Analysis: Rising seed costs on farmer radar

There are different options for producers to consider

There are no crops without seed.

It’s as essential to production as air, soil, water and sunshine.

Seed is also increasingly expensive ranking in the top three “operating expenses” for Manitoba crop producers along with fertilizer and pesticides. (Operating costs do not include fixed costs such as land and equipment or labour.)

The National Farmers Union (NFU) fears seed costs will escalate in the wake of stronger Plant Breeders’ Rights legislation as part of the adoption of UPOV ’91 (International Union for the Protection of New Varieties of Plants) last year. That’s why the NFU is advocating a new seed act to allow farmers to not only save seed but “select, exchange and sell seed.” It’s quixotic, but the NFU often swings for the cheap seats. (

However, the NFU isn’t alone in its concerns. As the new checkoff-funded provincial cereal organization took shape, farmers sometimes said they didn’t want “cereal variety development to go the way of canola.” In other words, they don’t want it dominated by private companies.

The issue is who pays for variety development and how much? It takes about 10 years and a million bucks to create a new cultivar, according to Lorne Hadley, executive director of the Canadian Plant Technology Agency.

Farmers pay companies to develop varieties, so why not own those companies or at least the varieties? You can use that logic on a lot of products and services farmers buy from equipment to grain companies. They’ve tried that with mixed results.

If farmers were allowed to save and sell seed, as the NFU proposes, seed companies would earn even less than now and stop developing varieties for Canadian farmers. The NFU’s answer is publicly funded research.

Agriculture and Agri-Food Canada (AAFC) and Prairie universities already do cereal development. But the royalties farmers pay don’t come close to covering the costs, says a report prepared for Prairie cereal associations. AAFC spends $41 million a year on cereal development, but earns just $5 million to $6 million in royalties from certified seed sales of its varieties. Farmers contribute another $7.5 million through checkoffs. Together that’s about $14 million or only a third of AAFC’s cost. The Australians invest close to $100 million a year in cereal development — most of it from farmers.

UPOV ’91 makes it easier for seed developers, including publicly funded ones to get paid for their varieties. Canadian farmers can still save seed so long as the original seed was legally purchased, which means having paid a royalty to the seed developer, and the farmer hasn’t signed a contract giving up seed-saving privileges.

It’s illegal for Canadian farmers to sell, trade or even give away seed that’s protected.

Under UPOV ’78, seed developers could only go after the farmer who failed to pay a royalty for their seed, but now seed cleaners and even grain companies that buy grain produced from illegally obtained seed can be sued.

“The NFU could live with UPOV ’78,” Cathy Holtslander, the NFU’s director of research and policy said in an interview March 1. “There was a balance between the farmer and the (seed) developer, although it could’ve used some tweaking. UPOV ’91 ramps up control over seed, working with other parts of the seed law.”

UPOV ’91 doesn’t automatically allow the introduction of end-point royalties when grain is sold at the elevator, but it clears the way for regulations that could bring them in, Holtslander said.

The NFU also worries perfectly still-useful varieties will be deregistered just to force farmers to buy new varieties.

These are legitimate concerns. It’s just good business for companies to use any legal means to extract greater returns. We saw that when the patent on the original Roundup Ready soybeans ended a few years ago. Farmers were told they could start saving that seed, but then there was no seed to save. As one seed retailer confided, selling seed that farmers could save would hurt business.

The seed trade predicted UPOV ’91 would encourage foreign seed developers to bring their varieties to Canada. That’s happening, Mark Forhan, senior specialist in the Canadian Food Inspection Agency’s Variety Registration Office told the Prairie Recommending Committee for Wheat, Rye and Triticale in Saskatoon Feb. 25.

“These amendments are already having a positive effect on the agricultural sector,” Forhan said, based on information from Anthony Parker, commissioner of the Plant Breeders’ Rights office.

“Prior to the PBR act/UPOV ’91 being introduced in Parliament, the PBR office received approximately 80 new applications for agricultural varieties in a fiscal year…,” Forhan said. “As the amendments moved through Parliament the number almost doubled to 148 and the upward trend continues to this day. In the first seven months since UPOV ’91 came into effect we’ve had 87 applications, which is a big spike…

“The stronger intellectual property environment in Canada appears to be contributing to a greater level of long-term investment and the formation of new partnerships in plant-breeding groups within the country.”

While seed costs are a factor, farmers’ planting decisions are based on potential net returns and rotation. That’s why canola acres for the past few years have exceeded wheat in Manitoba, even though the cost of canola seed per acre is more than double that of wheat.

It would seem farmers are voting with their seeders.

Soybean acreage, in third place, continues to grow even though soybean seed per acre is almost double and quadruple that of canola and wheat, respectively.

This year MAFRD says canola seed represents about 20 per cent of canola’s operating costs. It puts wheat and soybean seed at 11 and 48 per cent of their respective operating costs.

In 2012, western Canadian canola growers spent an estimated $1 billion on canola seed, based on 20 million acres of plantings at an average price of $50 an acre. That’s a big bill. Was it worth it?

Western farmers produced 13.2 million tonnes of canola that year and prices averaged $628.24 a tonne ($14.24 a bushel) for a gross return of $8.3 billion).

MAFRD estimates this year’s cost to produce canola at $400 acre. Using that figure, on average western farmers netted $228 an acre in 2012.

The Manitoba cost-of-production estimates suggest that farmers will pay $52 an acre for seed in 2016. But this year the return per acre is estimated at $16 an acre as opposed to $228 four years ago.

Every year is different and so are yields, quality and price. But costs, including seed, rarely drop. Farmers have to decide themselves whether what they pay for seed is worth it.

About the author


Allan Dawson is a reporter with the Manitoba Co-operator based near Miami, Man. Covering agriculture since 1980, Dawson has spent most of his career with the Co-operator except for several years with Farmers’ Independent Weekly and before that a Morden-Winkler area radio station.


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