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Royalty issue discussed at canola, flax AGMs

Manitoba Flax is working on royalty policy for flax with Sask Flax

The Manitoba Canola Growers Association (MCGA) is following cereal royalty discussions closely because of the potential impact on MCGA members.

At its annual meeting last year, MCGA members passed a resolution calling on the association to “vigorously oppose” the introduction of end point royalties on canola.

An end point or trailing royalty is now being proposed for cereal grains.

Jack Froese.
photo: Allan Dawson

“Our message has been consistent, while we are an active part of these discussions we are not in support of an end point royalty system for canola,” MCGA director Jack Froese told the association’s annual meeting Feb. 14, during CropConnect in Winnipeg. “We believe farmers need more consultations, more information about the state of the current variety development system and more information on the impact of the proposed seed royalty system before they can make any decision on seed royalties beyond canola.”

The current royalty talks are focused on cereals, not canola, but Canola Growers members grow cereal crops too, which are important in crop rotations, Froese said.

Unlike with cereals, most farmers purchase new canola seed for every planting. The price of canola seed includes a royalty, providing the variety developer a return on investment.

Since cereal growers plant so much saved seed they don’t pay as much in royalties. An end point or trailing royalty are ways to force cereal growers to pay more, which proponents argue will result in better varieties.

Cereal royalties, which currently are collected only on certified seed, only cover 10 to 20 per cent of the development cost, Carla St. Croix, Agriculture and Agri-Food Canada’s director of innovation and growth policy said during a presentation at CropConnect.

Soon after UPOV ’91, the breeders’ rights rules that allow for more royalty flexibility came into effect in Canada in 2015, Limagrain, a major French wheat-breeding company, partnered with Canada’s Canterra Seeds, setting up a research facility in Saskatoon, she said.

Carla St. Croix.
photo: Allan Dawson

“It’s amazing what a good investment climate can do for our country in the sense if you’re open for business then there is this willingness to invest,” St. Croix said. “If a model like this (end point or trailing royalties) came to pass it’s quite reasonable to assume that Canada could attract quite a lot more investment.

“It’s quite reasonable to assume that a group of producers or a group of breeders within Canada could get together and form a company and try to get in the game because they would have a way to get a return on their breeding venture.”

Either royalty model would help all cereal breeders — public, private, small, medium or large — she said.

But during a question period, Cam Goff, a director with the Saskatchewan Barley Development Commission, said farmers would be better to invest in publicly funded research instead of bankrolling multinationals.

“I think it’s really important for farmers to keep control of our seed because if I am going to pay for it I’d far rather have control over it as well, which is something the cereal commissions have right at the moment and also when the government is involved we have input to the politicians, which I think is very important,” he said.

Oak River farmer Eric McLean said most farmers agree more cereal investment is needed.

“We need to see the bigger picture and go from there,” he said.

Many farmers opposing the royalty options are older and making decisions that will affect the next generation, he added.

“Let’s think about who is going to be farming and who is not going to be,” McLean said. “Let’s move these things ahead.”

The Manitoba Flax Growers Association (MFGA) doesn’t have a policy on cereal royalties, but it’s working on developing one for flax with the Saskatchewan Flax Development Commission, MFGA president Eric Fridfinnson said in an interview following the association’s annual meeting Feb. 14 during CropConnect.

“Obviously it’s going to cost producers some money, but for a relatively small investment I think we can have a real world-class breeding program at the Crop Development Centre (at the University of Saskatchewan) and have some real input into how the program is run and what the results will be coming out of it.”

Royalties collected now on pedigreed flax sales don’t cover the cost of developing new flax varieties, Fridfinnson told the annual meeting.

“The concern I’ve been hearing about the royalty discussion is that it really feels like a blank cheque that guarantees us higher seed costs, but no guaranteed results, or even a substantial increase in funding for the breeding program,” he said.

Under the current system royalties collected on Agriculture and Agri-Food Canada and CDC varieties go to general revenue and the university and directly to breeding programs.

Fridfinnson said there’s also interest in a third option that would see farmers collect and direct their own money into variety development.

“My own feeling is the process should encourage the use of pedigreed seed and should allow new entrants to participate if they want to,” he said. This is quite different from saying anyone who wants to set up a breeding program is guaranteed to make money, or that farmers or Agriculture and Agri-Food Canada pay for the expensive technology development or early line development and then turn that work over to private breeders to conduct the final selections and own the varieties.”

Royalties didn’t come up at the Manitoba Pulse & Soybean Growers (MPSG) annual meeting Feb. 13 at CropConnect.

“The two options that are out there aren’t in our minds the greatest options,” MPSG chair John Preun said in an interview. “We are closely monitoring and hoping common sense will come to this file and we’ll be able to come to a conclusion where everybody is going to be happy. We’re not quite there yet.”

Winter Cereals Manitoba, which held its annual meeting Feb. 14 at CropConnect, doesn’t have a royalty policy either, outgoing vice-chair Curtis Sims said in an interview.

“It’s probably legitimate to try and get more dollars for research, even in the private sector, to encourage them somehow, but we have to do it right,” he said.

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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