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Seed companies defend proposed cereal seed royalty changes

Alliance Seed, Canterra Seeds, FP Genetics and SeCan say the current system for funding cereal development isn’t working

Four independent Canadian seed companies want western grain farmers to “get the facts” on a proposal for them to pay more royalties on new cereal seed to encourage variety development.

Alliance Seed, Canterra Seeds, FP Genetics and SeCan issued a news release Jan. 11 saying the proposal is a “divisive topic,” but they are united in their support for it and in helping farmers understand the effects.

Todd Hyra.
photo: Supplied

“There is a lot of negative, misinformation whirring around out there and we’re happy to answer questions and give our take on it,” Todd Hyra, SeCan’s business manager for Western Canada said in an interview Jan. 11.

He and other seed company officials are willing to talk to farmers about the proposal, including at upcoming trade shows, he said.

The Saskatchewan Wheat Development Commission opposes both options — an end point royalty and trailing royalty — it said in a news release Jan. 8, while calling on Agriculture and Agri-Food Canada (AAFC) and the Canadian Food Inspection Agency to widen consultations before changing how variety development is funded.

“Too few farmers know about what is being proposed and have had a chance to express their views,” said Laura Reiter, Sask. Wheat president. “The current federal consultations need to be expanded and more options and information must be made available before any value capture changes are made.”

That call was echoed by a number of other provincial cereals commissions who made a similar call in a press release just as the Co-operator was going to press for the Jan. 17, 2019 issue.

Some push-back on the proposal was expected, Hyra said. The companies want to “dispel some of the myths… ” he said.

The proposal unveiled last fall, is also opposed by the National Farmers Union.

More consultations are scheduled for Ag Days in Brandon next week and CropConnect in Winnipeg in February.

Farmers currently pay a royalty to variety developers when they buy certified seed, but the seed industry contends because many farmers sow saved cereal seed, developers — public and private — are not getting enough revenue to keep Canadian varieties and farmers competitive.

The end point royalty option would see farmers pay a royalty when they sold their cereal grain.

With a trailing royalty farmers would continue to pay a royalty on certified seed, plus a fee on seed saved for planting. Farmers who buy certified seed every year wouldn’t see much change in costs, Hyra said.

The seed industry favours a trailing royalty because it’s simpler to administer.

Both options would only apply to varieties covered under UPOV ’91 plant breeders’ rights rules. Farmers could grow older varieties without paying more royalties, Hyra said.

Seed companies are committed to not deregistering those varieties so long as there is a demand, he said.

“That’s what I like about the Seed Variety Use Agreement — the phase-in approach where there will be varieties that have it attached and varieties that don’t,” Hyra said. “And seed growers and customers will adopt it according to their comfort level and over time the system will hopefully prove itself and evolve.”

The seed companies’ release asks and answers seven questions starting with: “Isn’t our existing model working?”

“No,” the companies say. “Something needs to change. Canada invests less than most of our major wheat export competitors and will only fall further behind unless there is more plant-breeding investment.”

Some farmers argue the current system is working and point to the high-yielding, high-quality wheats AAFC currently has on the market.

Manitoba crop insurance yields show Canada Western Red Spring wheat yields have doubled in 25 years. (That’s based on average yields from 1993, 1994 and 1995 compared to average yields from 2015, 2016 and 2017.)

During the same period average yields of insured Manitoba canola are up 80 per cent.

However, Hyra noted current varieties, including AAFC’s high-yielding AAC Brandon, began development 10 to 15 years ago. Much has changed, including “erosion” of AAFC’s research, including the loss of a wheat breeder, fewer test plots and stagnant funding, he said.

The companies’ release says the royalty proposal is not driven by multinational seed companies. Canada relies on public and smaller private breeding programs for new cereal varieties and both would benefit from the proposed change.

In fact, public varieties have been SeCan’s “bread and butter,” Hyra said.

However, he added SeCan and the other companies also want to support private variety developers big and small. Whoever comes up with the next, great variety should be rewarded so they can invest in future variety development, he said.

While some farmers fear companies might not invest additional royalty earnings in new varieties, Hyra said companies like Limagrain that set up Canadian research in 2016 have already made the investment and might leave if they don’t see a way to get a return.

Some farmers say they don’t want wheat to follow canola — a crop that is almost exclusively developed by private companies and has seen a big jump in seed prices.

(Some farmers counter wheat should emulate canola given it’s a more profitable crop.)

“That’s why this model is being proposed — the Seed Variety Use Agreement,” Hyra said. “It’s so different from the canola model because it does allow grain to be diverted for seed use in subsequent generations with a fee on those new products.”

Public breeding would benefit continuing the diversity among cereal variety developers, which would encourage competition keeping seed prices in check, he said.

“We want to ensure people are asking the right questions and thinking about the future 10 to 15 years from now and looking at making this investment for the collective good for western Canadian agriculture and their farm practices going forward,” 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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