Editorial: Paying for improved varieties

Having witnessed the Canadian government’s softening commitment in recent years to research that develops improved varieties for farmers, we’ve been reluctant to let taxpayers off the hook.

Historically, publicly funded research has been the cornerstone of Canada’s reputation as one of the world’s best when it comes to producing cereal crops. Over the past century, Agriculture and Agri-Food Canada scientists have helped farmers steadily improve their productivity through genetics that increase yields, use available resources more efficiently, and keep farmers one step ahead of disease and pests.

It is a well-accepted principle that research investment pays off, as cited in an exhaustive 2010 review of the literature by Julian M. Alston for the Organization for Economic Co-operation and Development (OECD): “A predominant and persistent finding across the studies was that the rate of return was quite large. The main mass of the distribution of internal rates of return reported in the literature is between 20 per cent and 80 per cent per annum,” the report says.

He also found that underinvestment in agricultural research is a global problem, partly because it is a lengthy process. “Research takes a long time to benefit production, and then it affects production for a long time.”

In the past, it could be argued that society benefited every bit as much as farmers did from improved productivity. Increasing supplies make food more affordable, which means consumers have more to spend on goods and services that support a growing economy.

But in industrialized economies such as Canada’s, the agricultural sector is highly dependent on exports and that societal benefit becomes more nuanced. Despite all the media reports about higher food costs consumers will face this year due to our sinking dollar and our penchant for imported fresh fruits and vegetables, Canadians aren’t likely to go hungry.

Canadians spend about a dime of every dollar they earn on food. At most, Food Freedom Day, the day in early February when the average Canadian household earns enough income to pay its annual food bill, might be delayed a few days. But the amount of food wasted in this country might also decline and people might start embracing some often overlooked local options such as homegrown carrots and cabbage.

Of course, Canadian taxpayers benefit from a strong agricultural sector’s contribution to the country’s GDP. Maintaining the industry’s competitive advantage in a global market is an important rationale for continued public research investment. But many of the consumer benefits of farmers’ improved productivity now flow to consumers elsewhere.

The discussion over who should pay the cost of variety development, particularly pertaining to cereals, is undergoing an evolution that has some significant implications for farmers.

Several options are outlined in the recently released report by JRG Consulting Group for the Prairie wheat and barley commissions entitled “Exploring Options for Producer Involvement in Wheat and Barley Variety Development.”

Farmers are being asked to consider how they want to be involved in cereal development, how much more they are willing to pay and how that support should be collected. End point royalties (EPR), an option that became possible with Canada’s adoption of the updated Plant Breeders’ Rights international treaty, are also on the table. With EPR, you’d declare the variety and pay a user fee on delivery.

Note this is not about whether farmers should pay more than they do today through checkoffs and royalties; it is about what form their increased support should take.

Prairie farmers’ contributions today cover about one-third the cost of the $41 million Agriculture and Agri-Food Canada (AAFC) spends annually on variety development.

The private sector stepped up quickly to take the helm on improving crops such as canola, because it was able to secure a return on investment on those crops through hybridization, and by contractually ending the use of farm-saved seed.

Neither is an option for cereals, at least not yet, so investments in cereal development improvement hold little appeal for the private sector.

As things stand today, governments are still carrying 72 per cent of the estimated $56 million spent on cereal development annually in Canada, with only 15 per cent carried by the private sector and 12 per cent by farmers.

The report points out that Canada’s total investment in cereals falls far short of what some of its global competitors are doing. Australia, for example, spends 2.7 times more.

We continue to oppose governments withdrawing from public investment in varietal research altogether. But if farmers want to see continued genetic improvements in their crops, they are going to have to pay more.

About the author

Editorial Director

Laura Rance is the Editorial Director for Farm Business Communications. She is an award-winning journalist who has covered agriculture and rural issues for more than 30 years.


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