Federal seed royalty consultations in limbo

It remains to be seen if Ottawa will restart a federal consultation on seed royalties that was cut short last year or if it will step back and let seed companies chart their own course forward.

A government-facilitated seed royalty consultation process was launched in late 2018 but was sidelined last year when the Liberal government turned its attention to the 2019 federal election.

Now it is unclear if the federal consultation process will continue, or if Ottawa will distance itself from the issue in hopes of avoiding criticism from a vocal group of primary grain producers who oppose additional royalties on plant-breeders’ rights -protected seed varieties.

Regardless of what Ottawa chooses, it is expected that individual seed companies will move forward with plans to introduce new seed royalties, using contract law if necessary.

Under that scenario, seed companies that develop and commercialize new seed varieties would ask farmers to sign variety-use agreements that place conditions on the reuse of new PBR-protected seed varieties for the purposes of replanting.

Similar contract agreements are already being used on products such as canola and midge-tolerant wheat varieties.

Variety-use contracts could be applied to additional seed varieties without government endorsement or the need for new regulations.

Dave Carey, executive director of the Canadian Seed Trade Association (CSTA), said seed companies have not been told by Ottawa whether the federal consultation process will be restarted.

Carey said Ottawa has been working on an economic analysis that outlines the financial costs and benefits of a new seed royalty collection system as they pertain to farmers, seed companies and seed developers.

But in a Jan. 10 interview, he said it is still unclear when Ottawa is planning to unveil its economic analysis or whether Ottawa is inclined to endorse a new royalty collection system through new PBR regulations.

Carey said seed companies generally favour the introduction of a seed royalty collection system that is endorsed by Ottawa and authorized through government regulation.

But others in the commercial seed trade acknowledged last week that Ottawa is becoming increasingly reluctant to get involved in an issue that could further erode its support among western Canadian farmers.

“To be honest, we’re a little concerned that the federal government may disengage from the process unless they’re asked to re-engage by a producer group,” said one source who spoke on the condition that his name be withheld.

“We’re not going to ask the federal government to do anything it’s not comfortable with … and I don’t think the federal ag minister has any strong desire to get involved in this kind of controversy right now.”

If Ottawa pulls back from the seed royalty file, it is widely expected that seed companies will move forward with trailing seed-use contracts that are signed when growers purchase quantities of new, royalty-eligible, PBR-protected seed varieties.

Some seed companies have confirmed that they are considering the introduction of back-end variety-use contracts on a trial or pilot basis, possibly as early as this year.

Other are looking at existing variety-use contracts and are assessing how the terms of such contracts could be monitored and enforced.

“The seed industry is moving forward with planning and analyzing and structuring trailing royalty contracts,” the anonymous source said.

“We’ve looked at what we’ve done successfully in the past, and the success we’ve had is putting in place contracts between tech suppliers and farmers directly, with no third party or government involvement.”

“At this point, we’re in support of a system that’s run by the industry … with minimal impact from third parties,” the source added.

“How fast we move forward? Well, we have some proposals but nothing has been confirmed just yet.”

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