A federal consultation on the issue was sidelined when the Liberal government turned its attention to the 2019 federal election.

Why it matters: The issue of how royalties will be charged on seed protected under plant breeders rights will have wide-reaching impacts on plant research and development, but whether farmers or other industry players will be asked to shoulder most of the new fees remains to be seen.

Now it is unclear if the process will continue, or if Ottawa will distance itself in hopes of avoiding criticism from a vocal group of farmers who oppose additional royalties on plant breeders’ rights (PBR)-protected seed.

Regardless of what the federal government decides, private seed companies are expected to move ahead with plans to introduce new seed royalties, using contract law if necessary.

Under that scenario, seed companies that develop and commercialize new seed varieties would ask farmers to sign variety-use agreements that place conditions on the reuse of new PBR-protected seed varieties for the purposes of replanting.

Similar contract agreements are already being used on products such as canola and midge-tolerant wheat varieties.

Variety-use contracts could be applied to additional seed varieties without government endorsement or the need for new regulations.

Dave Carey, who was executive director of the Canadian Seed Trade Association (CSTA) until late January, said seed companies have not been told by Ottawa whether the federal consultation process will be restarted.

Carey said Ottawa has been working on an economic analysis that outlines the financial costs and benefits of a new seed royalty collection system as they pertain to farmers, seed companies and seed developers.

But in a Jan. 10 interview, he said it is still unclear when Ottawa is planning to unveil its economic analysis or whether Ottawa is inclined to endorse a new royalty collection system through new PBR regulations.

Carey said seed companies generally favour the introduction of a seed royalty collection system that is endorsed by Ottawa and authorized through government regulation.

But others in the commercial seed trade acknowledged that Ottawa is becoming increasingly reluctant to get involved in an issue that could further erode its support among western Canadian farmers.

“To be honest, we’re a little concerned that the federal government may disengage from the process unless they’re asked to re-engage by a producer group,” said one source who spoke on the condition that his name be withheld.

“We’re not going to ask the federal government to do anything it’s not comfortable with… and I don’t think the federal ag minister has any strong desire to get involved in this kind of controversy right now.”

If Ottawa pulls back from the seed royalty file, seed companies will likely move forward with trailing seed-use contracts, which are signed when growers purchase quantities of new, royalty-eligible, PBR-protected seed varieties.

Some seed companies have confirmed that they are considering the introduction of back-end variety-use contracts on a trial or pilot basis, possibly as early as this year.

Others are looking at existing variety-use contracts and are assessing how the terms of such contracts could be monitored and enforced.

“The seed industry is moving forward with planning and analyzing and structuring trailing royalty contracts,” the source said.

“We’ve looked at what we’ve done successfully in the past, and the success we’ve had is putting in place contracts between tech suppliers and farmers directly, with no third party or government involvement.

“At this point, we’re in support of a system that’s run by the industry… with minimal impact from third parties,” the source added.

“How fast we move forward? Well, we have some proposals but nothing has been confirmed just yet.”

This article was originally published at the Western Producer.

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Private-sector investment in wheat and barley remains low in comparison to higher value crops such as corn, soybeans, and canola.

Why it matters: New strategies to encourage more research and varietal development in cereals could include changes to plant breeders’ rights and allowances for developers to charge new royalties. This could impact seed costs.

AAFC said only eight per cent of private sector seed investments are committed to research and variety development in cereals. Instead, plant breeding for major cereals are funded primarily by tax dollars and producer contributions.

After consultations with the Grains Roundtable, a group comprising industry representatives and policy makers, AAFC and CFIA identified the ability of farmers to save seed from year to year, and the declining profitability and acreage of cereals, as two major barriers to increase private sector investment in cereal breeding.

Two strategies to address these barriers have been proposed, both of which focus on establishing more concrete rules around contract royalties for new cereal varieties.

Strategy one: end point royalties

• A royalty payable on all harvested material that is collected where grain is sold or delivered, such as grain elevators.

Strategy two: royalty collection enabled via contracts

• This option allows for contracts where producers agree to conditions of use for farm-saved seed, like those existing for corn or soybeans.

The Canadian Seed Growers Association, Canadian Seed Trade Association, and CropLife Canada have announced their support for strategy two in a news release released Nov. 15.

