Seed royalty debate needs Plan C: farm group

Growers would like an assurance that 100 percent of royalty revenues generated are reinvested into plant breeding

SASKATOON — Discussions about value creation in the Canadian cereal grains sector have been relatively quiet over the past month or so, at least it seems that way on the surface.

Behind the scenes, however, work is continuing to determine whether a new seed royalty collection system will be introduced, and what that system might look like.

Anthony Parker, commissioner of the Plant Breeders Rights Office at the Canadian Food Inspection Agency, addressed the Prairie Grain Development Committee (PGDC) in Saskatoon late last month and told PGDC members that an industry-wide consultation on seed royalties will soon be entering its next phase.

Online consultations will commence in March and will include an in-depth economic analysis of the two value creation models currently being considered — end point royalties (EPRs) on farm-saved seed and trailing contracts.

“What we expect is that some time in March we’ll have an online posting of our consultations along with … (an) economic analysis and some key questions that we’re going to be posing to the stakeholder communities,” Parker said.

“In terms of the economic analysis, it is forthcoming .…

“It’s going to be a part of that online consultation (and) it’s going to deal with not only the economic benefits to the sector itself, but also to the Canadian economy as a whole … (and) its impact on producers.”

Parker repeated claims that the federal government is in no rush to make regulatory changes that could lead to the implementation of new royalties applied to farm-saved seed.

Government facilitators are also aware that Canadian farmers will soon be preoccupied with planting their 2019 crop, he added.

“We’ll roll out that online consultation over the spring … (but) if we have to pick this up and continue the discussion next fall or next winter … that’s fine,” Parker said.

“We need to do this properly and we need to get it right the first time.”

Industry wide consultations on “value creation” in the cereal grains sector began last fall.

Prairie meetings held in Winnipeg, Saskatoon and Edmonton attracted hundreds of commercial grain growers, many of whom expressed strong opposition to the notion of collecting additional royalties on farm-saved seed.

Parker said there is evidence to suggest that collecting additional royalties would benefit all players in the production and supply chain, including primary producers.

“When we look at successful funding models (in place in other countries), what they’ve done is they’ve grown the amount of investment, the amount of innovation and the productivity and profitability … of wheat, and those benefits have been distributed equally between breeders and producers,” he said.

“Really, at the end of the day, none of these systems work unless they increase profitability for the producer.”

Although previous discussions about value creation have focused on end-point royalties or trailing contracts, support is growing for a third option that’s endorsed by primary producers.

Industry sources told The Western Producer that a third model was to be presented at the next Grains Round Table meeting to be held March 8 in Montreal.

General farm organizations including the Alberta Federation of Agriculture have been working on the proposal, which will require additional time to fully develop.

Todd Lewis, president of the Agricultural Producers Association of Saskatchewan, said he’s encouraged that there seems to be a willingness to consider other options, including ideas that have some level of support from commercial grain growers.

“Our membership (at APAS) wasn’t happy with either one of the proposals that were put forward initially and we certainly weren’t impressed with the level of producer engagement that took place before those two ideas were put forward,” Lewis said.

“I think that’s an indication that we need to have a Plan C that’s producer driven, from the grassroots up.”

Lewis said producers would be more inclined to support a model that ensures a greater level of producer control, and more transparency.

Specifically, growers would like an assurance that 100 percent of royalty revenues generated are reinvested into plant breeding.

APAS would also like to ensure that a new royalty collection mechanism would not have a negative impact on provincial cereal commissions.

“I think the other part is that producers want to see governments still involved in research and varietal development, “ Lewis added.

When it comes to varietal development “we’ve got some really good building blocks in place at AAFC (Agriculture Canada) and CDC (the Crop Development Centre)….

“Let’s ensure that we keep those pieces in place and improve on the system that we have.”

Lewis said it’s unlikely that farm groups would be able to develop a detailed alternative under tight timelines.

More likely, it will take months to develop a third funding model that has the support of farmers across the West.

“At this point it’s way too early to say that there’s a Plan C that’s ready to go,” Lewis said.

“I think we need to take a little time here, flesh out some ideas and see if we can’t put a plan together that has better buy-in from producers.”

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