Ottawa to consult on seed royalty proposal

The federal government has agreed to launch a formal consultation process that will look at potential changes to Canada’s plant breeders rights system, including the collection of farmer royalties on the use of farm-saved seed.

The Canadian seed industry — through a group known as Seed Synergy — has been pushing for changes to PBR regulations for some time.

Specifically, it is seeking changes that would allow companies to generate more revenue from the sale and use of new, PBR-protected cereal seed varieties that are approved for sale in Canada.

Seed Synergy partners, including the Canadian Seed Trade Association (CSTA) and the Canadian Seed Growers Association (CSGA), sent a letter earlier this year to federal Agriculture Minister Lawrence MacAulay asking that Ottawa launch a formal consultation process this fall, which could clear the way for the collection of farm-saved seed royalties as early as 2020.

Last week, Seed Synergy partners announced Ottawa has agreed to launch those consultations.

The consultations will include fall meetings across Western Canada, with dates and locations yet to be confirmed.

The first meetings will likely be held in November.

It is unclear how much revenue a farm-saved seed royalty would generate for Canada’s commercial seed trade, but some estimates suggest that the annual cost to commercial grain growers in Canada could be tens of millions of dollars annually, or more.

“Everyone recognizes the need to invest in innovation in order to deliver new varieties,” said Todd Hyra, president of the Canadian Seed Trade Association.

“In order to attract and retain the best plant breeders, Canada needs a system that compensates them for their efforts. Changes to the existing system will ensure lasting investment in variety development in Canada … allowing us to compete more effectively on a global scale.”

At seed industry meetings held earlier this year in Montreal, organizations that are part of the Seed Synergy initiative conducted detailed discussions and workshops on the merits of different royalty collection systems that could be introduced, including trailing royalties on farm-saved seed and end-point royalties (EPR), which are collected on grain that is harvested and sold through commercial channels.

In the end, the organizations decided that a trailing royalty on farm-saved seed would be the best option.

According to a report prepared by JGR Consulting Group, the introduction of farm-saved seed royalties could generate more than $100 million a year in Canada.

Hyra said it is not completely clear how a farm-saved seed royalty system would be rolled out, but in general the concept would operate as follows:

  • Up-front contracts would be signed by commercial grain growers at the time a new seed variety is purchased.
  • The contracts would outline restrictions on the future use of farm-saved seed, including applicable royalties that would be collected on a per-acre or a per-bushel basis.
  • Royalty rates would be determined by seed developers and their authorized distributors.
  • Royalty contracts and data on farm-saved seed use would be maintained and monitored through a web-based data collection system, allowing for centralized administration of royalty fees on all applicable varieties.
  • The royalties would be applied only to new varieties that were registered in Canada under the UPOV-91 convention.
  • Older PBR varieties that were registered under UPOV-78 rules would be exempt, meaning farm-saved seed royalties could not be applied retroactively to many of Canada’s existing cereal varieties.

Hyra said Seed Synergy partners agreed that the farm-saved seed royalty would provide the most comprehensive reach across all crop types and would ensure that certain crop types, such as feed barley and feed oats, are not missing out on royalty revenues.

“Those crops need investment as well, and this farm-saved seed trailing royalty option would ensure that (they) get investment as well.”

Plant breeding programs that are already receiving government support or producer check-off money would presumably have lower royalty rates than private-sector breeding programs that are developing new varieties without public or producer support.

Hyra said seed industry organizations, including the CSTA, are mindful of the fact that primary producers are facing challenging times and may not be in a position to pay extra royalties for the right to use the newest varieties.

For that reason, it’s important that farmers continue to have the option of using existing UPOV-78 cereal varieties on a royalty free basis.

“It’s important that there is choice available,” said Hyra, who also serves as the western Canadian business manager with SeCan.

“But in order to keep us competitive long-term, it’s important that we’re generating the best possible products that allow us to (remain competitive).”

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