Farm-saved seed royalties not unreasonable

“If this goes through, I’ll be out of business,” said a producer attending the Dec. 4 consultation in Saskatoon on options for farm-saved seed royalties. The comment is indicative of the level of concern — concern out of proportion to the actual proposals.

Under the rules imposed on media, comments made during the meeting are not to be attributed to a person or organization. Suffice to say that many in attendance felt that farmers are victims of corporate agriculture, and farm-saved seed should never have a royalty of any kind attached.

New varieties, they believe, should come only from taxpayer-funded breeding programs at no cost to producers. What has happened with canola seed is evil corporate greed. Besides, if we get better varieties that yield better, we’ll just depress world prices. And besides that, our transportation system is strained to the limit so we couldn’t export more even if we produce more.

Producers who see the potential merit of more private investment in variety development were also in attendance at the Saskatoon meeting, but since that wasn’t a popular view, those producers didn’t have a lot to say.

The federal government has indicated that while it’s committed to maintaining research funding, additional funds will not be allocated to varietal development. Many of our competitors have come up with ways to encourage more private investment.

For their part, seed companies say they can’t justify investments when only a limited opportunity exists to generate a return. Producers who buy certified seed of a new wheat or barley variety typically grow crops from farm-saved seed for many years thereafter.

This is an important discussion and many questions need to be addressed, but a royalty on farm-saved seed isn’t as nefarious as many believe.

Consider this scenario. Durum is very vulnerable to fusarium in wet years. In 2016, a large percentage of the durum crop was feed quality due to the vomitoxin levels. Just imagine if a seed company developed a durum variety with significantly enhanced tolerance to fusarium. Rather than charging an arm and a leg for certified seed, the initial seed cost is more manageable, but includes a trailing royalty on any of the grain saved for seed in subsequent years.

In year one, you would buy certified seed that included a royalty. In years to follow, you would pay a small trailing royalty for use of the technology within the seed. This might be $1, $2 or $3 an acre. Seed developers, whether private or public, would have latitude to set the rate depending upon the value of the genetics.

If you didn’t like the performance of the variety after the first year and didn’t want to seed it again, you wouldn’t pay a trailing royalty.

Of course, no one would be forcing you to buy the seed in the first place. Royalties on farm-saved seed can be applied only to the newest varieties registered after UPOV 91 came into effect in Canada. Older varieties should continue to be available and this is something that any regulatory changes must ensure.

Where’s the victim in the example above? Seed companies would have to develop varieties that farmers are willing to pay for. All the provisions for royalties would be laid out in the contract. If you don’t like the deal, don’t buy the seed. Use a variety where the trailing royalty doesn’t apply.

Kevin Hursh is an agricultural journalist, consultant and farmer. He can be reached by e-mail at kevin@hursh.ca.

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