The ‘value creation’ model both University of Saskatchewan agricultural economist Richard Gray and the Alberta Federation of Agriculture (AFA) are talking about has some commonality.
Both say a farmer ‘entity’ should be formed to collect a levy — probably mandatory — from farmers at the point of sale and then funnel that money to breeders — public and private — through partnerships.
Not only would farmers ensure their money went to its intended purpose, but they’d benefit from improved varieties and earn royalties, which, after administration costs, would all be reinvested in developing more new varieties.
“There are some good potential returns here,” Gray said in an interview Jan. 31. “To ensure the additional money flowing into the system actually ends up with better varieties you need that institution in place.”
Its structure is up for discussion, AFA president Lynne Jacobson said in an interview Jan. 30. It could be a co-operative or a not-for-profit organization, he said.
“Keep it pretty simple on the administration part — collection (of levies), a board of directors — and that group would distribute the money,” he said.
But isn’t that reinventing the wheel? The Prairie provinces already have cereal commissions collecting checkoffs to fund variety development and other research.
“These are all things that need to be talked about,” Jacobson said. “We’re not saying, no, ‘this is the model you’ve got to use.’
“Whatever entity is created we want a lot more than just certain people involved and open it up a bit more and be like (the) Western Grains (Research Foundation) that has more people sitting around the table from different organizations other than the grain commissions.
“Then they think of not just one commodity but the industry as a whole. A lot of the infighting that goes on in agriculture goes away when we sit around those types of tables.”
The proposal, like the other two on the table, won’t win over every farmer, Jacobson said, especially those opposed to paying anything more for seed.
Speaking at Ag Days, Deleau farmer Ian Robson sparked applause when he said: “Encourage the Government of Canada to add more money and do more research on our behalf so when we pay for those seeds we don’t have to pay anybody a royalty.”
Canada can learn from Australia’s system, Gray said. It collects funding for variety development and agricultural research two ways. One, is through an end point royalty, which raised $50 million to $60 million a year for variety development. The money goes to breeding companies owned by farmers and breeders.
In addition, there’s a one per cent levy collected on 27 crops sold by farmers. The government matches the farmer contribution, at 0.5 per cent. That raises about $200 million.
The Grains Research and Development Corporation, an Australian Crown corporation, administers those funds.
Some Canadian seed growers oppose the Australian model, fearing it would destroy Canada’s pedigreed seed system. But Gray says the decline of Australia’s pedigreed system was due other policy changes.
An end point royalty on all grain sales is more efficient than a royalty charged on certified seed, according to Gray.
“In fact, I’m pretty sure it will stimulate the purchase of certified seed because you’re no longer paying a big royalty,” said Gray, who also farms. “Right now if I look at purchasing certified seed versus saving my own there’s a $2-a-bushel cost to that certified seed that’s a royalty. If you lowered certified seed by two bucks a bushel I might buy a lot more of it. I think it would actually benefit the (pedigreed seed) industry a lot to move to an end point royalty.”
According to Gray, the proposed trailing royalty is a non-starter. Most farmers oppose the idea of paying to plant their own seed so won’t.
“You’ll get 10,000 (not paying) the first year,” he said. “And if you get away with it once why would you bother? You’d tell your neighbours and they would want to free ride the next year.
“One of the things that makes the farm-saved seed royalty model so ridiculous is there isn’t enough money there to sue people for. You can’t sue someone for 500 or 1,000 bucks.”
That makes enforcing royalty collection uneconomic, he said.