Black market seed sales concern industry

The sector wants the federal government to take action as buyers from Kazakhstan look to illegally buy seed in Canada

The Canadian seed industry is seeking government help to curb the black market sale of Canadian seed varieties to shadowy buyers in Kazakhstan.

Lorne Hadley, executive director of the Canadian Plant Technology Agency, says unnamed seed buyers from Kazakhstan have been attempting to gain illegal access to made-in-Canada varieties of wheat, barley, pulse crops and soybeans.

The buyers have been contacting Canadian seed companies, seed growers, brokers and grain handlers, attempting to acquire supplies of the most productive and popular publicly developed seed varieties available in Canada.

The attempts to acquire black market seed are aimed primarily at seed varieties grown in Western Canada and have been ongoing for several months, Hadley said.

The Kazakhstani buyers have already obtained some seed, although the exact quantities have not been confirmed.

The Canadian seed industry has asked companies and growers in Canada to be aware of the illegal seed export scheme and to report any unsolicited calls or offers from buyers in Kazakhstan.

“They’re importing seed and putting it in the ground in Kazakhstan,” said Hadley.

“They’re targeting the best and most recent genetics … and they’re looking for specific varieties that have good market share in Western Canada and have proven to be good varieties here.

“We really hoped that there would be something that could be done by the federal government to slow or stop this activity … (but) we haven’t got any assistance at this point from the federal government to stop it.”

Seed varieties that are popular in Western Canada are well-suited to production in Kazakhstan because the two regions have similar growing conditions.

“I have never been to Kazakhstan but as I understand it, anything that grows well in Regina will probably grow in Kazakhstan, as well,” Hadley said.

Kazakhstan is a grain exporting economy, but grain quality and crops yields there are relatively low and access to high quality seed genetics is limited.

As a result, Kazakhstani interest in Canadian seed genetics has grown in recent years, resulting in illegal seed export schemes and direct solicitations from eastern European buyers.

Hadley confirmed that buyers from Kazakhstan have managed to secure some seed from suppliers in Canada, despite the fact that the sales contravene commercial distribution agreements.

In Canada, commercial seed distribution agreements do allow for some seed varieties developed in Canada to be sold to foreign buyers. However, those agreements typically require that seed royalties be paid to the Canadian companies that developed and commercialized the seed.

In the case of the illegal sales to Kazakhstan, no such provisions exist.

The sales that have taken place so far are illegal and involvement of Canadian seed producers or sellers could result in legal actions here at home.

“We’re reluctant to (prosecute Canadian suppliers), but if the activity doesn’t stop, I guess we’ll have to,” Hadley said.

So far, the CPTA has issued warnings to a number of Canadian companies.

A recent tweet implied potential connections with companies or individuals based in Montreal, High River, Alta., and Tisdale, Sask.

The issue of black market seed sales is not completely new to the Canadian seed industry.

However, the sales to Kazakhstan are unusual in that buyers are persistent and have ignored requests to stop buying Canadian seed for reproduction abroad.

The issue is particularly concerning for Canadian farmers, seed companies and grain exporters.

Canadian grain companies compete directly with Kazakhstan-based grain exporters in global grain markets.

As Kazakhstan’s grain quality and production increases, Canadian farmers who helped fund the development of new seed varieties will lose their competitive advantage and essentially be financing their competitors overseas.

In past instances, illegal seed sales and export schemes have been stopped promptly after warnings were issued to foreign buyers and users.

This time, buyers in Kazakhstan have ignored warnings and have attempted to move their activities further underground by changing their identities or taking other steps to avoid detection.

“It’s just a very difficult situation,” said Hadley.

“There have been several attempts made by Canadian seed companies to talk to the (groups) involved who are based in Kazakhstan to ask them to stop … but rather than stopping, they continue to make calls, or they change the name of the company they’re working for.

“We know that farmers are concerned that Canadian varieties are being exported (illegally) for use by other countries.…

“As Canadians, we support a system of high grain quality … and we pay for that system through the purchase of seed, through seed royalties and through grants from producer groups and government funding, so for someone (from Kazakhstan) to come and say we’re going to buy … limited quantities of your seed to build our own agriculture sector in competition with yours — our Canadian seed companies just don’t approve of that.”

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