Seed industry introduces royalty collection plan

Canadian seed organizations are moving ahead with a royalty collection plan that’s designed to generate greater financial returns from the development and sale of new PBR-protected seed varieties.

On Feb. 25, the Canadian Seed Trade Association (CSTA) and the Canadian Plant Technology Agency (CPTA) announced plans to launch a seed variety use agreement (SVUA) pilot program to determine how SVUAs can be used and implemented in Canada.

The pilot project, which is expected to be in place this year, will apply to at least three new PBR protected seed varieties, including two wheat varieties and one soybean variety.

The wheat varieties include two Limagrain products — a CWRS variety named CS Daybreak and a CPS variety called CS Accelerate.

Royalty rates on those varieties have yet to be determined but should be known by early March. The two Limagrain wheat varieties will be distributed through the Canterra network.

The third variety covered in the SVUA pilot will be a glyphosate tolerant soybean variety developed by North Dakota State University and distributed in Canada by SeCan.

The SeCan soybean variety has yet to be registered but CFIA registration is expected shortly. The SVUA on that variety will be the first opportunity for glyphosate tolerant soybean growers in Western Canada to save seed and use it for replanting purposes.

The pilot program may be expanded to cover additional varieties, said officials from the CSTA and CPTA.

The pilot project will require the creation of an electronic platform that will track purchases of the seed varieties involved, as well as the use of farm-saved seed that’s used to plant commercial grain crops in subsequent years.

Royalty rates will be determined by seed breeders and retailers that are responsible for developing and/or commercializing the varieties.

Work has already begun on creating the electronic monitoring platform. The two-year pilot program is expected to lead to the creation of a permanent platform that facilitates the use of seed variety use agreements and accommodates the collection of seed royalties through a centralized invoicing system.

The pilot program is the culmination of several years of discussions within the commercial seed industry about the need to generate additional royalty revenues from new and improved seed varieties that are available to Canadian grain growers.

In addition to the creation of the electronic platform, the CSTA is also creating a working group comprising seed industry stakeholders such as seed breeders, seed retailers, pedigreed seed growers and producer groups.

The CSTA working group will meet regularly to discuss issues related to the SVUA pilot program, assess its success and provide advice on changes or potential improvements.

Membership of the CSTA working group has not yet been announced but a number of organizations have already been contacted, CSTA officials said this week.

Todd Hyra, western Canadian business manager for the seed distributor SeCan, said the SVUA pilot project is an important step forward for the Canadian seed industry.

“It has been a 12 year journey to get to this point on value creation, and I’m thrilled that we are taking steps to make the Seed Variety Use Agreement a reality,” said Hyra, a past-president at the CSTA.

“I’m excited about the opportunity that the pilot program offers to provide evidence of value, transparency and choice for all.”

In a Feb 25 new release, the CSTA said the SVUA pilot project and the creation of a new working group are an opportunity for the seed industry “to show leadership and establish how the SVUA will provide value for farmers, industry and the agriculture sector at large.”

The CSTA strongly favours the collection of additional seed royalties as a means of supporting ongoing plant breeding effort in Canada and ensuring that Canadian farmers have access to new seed varieties that allow them to compete effectively in global grain markets.

Over the past year or more, farmer response to the implementation of new seed royalty collection mechanism has been mixed at best.

Some growers and grower groups have voiced support for the idea but others are strongly opposed. They argue that placing restrictions or contractual limitations on farmers’ ability to use farm-saved seed on a royalty-free basis is unnecessary and will impose additional costs on the primary producer at a time when farm profits are already shrinking.

On Feb. 26, provincial wheat and barley commissions in Manitoba, Saskatchewan and Alberta issued a strongly worded news release expressing “significant concerns about the Seed Variety Use Agreement (SVUA) pilot project and its future impact on western Canadian wheat and barley producers.”

“The five wheat and barley commissions (in Manitoba, Saskatchewan and Alberta) are not a party to, nor supportive of this pilot SVUA program,” the joint news release stated.

“The pilot is separate from the federal government’s consultation process on a new seed royalty structure and signals the seed industry’s commitment to the SVUA model despite the on-going consultation.”

Saskatchewan barley grower Jason Skotheim, who serves chair of the Saskatchewan Barley Commission, said the SVUA pilot has the potential to create frustration for farmers.

“There needs to be a clear demonstration of value to producers from this pilot program,” Skotheim said.

“Until that time, the pilot program should not expand to other crops such as barley, that already struggle with unique issues on variety uptake.”

“(The Alberta Wheat Commission) believes that any trailing royalty system on varieties developed through the public breeding programs of AAFC and the western universities must take into account the fact that farmers have already made a substantial investment in the development of those varieties,” added Todd Hames, AWC chair.

The five commissions said Agriculture Canada should provide assurances to growers that all royalties collected through the SVUA on Agriculture Canada’s publicly bred varieties will be returned to the department’s wheat variety breeding program in an open and transparent way to supplement the funding currently provided by producers and the federal government.

Contact brian.cross@producer.com

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