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Survey says: Farmers reject proposed seed royalty models

Farmer skepticism on end point and trailing royalties proposals came through loud and clear in a recent survey

Proponents of royalties proposals to fund cereals variety development need to either head back to the drawing board or do a better job of making their case.

A recent survey from the three Prairie general farm organizations conducted to gauge farmer response to the two proposals for end point or trailing royalties found a deep well of skepticism amongst the farmers who responded.

The Keystone Agricultural Producers (KAP), the Agricultural Producers of Saskatchewan and Alberta Federation of Agriculture surveyed 1,136 self-selecting farmers — mainly from Western Canada — who took the survey between July and October.

“Responses to both proposals were consistent,” the survey says. “For each proposal, between 65 and 66 per cent of respondents disagreed, or strongly disagreed, that the models were worth further consideration.”

Seed royalty model feedback.

Twenty-five per cent of respondents said they needed more information, or neither agreed or disagreed with the proposals. Of the farmers who expressed a definitive opinion one way or the other, 79 per cent said they either “disagreed” or “strongly disagreed” either of the options should be pursued further.

Why it matters: The seed industry says Canadian farmers need to pay more for cereal varieties so plant breeders continue to develop better varieties to make farmers profitable. But farmers, seeing margins decline, are wary of adding more cost without more say on how their money is used.

The two models — an end point royalty that would collect a fee from farmers when they sell their grain, and a trailing contract royalty, which would require famers pay a fee on farm-saved seed — were discussed at a series of public meetings that began last November in Winnipeg.

Many farmers at those meetings shared concerns captured in the survey.

“It’s a clear indication that the two models that were presented were not universally accepted by the farming community,” KAP president Bill Campbell said in an interview Oct. 24.

“The respondents are really not in favour of those two models at this particular time for sure.”

Since farmers self-selected it’s not impossible that more opponents participated than supporters, Campbell agreed. However, given the large number of participants, the farm organizations behind the survey are confident in the results, he added.

While respondents reported an overall level of satisfaction with how new crop varieties are developed and funded in Canada, the highest satisfaction — 75 per cent — was for wheat/durum, which is dominated by public breeder Agriculture and Agri-Food Canada (AAFC) and the lowest — 57 per cent — was for canola, the purview of private seed companies.

Seed royalty survey feedback.

The result seems to conflict with the fact that canola is the most seeded crop in Canada and is considered generally the most profitable. Campbell said he thinks farmers are happy with their canola varieties but believe the seed costs too much.

“How much of that seed cost actually goes to variety development and how much actually goes to marketing and how much goes to profit for that company? We don’t have the type of accountability,” he said.

Progress

Todd Hyra, SeCan’s business manager for Western Canada, wasn’t surprised by the survey results. He wants farmers to invest more in plant breeding, and even though farmers rejected both funding models, he is pleased with some of the survey results, including that 80 per cent of respondents said they were familiar with the two models.

“Considering we went from individuals saying (last year) they didn’t know anything about it at all… that’s huge, that’s fantastic,” he said in an interview Oct. 24.

Todd is also encouraged to see farmers generally supporting plant breeding.

“The piece that needs more education and fleshing out from my perspective is around the fact that everybody seems happy with the systems they have now, which is good, but at the same time I don’t think most people realize the erosion that has gone on (in Agriculture and Agri-Food Canada’s wheat-breeding program) over the last 15 years or so,” Hyra said.

The West’s most popular wheat now, AAC Brandon, was commercialized in 2015, but the first cross was made in 2003.

“Since that time a number of testing facilities have been closed,” he said.

“Wheat breeders are working with now, in some cases, half of what they had 10 or 15 years ago. The general public doesn’t see that and appreciate that. They just see the product that’s here now, but are we going to be able to keep it going? Will we have the same type of products moving forward in the future?

“In 2001 the (AAFC) Swift Current program had over 10,000 lines at that (F4 to F8) level and in 2014 it was around 5,000.”

Given the public good from varieties such as AAC Brandon, Campbell says the federal government should invest more in plant breeding. But Hyra doesn’t think it will happen.

Market pressures

Some farmers are worried about how royalties are used by private companies, but ultimately the market will ensure farmers are well served, Hyra said. If companies don’t develop competitive varieties, farmers will stop buying them.

Meanwhile, they’ll still be able to grow current varieties in the future without paying extra royalties, providing a price safety valve, he said.

Some farmers are also worried private companies want to push public breeders out of the market to reduce competition. SeCan, a not-for-profit association made up of 500 seed growers, doesn’t want that to happen either because public varieties are its lifeblood, Hyra said. Other seed distribution firms rely on public breeders too, he said.

The good news, he added, is AAFC currently has the upper hand.

“They’ve got the best product so a big part of this is keeping them strong and viable, but also making a place for private breeders to not be disadvantaged,” Hyra said.

Although controversial, the royalty issue has progressed the last 12 months, Hyra said. Now is the time to re-engage to find common ground, he said.

“Farmers understand the issue and the need for funding,” Hyra added. “That’s a big first step. So now it’s about filling in those gaps.”

The Canadian Federation of Agriculture was to discuss the matter at its fall meeting in Ottawa this week, Campbell said.

Farmers have rejected the two models on the table, so that means other options need to be considered, he said.

“We need to find out actually what farmers want, and what industry can deliver and the role of Agriculture and Agri-Food Canada, and ensure that particular role is around for quite awhile.”

More seed royalty survey results

Responses were more varied when farmers were asked about the future direction of plant breeding in Canada.

There is support for research, but with caveats.

  • When asked if increased investment in crop development is required provided it ensures long-term stable funding for public and university breeding programs 68 per cent of those who answered agreed and 32 per cent disagreed.
  • When asked if increased investment in crop development is required provided producers have oversight on how much is collected and what the funds are used for 64 per cent agreed and 36 per cent disagreed.
  • When asked if increased investment in crop development is required to ensure Canadian producers have access to improved varieties to remain competitive 52 per cent agreed and 48 per cent disagreed.
  • When asked if increased investment in crop development is required provided it encourages competition and higher levels of private sector investment in plant breeding 47 per cent agreed and 53 per cent disagreed.

Principles for funding plant breeding

The Keystone Agricultural Producers, Agricultural Producers of Saskatchewan and Alberta Federation of Agriculture have agreed on six principles for funding plant breeding:

  • Maintain and enhance public research, development and finishing of new varieties.
  • Preserve or enhance current public funding.
  • Make it transparent with producer involvement.
  • Maintain the privilege of farm-saved seed.
  • Systems be administered in a fair and equitable manner.
  • Ensure producers can remain competitive in the world marketplace.

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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