After farmer push-back Agriculture and Agri-Food Canada (AAFC) has hit pause on end point and trailing royalties consultations aimed at getting producers to contribute more money for plant breeding.
But the controversial issue isn’t dead. Some farm groups and the seed industry are trying to find consensus on how to proceed.
“What we’re trying to do… while government takes a back seat is figure out where that common ground is, and… try to drive the conversation forward,” Canadian Seed Trade Association (CSTA) interim executive director Tyler McCann said in an interview Aug. 11.
Questions are also being asked about Ottawa’s commitment to AAFC’s plant-breeding programs as the deficit and debt rise in the wake of COVID-19.
Why it matters: Canada’s seed sector says to be competitive Canadian farmers need to contribute more money for crop breeding. Many farmers say if they have to pay more they want to be sure the money goes to breeding and that publicly funded breeding continues.
“Given the work currently underway within the sector, AAFC is not planning further consultations at this time, and will remain engaged with farmers and the sector until a consensus can be reached on a way forward,” an AAFC official stated in an Aug. 7 email.
AAFC is aware of two industry-led initiatives on ‘value creation,’ the term used to describe proposals to get farmers to contribute more to variety development.
One is ‘guiding principles’ for a producer-approved value creation system set out by the Canadian Federation of Agriculture and Grain Growers of Canada (GGC).
The other is the Variety Use Agreement (VUA) pilot project set up by the CSTA with several seed company members attaching trailing royalties to a few new varieties.
End point royalties would be collected when farmers delivered grain to buyers; trailing royalties would be paid when farmers keep seed for planting.
In the fall of 2018 and winter of 2019 AAFC and the Canadian Food Inspection Agency held several public meetings on the two options. Officials said by paying more for seed farmers would benefit from better varieties.
Initially the government said it wanted to implement one of the options in late 2019.
While some farmers supported one or the other option, many more either opposed them outright, or wanted other options explored.
Some farmers, including Ian Steppler of Miami, described the proposals as a cash grab, potentially guaranteeing seed companies revenue without having to necessarily earn it.
Many farm groups, including the Keystone Agricultural Producers (KAP), said if farmers were going to pay more, farmers needed a say on how the money is used.
KAP president Bill Campbell expressed concern about the royalty issue during an online KAP advisory council meeting July 30.
“I would suggest there is some concern about the whole evolution of the process — that AAFC has kind of backed away,” he said in an interview July 31. “My thoughts are this is leading to the seed companies doing what they wish to do and that is to impose these trailing royalties on certain varieties.
“Will farmers’ money go to research or will it go to the shareholders?
“Will it be like canola? I pay 70 bucks an acre for canola seed. My understanding is not a lot of that went to research. Now is the time to address those issues and deal with the public-private research and delivery of seed today, tomorrow and in the future.”
A year ago KAP, Agricultural Producers of Saskatchewan and Alberta Federation of Agriculture issued the following six principles for funding plant breeding:
- Maintain and enhance public research, development and finishing of new varieties.
- Preserve or enhance current public funding.
- Be transparent with farmer involvement.
- Maintain the privilege of farm-saved seed.
- Fair and equitable administration.
- Ensure farmers remain competitive.
CFA and GGC support some of the same principles.
KAP members voted 92 per cent in favour of a resolution calling on the federal government to increase its funding for public research on grains, oilseeds, pulses, and other crops grown in Western Canada.
“It seems the seed companies are cleverly trying to devise some system where they can get more money from farmers,” Lowe Farm farmer Wilfred (Butch) Harder told the meeting. “That seems to be — pardon the pun — the end point of all these discussions.”
KAP is also worried about future government funding for AAFC.
“If AAFC determines that industry will fund this (breeding) their commitment will be reduced… so that is something that needs to be watched as well,” Campbell told the meeting.
That concern is shared by farm groups that collect checkoffs on farmers’ grain sales to help fund AAFC and other public breeding programs.
“We’re all prepared to fund it, but we fund it equitably and we want to fund it in a transparent manner and we don’t want it to displace federal funding,” Manitoba Crop Alliance chair Fred Greig said in an interview Aug. 11. “For every dollar we put in if they pull out a dollar what’s the point?”
Ottawa has cut AAFC’s plant-breeding budgets for 20 years. Greig doesn’t want further cuts but worries Ottawa’s projected $343-billion deficit and $1.2 trillion in net national debt could result in just that.
