Winter Cereals Manitoba members are grappling with how farmers can best fund development of new wheat and barley varieties.
It’s part of a sector-wide soul searching for checkoff-funded wheat and barley groups across the Prairies, prompted by the ongoing need for new varieties and the changing funding landscape following the move to an open market.
“If you believe the soothsayers this could be a significant issue five to 10 years up the road,” said Jake Davidson, executive director of both Winter Cereals Manitoba and the national Winter Cereals Canada group, speaking at the provincial organization’s March 16 annual meeting.
“We’ve got to come up with a plan,” he said. “If everything goes to hell what are we going to do to keep things going?”
Currently about $56 million a year is spent developing new wheat and barley varieties and 72 per cent of the money comes from taxpayers. Most of the work is done by Agriculture and Agri-Food Canada (AAFC). But several years ago AAFC said it would stop fully developing varieties and instead turn them over to companies to commercialize.
AAFC never fully explained its plan, but it was a wake-up call for farmers who want to keep new varieties coming so they can compete in export markets. It’s unclear if AAFC’s plans will change under the Liberal government.
“We need a backstop,” Davidson said. “If the government does back out, 72 per cent of $56 million is a very, very big hole.”
To help answer how farmers should pay the wheat and barley commissions and associations, along with the Western Grains Research Foundation (WGRF), it hired JRG Consulting Group to look at what other countries do. Its report, Exploring Options for Producer Involvement in Wheat and Barley Variety Development, was released in December.
The report provides five options, ranging from the current approach with a bit more co-ordination between the cereal commissions, all the way to farmers owning their own cereal-breeding company.
The consultants prefer a middle-ground model — one non-profit producer body called Wheat and Barley West.
That model allows for economies of scale and a consolidated farmer voice which accommodates larger and more focused strategic investments in variety development, the report says.
It’s less risky for farmers, especially compared to starting a farmer-owned seed company. It also puts farmers in position to gear up should the federal government decide to cut back.
Another model sees a total of eight provincial commissions involved in varietal development. The final model, dubbed Australia North, is separate partnerships between commissions for pre-breeding, breeding and commercialization.
Winter Cereals Canada chair Dale Hicks told the meeting he believes no matter which model is adopted, end-point royalties are not an option most growers would like to see.
“It’s a never-ending tax,” he said.
Farmers who buy the new varieties regularly pay an upfront royalty when they buy the initial seed, he said. Then they’re ‘taxed’ repeatedly each time they deliver the variety.
“An end-point royalty is a way to extract money from the guy who buys pedigreed seed once in 12 years,” he said.
Hicks also predicted there would be slippage as not all grain delivered would necessarily have an end-point royalty applied, plus it would take a lot of work to set up a collection system based on varieties delivered to elevators.
It would be better to continue existing checkoffs and increase them, he said.
“We’re pretty sure if they slapped a $5-a-tonne end-point royalty on at the elevator, there would be a riot,” Davidson said.
Farmers would be willing to pay more if they understood what checkoff money goes for, Hicks said, adding education is needed.
The other question is, who should administer the money? Davidson said small organizations like winter cereals groups want to be sure funds raised through their checkoff goes to winter wheat research.
Hicks added the WGRF is the natural administrator because it’s already in the business and has staff and infrastructure in place. It received checkoff money through the Canadian Wheat Board and the transitional checkoff, slated to end in 2018, when provincial associations are supposed to take it over.
“It’s a body that’s up and running,” Hicks said. “But if the commissions in Western Canada choose to form their own organization without the WGRF, then so be it.”
Hicks said the biggest mistake would be for the various groups to try to go it alone, because co-operation will concentrate the efforts, and no one group would be able to champion plant-breeding efforts as well individually.
“All the cereal groups have to work together to keep it going so we can all get what we need,” he said.
The full report on funding options for varietal development is available online at the Manitoba Wheat and Barley Growers Association website.