Legislation aimed at expanding plant breeders’ rights in Canada will set the stage for a new royalty collection system on new certified seed varieties, says an agricultural economist from the University of Saskatchewan.
Professor Richard Gray told the senate agriculture and forestry committee recently that passage of Bill C-18, the Agricultural Growth Act, will “significantly extend the rights of the breeder and create the foundation for annual royalty payments” that are paid by farmers to seed developers in exchange for the use of PBR protected varieties.
Annual royalty payments could easily take the form of an end-point royalty, Gray added. A likely scenario would see farmers sign a contract with the seed developer, allowing the producer to grow a PBR protected variety in exchange for a per-tonne fee on harvested material.
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Bill C-18 has received third reading in the House of Commons and was the subject of senate committee hearings last week.
The bill is expected to become law within weeks.
“Provisions of the bill will allow a breeder to enforce a bag licence agreement that could easily include provisions to pay an end-point royalty on the sale of harvested material,” Gray told the senate committee.
“When a farmer purchases registered seed, he or she may be required to sign a contract as part of the seed purchase agreement. That contract can forbid the sale of seed and can specify the farmer pay a royalty to the breeder … at the time that the variety of the harvest is sold.”
Over the past few years, much of Gray’s research has focused on examining alternative funding models for agricultural research and varietal development.
In a Jan. 29 presentation to the senate committee, Gray said Bill C-18 will not remove a farmer’s right to re-use seed on his own farm but it could result in the use of so called private “seed bag contracts” between the grower and the seed developer, similar to those that currently apply to corn and canola seed products.
The private contracts could include any number of terms and would be a likely avenue for the introduction of end point royalties.
“This is also exactly how end point royalties were introduced and enforced in Western Australia in 1994,” Gray said.
Although he acknowledged that the concept of end-point royalties would be somewhat controversial, Gray also claimed to be “very much in favour” of PBR changes contained in Bill C-18.
He said a new royalty collection mechanism is needed to ensure that additional revenue is available to support breeding activities. The bill also gives plant breeders the right to use existing varieties in their own varietal development programs.
Gray said “mandated sharing” of genetics will prevent any single plant breeder from monopolizing plant breeding efforts.
But he cautioned that the passage of Bill C-18 will not necessarily result in an immediate increase in investment by private sector companies.
That’s because new varieties that may require farmers to pay end point royalties on harvested grain would still be competing head-to-head with existing varieties that have already been registered.
Provisions in Bill C-18 stipulate that expanded plant breeders rights provisions would only be applied to new varieties that are registered after the bill is passed.
Older, existing varieties would be grandfathered in under existing PBR laws.
“Do not expect that Bill C-18 will create a cascade of private research investment into wheat, barley or similar open pollinated crops,” Gray said.
“Australia introduced end-point royalties in 1994 (but) because new varieties had to compete with existing royalty-free varieties, the royalty rates increased very slowly over time.
“It was 16 years before endpoint royalties got high enough (in Australia) to fully fund a breeding program.”
Gray said it is important to retain other sources of funding, including government investments, until the new system is able to generate adequate funding through seed royalties.
In France, all farmers pay a mandatory levy equivalent to roughly $1 per tonne. The uniform levy is negotiated between farm groups and the seed industry.
For every dollar that is charged, 85 percent goes directly back to the PBR holder as a royalty. The remaining 15 percent supports public breeding programs.
