Your reading list

Seed tax break idea has research merit – WP editorial

THERE IS widespread agreement that the federal government would help farmers and the country if it gave more support to agricultural research.

A dollar spent on research pays back many fold in increased productivity.

But there is disagreement over a proposal advanced by the Canadian Seed Trade Association and supported by Grain Growers of Canada that would create an enhanced tax writeoff for buying certified seed.

The idea is that the tax break would encourage farmers to buy certified seed instead of sowing farm-saved seed. This would generate royalties for seed companies, encouraging them to invest more resources in developing better varieties.

But some, including the National Farmers Union, argue that this would amount to a subsidy to seed companies, giving them greater power and making farmers more dependent on them over time.

This disagreement should not obscure the near universal agreement among farm groups for increased direct federal investment in public research, particularly in increased support to Agriculture Canada’s research division, which has never recovered from deep cuts made in the 1990s when then-finance minister Paul Martin was attempting to slay the deficit.

As the Grain Growers of Canada noted in a presentation to the House of Commons finance committee last month, in the last 15 years federal contributions to Ag Canada’s research branch have been stagnant with no increases for inflation.

In 2009 dollars, this means funding has dropped to $280 million from $458 million, nearly a 50 percent cut.

The number of scientists has dropped more than 10 percent in the last few years.

The Grain Growers’ request that Ottawa double the base funding to Agriculture Canada’s research branch is backed by most farmers.

When the federal government cut spending on public agricultural research, it implemented policies to encourage private investment. Canola, corn and soybean breeding benefited from this move, but there has been little impact in other crops.

Private breeding companies have not been active in crops such as wheat, barley, pulse and special crops because farmers tend not to use certified seed each year in these crops. They tend to use certified seed only when upgrading their genetics to new varieties every few years, whereas with hybrid canola they buy seed each year.

The ability to use farm-saved seed is a critical tool in the context of rapidly increasing input costs and it would be wrong for government to interfere with it.

But there are benefits to using certified seed. It is clean, variety pure, quality seed that has the latest genetics and is traceable, a trait of increasing importance.

In some cases crop insurance gives a break when certified seed is used and some buyers require its use.

A tax-based encouragement to buy certified seed would produce desirable benefits of upgrading farmers’ seed stock and increasing royalties, providing incentive to private and public breeders to increase and expand their efforts into new crops.

The policy would be unlikely to make farmers overly dependent on seed companies because the incentive would be only modest and certified seed would have to deliver clear economic benefits to attract farmers’ business.

Bruce Dyck, Terry Fries, Barb Glen, D’Arce McMillan and Ken Zacharias collaborate in the writing of Western Producer editorials.

Markets at a glance

explore

Stories from our other publications