Farmers split on farm-saved seed royalties

Most farmers at Winnipeg meeting opposed to proposal, but some argued such as system would benefit them in the end

Sometime, in life, a situation doesn’t feel right or fair.

That’s how Bill Matheson feels about a proposed new system, in which Canadian farmers will have to pay royalties to plant breeders for multiple years on farm-saved seed.

“Some days you wake up in the morning and you want to think, ‘hey, I finally paid for it,’ ” said Matheson, who farms near Stonewall, Man., with his son, Nick.

“When I look at the bin of grain, I see I have some seed there. It’s mine to plant again.”

Under a new arrangement being discussed right now, Matheson could still plant that farm-saved seed, but it will come with a price.

The Canadian seed industry — through a group known as Seed Synergy — has been pushing for changes to Canada’s plant breeders’ rights system. The changes should generate a return on investment for private firms and encourage more research and development into cereal crops in Canada.

After years of discussions, the federal government is now considering two options for changing seed royalties.

Under one option, growers would pay end point royalties when they deliver and sell grain. The other option is a trailing royalty. Farmers would sign a contract, requiring them to pay an ongoing and annual royalty to plant breeders for the use of farm-saved seed.

The royalties would apply only to new seed varieties, introduced after a certain date that has yet to be determined.

On Nov. 16 Agriculture Canada and the Canadian Food Inspection Agency held a consultation meeting in downtown Winnipeg to get feedback on the two options. About 75 attended the meeting at a hotel conference room, including 35 to 40 farmers.

Up to 15 producers spoke out against the two choices and several said there should be a third option on the table: continued funding for plant breeding and varietal development at Agriculture Canada.

“I have no problem funding a public breeding system,” said James Melnyk, who has a 3,500 acre grain farm near Russell, Man.

“(But) why should I be … forced to provide funds for a private business?”

Erin Armstrong, director of industry and regulatory affairs with Canterra Seeds, told Melnyk that farmers won’t be “forced” to pay royalties to a private company. Farmers will have choice. They can choose to use seeds developed by Agriculture Canada breeders and thus pay royalties back to the public breeding system.

Melnyk didn’t accept that logic. He believes the royalties will change the system so that private firms will take control of wheat breeding and varietal development.

“Then we don’t have a choice. That’s the main concern. That’s what happened to the canola industry,” he said.

“This is where it’s leaning to.”

Others at the Winnipeg meeting made similar arguments, asking why changes are necessary when Agriculture Canada is producing excellent varieties of wheat.

“It was recently suggested … that the current system is broken,” said Mitch Janssens, who farms near Boissevain, Man.

“In the past 20 years, which is my farming career, my canola yields have gone from 31 to a 51 bushel average, a 64 percent increase. My wheat yields have gone from a 40 bu. average to about a 78 bu. average this year, which is a 95 percent increase…. The genetics we’re getting out of the current system are not flawed.”

The existing system may work, for now, but a shortfall of investment in cereal breeding could hurt Canadian farmers in the long run. A Canterra Seeds rep estimated that the annual investment in canola breeding in Canada is $75 to $80 million. The investment in cereal crop breeding is around $25 million.

If the Plant Breeders’ Rights Act is not changed and the status quo prevails, there could be long-term consequences. Canadian wheat may struggle to compete with wheat from Russia, Australia and elsewhere.

“For many people in the room, I don’t know if they’ll notice the change. It will be something that will happen 15 or 20 years from now, where we lose competitiveness in a crop and we see it go away,” said Todd Hyra, western business manager with Secan, the largest supplier of certified seed to Canadian farmers

“For the 23-year-old (farmer) in the room, he will be the one that really sees what happens.”

A number of growers at the Winnipeg meeting agreed with Hyra, saying the royalty changes are needed and reasonable.

If producers want better wheat varieties and more choice, they should “pay to play,” said James Karlowsky, a producer in southern Manitoba.

“If my returns are consistently better, I’m willing to pay.”

Others were also willing to pay royalties to increase investment in wheat breeding, but how much is reasonable? Agriculture Canada estimated that an average grain farm in Saskatchewan, with 1,700 acres, would pay $150 to $500 year, based on an end point or trailing royalty of 50 cents to $1 per tonne.

Several growers said those estimates were out of whack.

Many farms are 4,000 to 7,000 acres. Plus, the royalty rate, if market driven, could be much higher. Farmers could be paying several thousand dollars in royalties, rather than a few hundred.

Agriculture Canada and CFIA reps listened to the feedback and promised to provide more information on costs at future consultation meetings.

The actual cost to farmers is critical because if the royalties amounted to only $150 per year, the consultations with growers would probably be unnecessary.

For Matheson, though, there is a principle at stake. He is willing to pay for technology and better varieties, but why should he pay royalties every year for the same product?

“I read a comment … someone said the guys buying certified seed every year are paying (for) the rest. You can buy a truck every year if you want, but that doesn’t mean I didn’t pay for my own truck,” he said.

“That’s what bothers me about this continued contribution.”

Agriculture Canada and the CFIA will hold additional consultations this fall on amending the Plant Breeders’ Rights Act: Nov. 30 in Ottawa, Dec. 4 in Saskatoon and Dec. 6 in Edmonton.

It will also hold information sessions over the winter at agricultural events and conferences across Canada.

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