BASF is introducing a technology use fee for its canola and sunflower systems starting in 2008.
The company will charge growers $30 per bag of Clearfield canola and $3 per acre for Clearfield sunflowers. The canola fee works out to about $3 per acre.
“The Clearfield Commitment Fee is part of our strategy to accelerate trait-based innovations and ultimately deliver even more opportunity to western Canadian growers,” said Ron Kehler, marketing manager for BASF Canada.
Brian Tischler, president of the Canadian Canola Growers Association, had a different way of describing the company’s actions.
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“If they feel comfortable doing the old money grab, great,” he said.
Tischler has no problem with seed companies introducing new fees because the market is so competitive that it will sort itself out. But he does find it curious that BASF chose to go the route of charging a technology use agreement (TUA) fee.
“They could have just added to the price of their seed,” he said.
Until now, Monsanto was the only company using the TUA pricing strategy on canola, charging growers a $15 per acre fee for using its Roundup Ready technology.
The company received flack from growers for charging the controversial fee, which has some wondering why BASF is following suit.
“The question is, where are they heading with this?” said Tischler, who quickly answered his own query.
“I think the idea is to get the farmers used to signing a TUA, used to paying these things.”
In the United States, where genetically modified corn and soybeans dominate the crop landscape, most seed is purchased from seed companies on an annual basis. But in Canada, aside from the 14 million acres of canola that are bought, most crops are planted with saved seed.
Tischler said he thinks companies like BASF are trying to pave the way for more “bought acres” in other crops like wheat by getting farmers used to signing legal agreements. But BASF said it won’t be charging what it calls a Clearfield Commitment Fee on its wheat and lentil systems in 2008.
TUA fees make it more difficult to choose among canola varieties, said Mike McAvoy, manager of Saskatchewan Agriculture’s crop section.
At one time a grower would compare maturity dates, yield performance data and disease packages.
“Now there’s some new complexities there. I think it takes a little more planning ahead by farmers in terms of what system they would want to use.”
Growers have to compare seed and herbicide costs, TUA fees, weed control spectrums and varietal performance.
But Tischler said no matter what pricing strategy is used, the companies have to remain competitive with one another. One system can’t cost growers an extra $10 per acre because farmers will sniff that out in a hurry.
“They make that choice with their wallet and they will determine which technology succeeds or fails,” he said.
Accompanying BASF’s new fees are some new varieties. Four hybrid canolas will be available in 2008, two of which are new and two of which were introduced in 2007. There will also be four Nexera varieties available, two of which are new. Five Clearfield sunflower varieties have been approved by government regulators.
Farmers who sign the commitment will be entitled to 10 percent off BASF’s canola and sunflower herbicides and other benefits related to herbicide failure.
