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Comment: Farmer push-back on cereal seed royalty proposals

Most people don’t like change or paying more but a lack of trust could be a factor too

Western Canada’s wheat, barley and oat grower commissions say it’s unlikely farmers will accept either one of the two options to get farmers to pay more royalties for cereal seed.

Some push-back was to be expected, but the seed industry no doubt was, and likely still is, hoping its arguments, including that farmers will gain through better varieties, will win the day.

In a Jan. 14 news release the commissions, including the Manitoba Wheat and Barley Association, said “… the likelihood of an industry-wide agreement on either of the proposed models is low… ”

The commissions delivered the same message to Agriculture Minister Lawrence MacAulay in a letter, asking him to continue consulting with farmers and to look at different options.

An end point royalty or a trailing royalty are on the table. The former would see farmers pay a royalty when they sell their grain. The latter would require farmers to pay a royalty on seed saved for planting if covered under UPOV ’91, which took effect in Canada Feb. 27, 2015.

The commissions’ assessment doesn’t bode well for either. One suspects a lot of farmers opposing the proposal called their commission directors. Why else would the commissions have taken such a position relatively early in the consultation process?

A lot of factors are at play. One is shock. Despite more than a decade of discussion, it came out of the blue for some farmers.

People also don’t like change and have an even greater dislike to paying more — even when told it will make them better off.

But probably the biggest factor is trust, or the lack of it. Farmers at several meetings in November said while they support research they’d feel better if they knew for certain their royalty money was going for plant breeding and not to company executives or shareholders.

There’s no way to guarantee that, at least when dealing with a private company. Companies decide themselves how to allocate revenues. Although presumably companies that don’t reinvest run the risk of falling behind and perhaps going out of business.

Some farmers have said they don’t want wheat to go the way of canola. To which others ask, why not? Canola is more profitable than wheat.

As much as farmers understand canola’s economic benefits, some begrudge the cost of seed. Manitoba Agriculture’s 2018 Crop Production Guide put canola seed at $60 an acre compared to $24 for wheat. (Soybean and corn seed cost even more.)

There’s no disputing canola seed comes with a lot of benefits such as herbicide tolerance and early protection against disease and insect attacks. But most canola seed is hybrid and/or farmers must agree not to save any production for seed. So not only are farmers prevented from saving canola seed, they pay a lot for it.

And there’s the rub for the cereal variety developer. After buying certified cereal seed and paying a royalty, farmers can save seed grown from that crop and plant it for years. It saves the farmer money, but hurts the plant breeder. That’s why the industry is discussing these two royalty options.

The vast majority of cereal varieties farmers grow now were developed by publicly funded plant breeders, including Agriculture and Agri-Food Canada (AAFC). This is especially true of wheat.

An AAFC official told the ‘value creation’ consultation meeting in Winnipeg in November that AAFC is committed to continuing its role in plant breeding. (We all know any government could abandon it with the stroke of a pen.)

However, she added, if private companies step up their variety production AAFC would get out of the way, focus on upstream research and transfer traits to breeding companies to use in their varieties.

The prospect of AAFC no longer commercializing wheat leaves some farmers uneasy. AAFC wheats grown in Manitoba have doubled in yield over the last 25 years, according to crop insurance data. Canola yields are up 80 per cent over the same period.

There are a couple more points on trust. When UPOV ’91 was implemented farmers were told repeatedly the change would not prevent them from saving cereal seed. Four years later there’s a proposal to charge a royalty on saved seed. Arguably it’s for a good cause — generating more revenue for plant breeders — but in retrospect it looks like bait and switch, perhaps contributing to the farmer push-back.

At the Winnipeg meeting federal government officials said the proposals were discussed by the Grains Roundtable, which represents many in the grain supply chain, including most farm groups. It came across as a stamp of approval.

The commission release and letter to MacAulay notes the roundtable never endorsed the proposals and “requested that AAFC conduct an economic analysis of the two options prior to any farmer consultations. To date, this analysis has not been done making it impossible for producers to make an informed decision on a path forward.”

The commissions are already in the variety development game, collecting farmer checkoffs, some of which goes to variety development. Arguably the commissions hold their research partners — often public funded breeders — to account. And that gives farmers some reassurance their money is going to the intended purpose.

Increasing farmer checkoffs is another option to consider. But since checkoffs are voluntary more farmers might request refunds.

And checkoffs don’t encourage foreign seed companies to bring their varieties to Canada or set up variety development here.

Farmers are being told if they pay more they’ll get more. For good or ill many have yet to be convinced.

About the author

Reporter

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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