As consultations between government, farmers, and other industry professionals continue others have yet to take a formal position

Dave Carey, executive director of the Canadian Seed Trade Association, says the need to develop better cereal varieties and increase the competitiveness of Canada’s cereal sector was flagged as an issue more than a decade ago. The end point royalties option, he says, would involve elevator operators determining which variety a farmer is delivering, the royalty payment for those bushels, and processing the transaction. This is not ideal because the option is inherently more complex, and elevator operators do not want to act as the middleman for royalty transactions, he says.

Royalties established through upfront contracts for registered cereal varieties would be more practical.

“It’s the small- and medium-sized companies that are saying they want to compete. This would benefit public and private breeders,” says Carey.

“We definitely don’t want the government to remove any funding they are committing to. What this would do is top that up. The breeder, regardless of where they work, would benefit from their right to that revenue stream….”

He adds that farmers who prefer to save seed, or those who don’t anticipate a favourable cost-to-benefit ratio, would be able to plant varieties not restricted by user contracts.

Contract law and breeder rights

Royalties from seed user agreements can already be used under Canada’s current contract law. However, Carey says it’s “cost-prohibitive” for smaller and public breeders.

“There would be a plethora of contract types out there with no group to assist in oversight or collection of the fees,” he says. “Changes to the regulations allows for a concerted dialogue with producers and gives small breeders the additional support of the use of contracts supported by federal regulation.”

“It also makes the whole thing much more transparent to have government involvement.”

Lorne Hadley, executive director of the Canadian Plant Technology Agency, a nonprofit organization supporting intellectual property rights within the seed industry, says legal clarification is also needed for current regulations pertaining to breeder rights and what’s called “farmer’s privilege.”

Farmer’s privilege is an exception within plant breeders’ rights regulations that allow farmers to save seed from registered crop varieties indefinitely, unless precluded by contract.

Hadley says the current language may lead people to believe they can act in a way that the contract would restrict.

“The language has to be edited a bit so farmers can understand it,” he says. “What goes on in other countries gets brought up a lot…. We have a totally different regulatory system in Canada. What we’re seeking is a made-in-Canada solution, based on the system we have today.”

Deliberations continue

Crosby Devitt, vice-president of strategic development for Grain Farmers of Ontario (GFO), says his organization has been discussing this issue for some time and continues to be open to options that will support cereal growers. He agrees that many producer groups, like GFO, are already investing in cereal development, but the level of investment doesn’t match what the private sector can do.

“If we invest more in cereals the more we get out of it in the end. It’s a numbers game. We’re always in support of new innovation,” said Devitt.

“GFO doesn’t have a position on either proposal at this point. We’re holding consultations with delegates during a policy day in December to try and formulate a position.”

Many other producer associations also continue to deliberate the merits of both value proposals, as well as the status quo.

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The consultation includes increasing Canadian investment in cereals research.

“Everyone recognizes the need to invest in innovation in order to deliver new varieties,” said Todd Hyra, president of the Canadian Seed Trade Association. “In order to attract and retain the best plant breeders, Canada needs a system that compensates them for their efforts. Changes to the existing system will ensure lasting investment in variety development in Canada, for Canada, allowing us to compete more effectively on a global scale.”

Under the current system, public and private breeding programs are unable to recover the full cost of variety development, the Seed Synergy Partners group said in a news release.

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Canterra Seeds and French farmer co-operative Limagrain on Thursday announced they would further tie up their wheat variety commercialization work through a new joint seed breeding and development business.

The two companies said their new cereal breeding and development partnership, to be named Limagrain Cereals Research Canada, will be based in Saskatoon.

Limagrain — which has already worked with Canterra since 2012, through an exclusive license deal for commercialization of wheat varieties — also said Thursday it will buy a minority stake in Canterra, including rights to name representatives to Canterra’s board of directors.

Both deals are expected to be completed by the end of September, subject to conditions such as the usual due diligence — and a requirement “that there be no changes to Bill C-18,” Canada’s federal Agricultural Growth Act.

“There is no understating the importance of this deal to Canadian agriculture,” Canterra CEO David Hansen said in a release.

