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Seed royalty meeting leaves unanswered questions

Farmers fear handing a blank cheque to private breeders

How much more will cereal seed cost Canadian farmers?

That’s what those at the first federal government consultation on the proposed new cereal seed royalties were most interested in.

The answer? It depends on how much the royalty is — and how it’s applied.

Who sets the royalty — government or breeding organizations — hasn’t been determined either.

If the federal government implements one of two options it won’t be until the winter of 2020, Plant Breeders’ Rights Commissioner Anthony Parker, said in an interview following the meeting in Winnipeg Nov. 16.

“We’re hear to listen… and there has been no decision made,” Carla St. Croix, Agriculture and Agri-Food Canada’s (AAFC) director of innovation and growth — policy division, told the 75 or so meeting participants. “We are consulting and we want to hear your views.”

Carla St. Croix of Agriculture and Agri-Food Canada and Anthony Parker, Canada’s Plant Breeders’ Rights commissioner, led the first consultation meeting in Winnipeg Nov. 16 on a proposal to introduce a trailing or end point royalty on cereals to earn plant breeders more revenue. The proposal will be on the agenda at Ag Days in Brandon in January and at CropConnect in Winnipeg in February.
photo: Allan Dawson

More cost information on the trailing contract and end point royalty options will be provided at future meetings, she said.

In one example a trailing royalty on farm-saved wheat seed of 50 cents to $1 an acre would add $250 to $500 in extra costs to an average 1,700-acre Saskatchewan farm.

Angusville farmer James Melnyk said that would cost his 2,500-acre farm an extra $2,000 or $3,000 a year. He opposes both options, which the seed industry arrived at after two years of study.

“If you talked to the farmers whom this is going to impact I think you would see a very large push-back,” he told the meeting.

To encourage frank discussion AAFC asked reporters not to name or photograph participants. Some gave the Manitoba Co-operator permission to report what they said following the meeting.

Farmers who spoke fell broadly into three camps:

  • Those who oppose the two royalty options and favour continuing publicly funded plant breeding;
  • Those who support one or both of the options; and
  • Those who want to encourage more plant breeding but fear giving private companies a blank cheque.

A farmer who endorsed ‘revenue creation’ claimed it worked for canola.

“It’s almost all privately bred and it’s a really successful model,” he said.

“Wheat is dropping. There’s a reason for that — it’s falling behind in genetics.”

However, several farmers challenged that, including Boissevain farmer Mitch Janssens. In the last 20 years his canola yields have increased an average of 64 per cent, but his wheat yields are up even more.

“So I want to clarify the genetics we’re getting out of the current system (for wheat) are not flawed,” he said. “How we’re financing it is a problem.”

The Seed Synergy group, whose members include seed growers and seed companies that developed the options, says $2.13 an acre is invested annually in Canadian wheat — almost all of it by governments and farmers through checkoffs. But France and Australia invest $3 an acre and the United Kingdom invests $7.31 — most of it from farmer-collected royalties.

Canada’s seed industry says farmers here don’t buy enough certified seed, which comes with a royalty, to encourage private breeding companies to invest.

Only about 20 per cent of the wheat seeded in Western Canada is certified. Farmers currently can save and plant seed from the crops they’ve grown — a practice as old as farming and one that saves on seed costs.

A trailing contract obliges farmers who buy protected varieties to remit to breeders a fee per tonne, or acre, for saved seed.

The seed industry prefers that option because it’s simpler and cheaper to administer.

So did most farmers at the meeting who spoke in favour of one or the other options.

Under an end point royalty farmers pay a fee when they sell grain at an elevator or feed mill and it’s sent to breeders based on the varieties delivered.

End point royalties are used in France and Australia, while trailing contracts apply in the United Kingdom and the Netherlands, Parker said.

France’s end point royalty is a flat 0.70 euros a tonne. In Australia it ranges from $1 to $4 a tonne.

The trailing contract fee in the U.K. is 52.5 per cent of the previous year’s average royalty on certified seed, he said.

“The one thing that is crystal clear is if you can secure the investment in plant breeding it pays dividends,” Parker said. “For every dollar you put into plant breeding you generate $7 in benefits.”

According to a JRG Consulting Group report prepared for the seed industry, the lack of investment in cereal varieties is costing Canadian farmers and Canadian economy $170 and $340 million a year, respectively.

Melnyk was skeptical.

“I have no problem funding a public breeding system, but when it comes to a private business why should I be, not just asked, but forced to provide funds for a private business?” he told the meeting.

Public versus private investment in variety development.
photo: Agriculture and Agri-Food Canada

Farmers will have choices, Erin Armstrong, co-chair of the working group that came up with the two royalty options and Canterra Seed’s director of industry and regulatory affairs, told Melnyk.

“Nobody is forcing anybody to do anything,” she said. “If you choose to purchase and use the seed of variety that comes from a private program that’s your choice. If you choose not to that’s your choice as well. If you don’t use varieties from private programs you won’t be supporting them. You won’t be paying any royalty to that breeder.”

Melnyk again wasn’t convinced.

“The system ends up getting changed and it’s not an option, it becomes mandatory… and then we don’t have a choice,” he said. “That’s what happened in the canola industry… this is where it’s leading to.”

Parker told the meeting if one of the royalty options is implemented it would only apply, at the earliest, to varieties protected under UPOV ’91 (International Union for the Protection of New Varieties of Plants), which came into effect in Canada Feb. 27, 2015.

But some farmers worry varieties could be deregistered to limit farmers’ choices.

Parker also noted farmers who buy certified cereal seed, wouldn’t pay twice.

Farmers were also assured AAFC will not cut spending on cereal research, but it could shift away from variety development.

However, Canadian Seed Trade Association president Todd Hyra noted governments can and have changed spending priorities.

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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