Seed royalty plan requires electronic monitoring

Canadian seed organizations are moving ahead with a prototype royalty collection system that could form the basis of a permanent system to monitor and manage seed variety use agreements (SVUAs) and royalties on farm-saved seed.

The prototype system, announced Feb. 25 by the Canadian Seed Trade Association (CSTA) and the Canadian Plant Technology Agency (CPTA), will be in place this spring and will involve three new seed products — two wheat varieties and one glyphosate tolerant soybean variety.

Lorne Hadley, executive director of the CPTA, said the prototype system will be assessed for a two-year period, at which time future decisions will be made regarding wider implementation involving more UPOV-91 PBR protected seed varieties.

“I think when you’re building any prototype … your goal is to evolve the thing to the point where it can be implemented…,” Hadley said.

“Once we get to the end of the (two-year) pilot period, then the decisions will be made as to what happens next….”

Producer-funded cereal grain commissions in Western Canada reacted critically to the pilot project.

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.”

Under the pilot project model, commercial grain growers who purchase certain new varieties will be required to sign a contract, or SVUA, that places contractual conditions on their ability to save and re-use farm-saved grain for the purpose of replanting.

The prototype system is aimed at determining how SVUAs can be managed and monitored and whether a permanent SVUA-enabled seed royalty system should be introduced on a wider scale.

Officials from the CSTA and CPTA described the initiative as a two-year pilot program that is likely to be altered and improved over time. Additional seed varieties may be added in the future, but only new UPOV-91 seed varieties that are PBR protected would be eligible.

At least two additional seed varieties produced by Agriculture Canada’s producer- and taxpayer-funded cereal-breeding program are likely to be added to the prototype system, possibly as early as next year, according to sources in the seed industry.

The prototype system will also require the creation of an electronic monitoring platform, similar to one that’s already being used in Canada to manage and monitor midge-tolerant wheat varieties.

Seed purchases made by farmers will be entered into the electronic platform and growers will be required by contract to declare if they are saving harvested grain for the purpose of replanting in subsequent years.

Participating growers will receive royalty invoices based on their declaration and will also be subject to audits to ensure compliance.

The CSTA announcement came days before the federal government was expected to release details of an economic analysis that looks at the financial impact that a new seed royalty collection system would have on Canadian grain producers.

Saskatchewan barley grower Jason Skotheim, who is chair of the Saskatchewan Barley Commission, said the SVUA pilot could frustrate 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 three new seed products covered under the prototype system include a pair of Limagrain wheat varieties — a CWRS wheat registered as CS Daybreak and a CPS variety registered as CS Accelerate.

The third product is a yet-to-be registered glyphosate tolerant soybean line developed by North Dakota State University (NDSU).

The Limagrain wheat varieties will be distributed through the Canterra seed network. The NDSU soybean line will be distributed by SeCan.

Royalty rates on farm-saved seed will be determined by seed distributors.

Stakeholders in Canada’s commercial seed trade have long argued that additional royalty revenues are needed to stimulate future investments in plant breeding and varietal development.

Previous discussions surrounding seed royalty models ground to halt last year in advance of the federal election.

“I think … the driver of this is that … the seed industry wants to take a leadership role in coming to a solution…,” Hadley said.

“We believe the conversation (about seed value creation) should continue.

“The SVUA pilot is … certainly not set up to stop that discussion. It’s set up to inform further discussion.”

In addition, the CSTA will create a new working group “to help monitor, oversee, assess and evaluate the effectiveness and performance” of the new royalty collection mechanism.

CSTA interim executive director Tyler McCann said the working group is expected to include seed breeders and distributors, producer groups and commissions, pedigreed seed growers and retailers.

McCann said membership on the working group should be determined in the next few weeks.

“I think government did a lot of really important work in launching their (value creation) consultation process and taking that as far as they could. But at the end of the day, government can’t build an industry consensus. It’s up to industry to build an industry consensus.”

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