Passed in February, C-18 — which, among other things, tightened up Canada’s Plant Breeders’ Rights (PBR) legislation — “has opened up a whole new world of wheat,” he said.

“Our farmers can now buy and grow varieties that they couldn’t access before. For us as seed marketers, this is obviously an opportunity, but the opportunities are much greater for our customers, the producers.”

The Limagrain Cereals j.v. is expected to bring “significant added value” to the Prairie grain sector through development of new varieties of cereals, with a specific focus on wheat and use of “the most advanced technologies currently available.”

Passage of C-18 earlier this year, and Ottawa’s recent related move to ratify UPOV 91 (the 1991 International Convention for the Protection of New Varieties of Plants), puts Canada “finally on a level playing field with the rest of the international plant breeding community,” Hansen said in a separate federal government release.

France’s Limagrain already bills itself as the fourth largest seed company in the world and a top player in wheat and other cereals.

“Western Canada’s expertise in cereal breeding is globally recognized,” Bruno Carette, Limagrain Field Seeds’ CEO, said in the two companies’ release Thursday.

“We are proud to bring our cereal breeding expertise to Saskatoon — a hub for cereal development in Canada — and work collaboratively to breed advanced wheat genetics for farmers in Western Canada.”

“Today’s partnership announcement is a great example of how the Agricultural Growth Act is delivering for Canadian producers,” federal Agriculture Minister Gerry Ritz said at the j.v. announcement Thursday.

“Bringing Canada’s seed regulations up-to-date has created opportunities for new investment in crop breeding in Canada,” Rosetown, Sask. farmer Jim Wickett, chair of the Western Canadian Wheat Growers, said in a separate release Thursday.

The planned Canterra/Limagrain venture “demonstrates the value of creating a policy environment that encourages investment,” he said. “Prairie wheat growers will be the main beneficiaries.” — AGCanada.com Network

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Canada’s representatives to the World Trade Organization, on Friday in Geneva, deposited the government’s “instrument of ratification” for the 1991 Act of the International Union for the Protection of New Varieties of Plants (UPOV ’91).

Agriculture Minister Gerry Ritz said Monday the move finalizes one of the main measures of the government’s Agricultural Growth Act, which was passed this spring and brought Canada’s plant breeding legislation in line with the UPOV ’91 Convention.

“With the ratification of UPOV ’91, plant breeders have more protection and farmers have better access to a wider variety of seeds,” the government said in a release Monday.

The treaty, the government said, “encourages increased investment in plant breeding and brings Canada in line with trading partners, allowing Canadian farmers to be more competitive in the global marketplace.”

“We have been operating under the UPOV ’91 Convention since February, but now it has been announced to the world,” Canadian Seed Trade Association president Dave Baute said in a separate release.

“After 22 years of hard work, Canada’s formal ratification of the 1991 UPOV Convention places the agricultural sector solidly on the world stage and confirms that the door is open for international and domestic collaboration and innovation.”

Since the Act was passed in late February, the CSTA and other crop commodity groups said Monday, “new varieties of wheat, oats, flax, and potatoes, that would never have come to Canada without the updates to Canada’s Plant Breeders’ Rights (PBR) legislation, have become available.”

PBR is federally-mandated intellectual property protection for plant breeders who develop new plant varieties and want to sell and collect royalties from the sale of seed or plant genetics.

Canada, the government said Monday, has already seen a 20 per cent increase in the number of PBR applications since the Agricultural Growth Act came into force this year.

Formal UPOV ’91 ratification, the groups said, “confirms to the world that Canada supports an agricultural sector that is sustainable and competitive and that investment is welcome domestically and internationally.”

“Stronger intellectual property rights have proven to provide greater incentives to increase investment in research and development for Canada’s crop sector, giving our farmers greater access to the newest crop varieties,” Ritz said.

Critics of UPOV ’91 such as Canada’s National Farmers Union have said the treaty will make it “much more difficult” for farmers to save and reuse seed, forces them to pay more for seed and consolidates control over seed with the “world’s largest agribusiness corporations.”

Bringing PBR in line with UPOV ’91, the government said, doesn’t change what farmers are allowed to do with respect to protected plant varieties, but is meant to “facilitate a breeder’s ability to enforce his/her rights on protected plant varieties.”

