The university’s Crop Development Centre won’t renew a royalty-free arrangement with provincial organization
The University of Saskatchewan’s Crop Development Centre has ended a decades-long breeding agreement with the province’s pulse growers.
“We did make an offer to the Crop Development Centre to do a similar agreement as we’ve had in the past,” Saskatchewan Pulse Growers chair Brad Blackwell told growers attending the group’s annual general meeting at CropSphere last week in Saskatoon.
“But they have decided that they will seek investment from a range of new partners.”
Growers have invested $41.7 million in crop breeding activities at the CDC since the agreement was first signed in 1997. Another $20 million has been spent on genome and genetic research.
In return, the province’s growers received royalty-free access to the 128 pulse varieties released by the CDC over that time.
That arrangement comes to an end this September.
Pulse growers will retain royalty-free access to those 128 varieties. SPG is still negotiating ownership for new varieties that are in the second year of co-op trials.
SPG is budgeting $5.5 million for pulse breeding in the current fiscal year, which represents about two-thirds of its planned research and development expenditure. It is the association’s single largest expenditure.
Executive director Carl Potts said there is no doubt the crop breeding expenditure will shrink in the coming years, but the association has no plans to reduce its 0.67 percent levy on pulse crop sales.
“We’re likely to invest those levy dollars in different ways,” he said.
SPG will continue to fund targeted, outcome-based breeding projects such as developing root rot resistance traits for peas and lentils, creating a new herbicide tolerance system for lentils and producing varieties that allow for broader adaptation of chickpeas and fababeans.
However, Potts said growers have no appetite for funding such projects on the front-end and then paying for them again on the back-end through royalties.
There will need to be some type of arrangement where SPG receives a portion of those royalties.
He said SPG will continue to work with the CDC on targeted breeding projects, but it will also be forging new relationships with public and private breeders and seed companies.
This is probably a good time for the association to be reducing its pulse breeding expenditure.
Revenue for the current fiscal year is budgeted at $10.6 million, 90 percent of which comes from the checkoff. That is 55 percent lower than the peak revenue in 2015-16.
Expenses are forecast at $13.6 million, which is 36 percent below the peak in 2016-17. That means the association will once again be running a deficit.
SPG incurred deficits of $2.6 million in 2019 and $6.8 million in 2018.
The association has been living off its once substantial reserves, which amounted to $23.8 million in 2018. They fell to $17 million in 2019 and will be declining further in 2020.
A portion of those reserves was considered to be internally restricted. The association is increasing that restricted amount to $12.2 million in 2020 from $6.5 million in 2019.
Potts said $1.6 million of that will be set aside for closure costs in the unlikely scenario that SPG was forced to shut its doors.
Another $10.6 million is being set aside to cover multi-year commitments such as research projects in years when there is an unexpected reduction in levy revenue because of reduced pulse acres and prices.
SPG eventually wants another $1 million placed in restricted reserves to fund major strategic investments such as the university’s phytotron and greenhouse improvements. That hasn’t been funded yet.
The long-term goal is to eliminate any excess reserves above that restricted $13.2 million.
Blackwell said the SPG board comprises farmers who want to make sure their money is invested wisely.
“As farmers, we get the most return on our levy when it goes towards research and learning, not sitting in a bank earning interest,” he said.
“But as farmers we also want to be responsible and we know the markets have gone down for more than one year and we want to be prepared for those years.”