“I think we’re bracing for some of that and how it is going to change our strategies,” he said. “If we can understand where the feds and AAFC are going then maybe producers are prepared to be involved and step up with more funding through the present checkoffs… There’s a whole pile of uncertainty. The Seed Variety Use Agreement is just one of them.”
Harder told the KAP meeting AAFC officials are evasive when asked about the future of plant breeding. KAP should lobby politicians to commit to plant breeding ahead of the next election, he said.
Funding for public breeders is needed more now than ever, Todd Hyra, SeCan’s manager for Western Canada said in an interview Aug. 11. The VUA supports public plant breeders and private ones.
“SeCan, FP Genetics, Alliance Seeds, SeedNet, Seed Depot — all of those independent seed companies rely on the public system, whether it be Ag Canada or the universities,” he said. “That is most of what we sell. And so we are very much aligned with what farmers want. We want to maintain that, but we also see the benefit of private breeding having a fair shot and a fair shake at this as well.”
The divide between the seed trade, farmers and the government is not that big, McCann said.
“Everybody wants to see more plant breeding in this country,” he said.
“Everybody wants to see more innovation. I think everyone understands greater investment in variety development results in greater returns to farmers. I don’t think there is any debate over that. The debate is just on how we do it.”
The National Farmers Union (NFU) supports more plant breeding, but not by private companies, if it comes with additional royalties.
“We’re totally skeptical of any sort of private scheme for revenue collection and we think it’s just another way to extract more money out of farmers,” Colonsay, Sask., farmer and NFU member Terry Boehm, said in an interview Aug. 12. “Farmers are coming to the plate through their various commissions. The refund request is very, very low… At least with the commissions we have the possibility to elect representatives and have them place some direction on where research goes.
“Farmers are contributing and there’s more than enough money to keep it going coming from farmers.”
CSTA knows about the principles farm groups want included in a value creation system and has set up a working group, which includes farmers, to provide additional input, McCann said.
“Regardless of the model — and we think the SVUA (Seed Variety Use Agreement) is the right one — it’s only going to work if farmers see the value in it,” he said.
VUA agreements are self-regulating. Breeders who don’t offer superior varieties won’t find a market and the same holds if royalties are too high.
But some farmers fear eventually VUAs will apply to all varieties and that royalty-free varieties will no longer be competitive.
“That would be one of the downfalls,” Minto farmer David Rourke told the KAP meeting.
Rourke also worries companies will deregister royalty-free varieties.
“So again potentially we could have less and less choice going forwarded so we’ll have to be proactive,” he said.
So long as farmers are buying a variety companies will sell it, McCann said.
But even if a variety is available, if it’s deregistered it must receive the lowest grade in the intended class under Canadian Grain Commission rules, Boehm said. Boehm stopped growing Ebony canola, an open-pollinated variety that he could grow from his own seed, after Monsanto deregistered it a few years ago because it would be graded ‘sample’ at the elevator.
Campbell said canola seed is overpriced and worries the same will happen with other crops if private companies take them over.
Canola is the most grown crop in Western Canada so farmers see value in growing it, even if they feel seed prices are high, McCann said.
“It’s important for people to remember that Ag Canada’s transition out of variety breeding for canola was because farmers stopped buying those public varieties,” he said. “Farmers left Ag Canada, Ag Canada didn’t leave farmers… “
McCann also expects the Canadian government will be looking to spend smarter as it tries to cut its deficit. One way is to hand off germplasm and traits to companies to commercialize.
AAFC itself has proposed that. But many farmers want AAFC finishing varieties to provide competition to the private sector, Greig said.
The status quo in plant breeding wasn’t sustainable even before COVID-19, McCann said.
“So we think it’s in our interests to move this discussion forward relatively reasonably quickly,” he said. “But it’s also important to take the time to get it right and… have the discussions that obviously didn’t happen to the extent that they should’ve beforehand.
“But it can’t go forever and we’ll see six or 12 months from now what the world looks like and hopefully the discussions have evolved enough that government can get back engaged and we can get back to a more constructive and positive discussion on how to move forward on this file.”
While VUA works on contract law, new royalties should be implemented through plant breeders’ legislation, McCann said.
“It’s in all our interests to get government back engaged at a certain point in time but we need to make sure that industry, the growers and the trade and our other partners are ready for it to do that.”