Seed royalty pilot could show viable path

You can’t really blame the seed industry for forging ahead with a farm-saved seed royalty project, but it’s too bad the plan is vehemently opposed by the prairie wheat and barley commissions.

Last winter featured some heated initial consultations where the two options of an endpoint royalty system and a farm-saved seed trailing royalty were floated. A lot of farmers made it clear they wouldn’t be happy with any system that was going to cost them more money.

But you get what you pay for. Hopefully, governments will continue their contributions to public plant breeding, but it’s doubtful their investment will increase.

Meanwhile, private plant breeders want to do business in Canada, but they need to get paid for the varieties they release and develop.

Federal officials are making it clear that the consultation process is being dropped. Can’t blame them either since no amount of talking was going to bring a consensus.

Seed companies have the right to develop contracts with a trailing royalty on farm-saved seed. No government action is required. Farmers will have a choice whether to use those varieties.

Like any other input, it’s a business decision. Does the new variety offer enough benefit to warrant the initial cost and the ongoing cost if you save seed for replanting? If not, farmers won’t participate and can continue growing any of the existing varieties where a trailing royalty doesn’t apply.

This first year of the pilot project will involve a CWRS wheat variety, a CPS wheat variety and a glyphosate tolerant soybean — all developed with private money. The pilot project, if successful, could lay the groundwork for other varieties in future years.

More companies might be encouraged to bring varieties to Canada from other regions of the world. This could bring immediate benefits as compared to the long time lag involved in the development of something brand new.

Where a trailing royalty on farm-saved seed gets messy is when it involves varieties developed with taxpayer money and the assistance of producer check-off funding. On that issue, the wheat and barley commissions have a more legitimate concern.

Farmers could view this as paying for the same variety twice — with check-off dollars and through a farm-saved seed royalty. However, this isn’t as nefarious as it sounds, as long as the farm-saved seed royalty flows back to the public breeding institution and is used for more varietal development.

Royalties on certified seed sales already flow back to the funding agencies, but certified seed sales alone are nowhere near enough to cover development costs in crops like wheat and barley, where producers buy a new variety only once and then benefit from the genetics for years by saving their own seed.

Obviously, producer-funded commissions, public breeding institutions and the seed companies that commercialize public varieties will need to discuss and negotiate how the money flow is going to work in any trailing royalty system, but this shouldn’t be an insurmountable problem.

It’s generally accepted that money invested in variety development has a high rate of return, generated not only through yield, but in agronomic traits as well. Value creation in the Canadian grain sector has been discussed for more than a decade. Rather than endless debate, seed companies are moving ahead with a market-based pilot project.

At the least, this will inform the discussion and hopefully it provides a viable path forward.

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

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