agreement. Since 2007, the company cut all communications with the Ethiopian authorities. It unilaterally secured patent rights over Teff products in The Netherlands. It then transferred the rights to Vennootschap Onder Firma (VOF), another company which is part of S & C in 2008 for a sum of 60,000 Euros. Around the same time, HPFI was declared allegedly bankrupt. VOF filed for patent licenses over the sale of Teff products in a number of European countries, the United States, Japan and other nations’ patent offices. It successfully secured the licenses, except in Germany. The only reported amount Ethiopia received is 4000 Euros.

The Ethiopian authorities have taken unsuccessful steps after the company severed its relations with them. There has been attempting to cause the revoking of the licenses. However, technical and financial barriers have not made Ethiopia’s move progress as fast and successfully as expected.

VOF and S & C claim that they are being wrongly accused by mentioning the fact that HPFI was already bankrupt. However, the close relation among HPFI, VOF and S & C shows that the first’s bankruptcy may not be a defense for the latter two. Given also the harm the monopoly causes over Ethiopians and its human rights implications, the situation is governed by a regime more than simple contractual relations, as discussed latter. But before, let me dwell on the harms first.

The harms caused by Dutch companies affect farmers and consumers. The effect is both past and ongoing. The farmers have been stolen their traditional grain without their involvement, even without their awareness. This may implicate Ethiopian Government’s duty to consult them before entering into the agreement. Yet the fact that the agreement reserves intellectual property rights to the farming communities and that the companies did not observe that agreement would mean that the harms were results of the companies’ monopolistic moves. That again means even if the communities were consulted and thus had the awareness, they did not have the technicalities to stop the companies unless the later did it fairly as a matter of doing a just business unless we presume that they would not consent in the first place. But we are far from this presumption—we are talking about harms that have already materialized. From a pure economic perspective, one may argue that the more expensive Teff becomes, the Ethiopian farmers would gain more income. However, the monopoly’s repercussion is not a simple arithmetic. The farmers’ hope to sell Teff as a super-grain has vanished for they would not have any right to do so in the profitable Western markets.

The second category of victims are Teff consumers, which includes farmers (both Teff-growing and non-growing), and other sections of the Ethiopian society at home and abroad. Following the Teff agreement, domestic price of the grain rose sharply. That continues up until now. It led to a subsequent intervention by the Ethiopian Government which banned the export of Teff in 2007, most likely, I suspect, in connection the already set trouble with the agreement. That again caused the suffering of Ethiopians abroad who rely on Teff. For instance, there was a reported acute shortage of Teff among the Ethio-Israeli community in Israel following the ban. The harm to the consumers abroad is evident as the Ethiopian community generally sticks to their own feeding habit everywhere they go.

Both sets of harms carry with them human rights implications. For this piece, let me limit the analysis to the human rights issues arising from the rights of the farmers only. Discussion of the human rights issues arising from the harms happened or happening to consumers at home and abroad would lead to an expanded analysis.

The actual and potential harms to the Ethiopian Teff-farming communities implicate the violation of a number of human rights. In fact, not all human rights violations require the materialization of harms. The human rights under issue arise under the International Bill of Human Rights, which consists of the 1948 the Universal Declaration of Human Rights (UDHR), and the 1966 two covenants- International Covenant on Economic, Social and Cultural Rights (ICESCR) and the International Covenant on Civil and Political Rights ( ICCPR). Firstly, the right to intellectual property is part of the right to property protected under Article 17 of the UDHR. Related to this is the right to share in scientific advancement and its benefits, which, in addition to the provision just mentioned, has been reiterated by the Article 15 of the ICESCR. The other right violated is peoples’ right to freely dispose of their natural wealth and resources provided under the common article 1 of the two covenants.

Legally speaking, all these violations are not attributable to the companies as businesses do not have human rights obligations under international law. Thus, the violations will be analyzed in terms of the obligations of any States involved and to the extent international law imposes such obligations.

But that does not mean that businesses do not have a responsibility to respect human rights. They do, at least a social one. We are moving towards codifying legal responsibilities as well. After witnessing the involvement of companies in grave human rights violations, the world now sets an era when the end does not anymore justify the means for doing business. In 20ll, the United Nations Human Rights Council adopted the Guiding Principles on Business and Human Rights. The Principles are based on three pillars: States’ obligation to protect human rights; companies’ responsibility to respect human rights and the need to redress violations of human rights.

The principles reaffirm that the Ethiopian Government has the primary obligation to protect its people from the violations that have been highlighted above. The Ethiopian Government’s obligation arises from all relevant treaties including the African Charter on Human and Peoples’ Rights ( ACHPR), under which Ethiopia undertakes to protect its people from “all forms of foreign exploitation particularly that practised by international monopolies so as to enable their peoples to fully benefit from the advantages derived from their national resources.”

The Guiding Principles also encourage home states of companies- in this case the Government of The Netherlands- to regulate the conduct of its companies operations at home and abroad. In line with this, the United Nations Human Rights Committee’s recently requested Ireland on how it is addressing the extraterritorial harms of human rights by Irish companies operating overseas. This shows a development of a general extraterritorial human rights obligation of States. This is highly important in situations where home States do not have either the incentive or the capability to handle the human rights issues.

Based on the same reasoning, all other States (in Europe and outside Europe) and intergovernmental entities such the European Patent Office and the World Intellectual Property Office as well as the European Union have also the obligation to respect human rights. I believe that the intergovernmental entities have an aggregated obligation to respect human rights that arise from each individual Member State’s obligation to protect the rights.

S & C, VOF and all other existing companies have a responsibility to respect the rights of Ethiopian farmers by halting their monopoly, and redressing the harms materialized. For instance, VOF has the responsibility to make sure that its purchase of the patent rights from HFPI is not detrimental to the rights of Ethiopian farmers. S & C should have ensured human rights compliance in the transfer of the rights between its holding companies. They have also a responsibility to provide reparation.

At this point, the Government of The Netherlands is best situated to handle the problem, bearing in mind that this does not relieve any of the stakeholders from their respective obligations and responsibilities.

Firstly, the Ethiopian Government has been filing applications to the European patent offices to have the Teff patent revoked. Given the financial and technical difficulties the Government faced, these attempts, coupled with the terms of the agreement being in favor of the Teff farmers, may demonstrate a case of due diligence by the Government.

Secondly, the companies have been unresponsive. As international law stands now, they do not have a legal obligation. The social and business cost they may face depends on the extent to which the international community is aware of the harms they caused and condemns them.

The Government of The Netherlands has, thus, the ultimate obligation. The companies are now operating in its territories. It should investigate the takeover process between the companies. It should also redress the harm done to Ethiopian farmers, for instance, by supporting them through development projects that will make them more competitive in the international Teff market. This could be one way of redressing the harm caused.

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*The author, Bantayehu Demlie Gezahegn, is LL.M. Candidate in International Legal Studies at American University Washington College of Law and can be reached at [email protected].