For every dollar invested in wheat varietal development there’s a $20 return, says a study conducted several years ago by University of Saskatchewan agricultural economist Richard Gray and his colleagues.
So why aren’t farmers investing more?
“Because checkoffs are refundable. They can free ride. Full stop,” Gray said in an interview Jan. 14.
Those who seek a refund get the benefits of new varieties paid for by others.
An alternative to a refundable checkoff are end point royalties (EPR). Like a checkoff, they are collected when farmers deliver grain to the elevator, but the money isn’t refundable. It goes to the developer of the variety who then invests it in new varieties. Or that’s the hope. There’s no guarantee.
“Without strong producer leadership, an EPR-based royalty system could result in most royalty revenues accruing to private shareholders rather than as investment in breeding,” says a report prepared for provincial wheat and barley groups in Western Canada.
A checkoff, in contrast, goes to an organization run by farmers, to benefit farmers, the report says.
There are pros and cons to both systems, the report notes.
“I think there has to be a way to get farmers interested in this stuff,” Gray said. “I think their future depends on it.”
Under an EPR system information and germplasm sharing may decrease, small classes may be underfunded compared to the current system and fewer checkoff dollars could go to varietal development, the report says.
How western farmers collect variety development money depends on which model they want for promoting research, the report says.
The Manitoba Wheat and Barley Growers Association (MWBGA) collects 52 and 50 cents a tonne on spring wheat and barley, respectively. It’s proposing to raise the spring wheat checkoff to $1 a tonne to pick up the 48-cent levy now collected for the Western Grains Research Foundation when it expires July 31, 2017.
If governments don’t increase their varietal development spending, farmers can invest more by increasing their checkoffs or introducing EPR, or both, the report says.
The EPR system can be a double-edged sword. On the one hand, it can potentially bring in more revenue, including to private companies and encourage more varietal development. However, it could also weaken farmers’ influence in plant breeding.
“The analysis also indicates that producers capture value each year through the release of new varieties and this on-farm value capture is likely higher without an EPR system,” the report says.
The report concludes without a way for cereal variety development companies — private or farmer owned — to capture a return on their investment, they won’t be profitable in Western Canada.
Under plant breeders’ rights farmers are obliged to pay a royalty that goes to the variety developer. But farmers are allowed to save the seed they produce to plant future crops without having to pay any more royalty.
Saving seed is common amongst cereal growers, but farmers buy new corn, canola and soybean seed every year providing developers a return on their investment.
Corn and canola are hybrids, making seed saving impractical. Most corn, canola and soybeans are also genetically modified and farmers agree not to save the seed.