The government has also said Canada’s UPOV-based PBR legislation enshrines the “farmers’ privilege,” allowing farmers to save, clean, treat and store seed produced from a protected plant variety and use it for replanting on their own farms.

“If farmers are obtaining seed of a protected variety legitimately, then there will be no increased liability.” — AGCanada.com Network

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Immediately after the bill received royal assent Wednesday, Agriculture Minister Gerry Ritz tabled a treaty in Parliament to ratify the UPOV 91 Convention (the 1991 Convention of the International Union for the Protection of New Plant Varieties), the international standard for plant breeders’ rights (PBR).

Being party to UPOV 91 will encourage more plant breeding in Canada and bring in more plant germplasm, resulting in higher yields and bigger profits for farmers, Ritz said Friday at a separate event celebrating the legislation, at Canterra Seeds in Winnipeg.

Proponents of Ritz’s package of legislative amendments, which will align Canadian PBR with UPOV ’91, hail the legislation as offering opportunities for increased investment and delivery of new varieties both from plant breeders operating in and outside of Canada.

Partners in Innovation, an umbrella group of ag commodity groups backing the amendments, said Friday the new law will ensure farmers have access to “new and improved varieties developed in Canada and internationally.”

“Many Prairie farmers have benefited from private investment in canola, corn and soybeans,” Mike Bast, Manitoba vice-president of the Western Canadian Wheat Growers Association, said at the Winnipeg event.

“I’ve seen those benefits firsthand in each of these crops. We now have an opportunity to see similar benefits from new investment in the breeding of wheat, barley and other crops.”

The legislation has the support of all “relevant” farm organizations, Ritz said. The list includes the Canadian Canola Growers Association, Alberta Wheat Commission, Canadian Federation of Agriculture, Grain Growers of Canada, Western Canadian Wheat Growers and Cereals Canada.

“Rights and responsibilities”

The legislation will also “further enhance the contribution of Canadian fresh fruit and vegetable growers to healthy diets for Canadian families,” Keith Kuhl, president of the Canadian Horticultural Council, said in Partners in Innovation’s release.

Fruit and vegetable growers, he said, will be able to “access new and innovative crop varieties developed internationally while encouraging domestic plant breeding and the development of Canadian varieties that can compete in international markets.”

The Canadian Seed Trade Association also supports the act, adding Friday it plans to run an outreach and education campaign “to make sure everyone understands their rights and responsibilities” under Ritz’s amendments.

The National Farmers Union (NFU) has long opposed the legislation, fearing it will allow seed companies to charge farmers more and restrict farmers from saving grain from their own crops for seed.

“I cannot stress enough that amendments to the plant breeders’ rights act allow for farmers to retain the right to save, clean, and store seed for their own operations,” Ritz said. “There seems to be some confusion around that.”

UPOV’91 will not result in Canadian farmers getting access to more varieties and higher yields, according to Terry Boehm, chair of NFU’s seed and trade committee.

“With increased rights to plant breeders we will only see increased costs to farmers and even greater domination by the giant seed companies that are so inefficient that they need enhanced plant breeders rights to stay in business,” he wrote in an email.

“Farmers will rue the day when they see their so-called privilege diminished over time.”

Keystone Agricultural Producers (KAP) president Dan Mazier said in an interview he hopes farmers will get a major say in developing the regulations under the act.

The Manitoba farmers’ group, he said, “feels if you’re not at the table, you’re on the menu.”

Ritz told reporters farmers and other “industry stakeholders” will be consulted on the regulations.

Among other groups, the Alberta Wheat Commission hailed the bill’s passage, but noted its support to PBR amendments is on three conditions.

Farmers, the commission said Friday, must maintain the ability to use farm-saved seed, and federal government funding of pre-breeding and genetic research must be maintained.

Thirdly, the commission said, the “farmer and public equity stake in Canada’s proprietary genetic material for cereals developed over the past 100 years continues to be recognized.”

— Allan Dawson is a reporter for the Manitoba Co-operator based at Miami, Man. Includes files from Co-operator reporter Shannon VanRaes in Winnipeg, Commodity News Service Canada and AGCanada.com Network staff.

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