GUELPH, Ont. — The time is ripe for an investment in plant breeding and other agricultural research, according to a University of Sask-atchewan agricultural economist.
Given the federal government’s commitment in its recent budget to agricultural innovation and the enactment of the Agricultural Growth Act two years ago, steps can be taken to increase spending, combining dollars from private companies, government and producers, Richard Gray said during a lecture at the University of Guelph.
“Wednesday’s (March 22) budget illustrates how important agriculture is,” he said.
“Perhaps for the first time the federal government has included agriculture as one of the six areas for investment in innovation.”
Gray described it as the 4P approach: a partnership between the public and private sector and producers.
“It seems to be the best model.… The more sources of funding you have, the more money you have,” he said. “Producers as a whole have to say we want to do this, and the seed industry needs to be in alignment.”
In Australia, plant breeding is funded through the Grains Re-search and Development Corp. (GRDC), which was established by the Australian Parliament in 1990. It collects producer dollars that are matched with government funds, generating about $200 million.
When producers deliver grain grown from the program’s varieties, a royalty is directed to the seed developer. In the case of wheat, most royalties go to Australian Grain Technologies (AGT), a company founded in 2002 by two levels of government and the GRDC.
Other companies were created, but it was AGT that was most successful with its development of two wheat varieties. Gray said that may be a shortcoming to the approach because other companies involved in the program have far less access to wheat royalties.
In France, where there’s been a long history of producer-government partnerships, royalties flow back to breeders from all grain sales as a proportion of their certified seed sales. Royalty rates are negotiated with farmer input, and there’s a refund system for small farmers and certified seed growers.
In Canada, Gray said the 4P approach would begin with government passing legislation to create a one percent end-point royalty on the sale of all crops to be paid to variety owners. This would create a large and immediate revenue stream for crop breeders and make Canada compliant with UPOV 91, the latest revision of the international convention protecting new varieties.
Ottawa could also use its research mandate to create national producer-controlled organizations funded through check-offs. With matching government funding, existing organizations would be encouraged to participate.
From there, corporations similar to the AGT in Australia could be formed with the private and public sectors. As well, government would continue to support basic and applied scientific research.
Gray said it’s a challenge in Canada to raise an adequate level of support for many non-hybrid crops beyond the money generated through certified seed sales. Wheat and barley are prime examples, he added.
With hybrids and crops such as canola, companies simply charge as part of the seed price what they feel is required to fund their breeding programs.
Gray feels the new system he proposes would put all crops on a more even footing when it comes to new variety development. In addition, with a secure new funding system in place, companies marketing hybrids would have the option of reducing the prices producers currently pay for their seed.
In directing more money toward research, producers and companies would benefit in the long term, Gray said.
He cited a published review of more than 2,600 studies examining the return to agriculture and food from research and development investments.
“It’s a like a bank account that returns 37 percent a year. It’s come almost to the point that you don’t need any more studies to show there’s a good return from research.”
Gray also dismissed the notion that Canadian farmers like to avoid change. In fact, the opposite is true, he said, citing the adoption of canola and new approaches cropping management as evidence.
“There is certainly a lot of evidence of innovation,” he said.
“In fact, you could call it a culture of innovation.”