A proposed tax credit for purchases of certified seed amounts to a major subsidy for multinational seed and chemical companies, says the National Farmers Union.
“The tax credit scheme is nothing more than an attempt to foster dependency by farmers on these companies for their seed in the long run,” NFU vice-president Terry Boehm said in a letter to federal finance minister Jim Flaherty.
The Canadian Seed Trade Association (CSTA), along with the Canadian Seed Growers Association, have proposed to government that farmers who buy certified seed be able to claim 155 percent of the cost as an expense for income tax purposes.
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Farmers paying $8 a bushel for seed would receive deductions of $12.40 on their tax returns.
CSTA officials say the tax plan would even out the cost of certified versus saved seed, lead to higher yields and better quality product and generate more money for seed research.
Under the plan, governments would forgo the collection of more than $150 million in taxes in Western Canada and $25 million in Eastern Canada, according to report prepared by the CSTA in 2008.
In his letter to Flaherty, Boehm said that while the idea may seem attractive on the surface, farmers would end up paying higher costs in the long run.
He said the cost of certified seed has increased sharply over the past decade and has become a major expense for producers.
While farm-saved seed is suitable for replanting, he said the introduction of a number of new rules regarding patents, contracts and seed treatment has limited the ability of farmers to use their own seed.
“The most expensive seeds in Canada are canola, corn and soybeans, the crop types cited by the CSTA where certified seed usage is highest,” said Boehm.
The NFU vice-president said the federal government should instead take the money it would lose through forgone tax revenue under the CSTA proposal and invest it directly into public plant breeding to create new varieties that can be used freely by all farmers.
CSTA officials acknowledge the proposal could be considered a trade-distorting subsidy under World Trade Organization rules.
However, Canada is allowed to spend a certain amount on so-called “amber” programs, and the seed tax credit could be included in that, they say.
The federal government has given no indication whether or not it agrees with the tax credit.
