Producers could save millions of dollars a year if the federal government adopts a proposed tax incentive promoted by a pedigreed seed distribution company from Regina.
Quality Assured Seeds wants the government to allow producers to mark up by 40 percent what they claim on their tax returns for certified seed purchases.
The company hired the George Morris Centre last year to study the potential impact of such an incentive.
The study concluded that tax savings to farmers could exceed $200 million a year. The agricultural think-tank also concluded that the incentive could make almost $30 million more available each year to develop new crop varieties.
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Quality Assured Seeds has met with farm groups and provincial and federal governments over the past year seeking support for the idea.
Trenton Baisley, the company’s chief executive officer, said the concept fits well with the goals of the national agricultural policy framework, which include fostering more research and innovation in agriculture as well as more economic activity in rural areas.
The tax incentive would alleviate the need within the seed industry to consider other ways to increase certified seed sales.
“We think this is a really friendly alternative to producers,” said Baisley, who added Canada risks lagging behind other countries in crop variety development unless more money is available for research and innovation.
Baisley offered an example of how the 40 percent markup on a certified seed invoice would work for tax return purposes. If a farmer bought certified seed for $8 per bushel, the farm’s expense deduction would be calculated as $8 x 1.4 to equal $11.20 per bu., which would mean an additional $3.20 per bu. deduction.
Added revenue for research and innovation would come through an anticipated increase in certified seed sales and the resulting royalties.
Baisley also said increased certified seed sales would mean more jobs and economic activity in rural areas because of increased production, processing, wholesaling and retailing. There would also be more high skilled jobs and economic activity in urban centres because of an anticipated increase in crop variety development.
As well, Baisley said the expected increase in certified seed use would fit with the growing demand for traceability from buyers of Canadian crops. Crops grown with certified seed can provide the varietal purity needed for programs where grain is segregated for the purposes of identity preservation.
Keystone Agricultural Producers in Manitoba has not officially endorsed the proposed tax incentive, although one of its vice-presidents sees merit in the idea. Glenn Young said the program would have to limit additional government administration. Government would also have to determine how such an incentive would affect farmers’ reference margins under the Canadian Agricultural Income Stabilization program, he added.
“I think anything that’s going to promote improved or increased research of new varieties is good.”
Young said he doubted the proposed tax incentive would prompt seed retailers to increase prices in an attempt to capture part of the savings farmers could expect from the increased writeoff on their tax returns.
“I think the seed industry is pretty competitive. I don’t see this as any sort of a windfall for the seed salespeople.”
The Canadian Seed Growers Association also likes the idea and is encouraging Quality Assured Seeds to find support from general farm groups so it does not appear the tax incentive is designed only to serve the interests of the seed industry.
“We think it’s innovative,” said CSGA executive director Dale Adolphe.
“It levels the playing field, in terms of price, between certified seed and common seed. The other thing is it should improve the agronomics and quality of the seed that’s going in the ground, because that’s what pedigreed seed is all about.”
