But the Prairies’ five wheat and barley commissions have “significant concern” about the project, they said in a news release.

The SVUA pilot is being organized by the Canadian Plant Technology Agency (CPTA) and the Canadian Seed Trade Association (CSTA).

In addition the CPTA and CSTA have formed a working group with farmer and industry representation.

“These combined efforts are an opportunity for industry to show leadership and establish how the SVUA will provide value for farmers, industry and the agriculture sector at large,” the CPTA and CSTA said.

To begin, the pilot will include three crop variety options — CS Daybreak, a Canada Western Red Spring wheat, CS Accelerate, a Canada Prairie Red Spring wheat, and ND17009GT, a Roundup Ready 1 soybean developed at North Dakota State University.

However, ND17009GT, which will be distributed by SeCan, must first be registered in Canada before it can be sold here.

Why it matters: Seed royalties have been a long-standing issue, with many farmers worried about increased costs without any accountability. The pilot will demonstrate how one system might work, but could undermine ongoing consultations.

The issue has been debated more more than a decade.

Farmers who grow hybrids, such as corn and canola, or crops with a technical use agreement forbidding farm-saved seed, must buy new seed every planting season. As a result they pay a royalty to the breeder annually.

But with open-pollinated crops, such as cereals, farmers only pay a royalty when they buy certified seed. It’s common, and legal, for farmers to save some of the harvest from that first crop for planting in future years, avoiding paying a royalty until they buy certified seed again.

The five Prairie wheat barley commissions — Manitoba Wheat and Barley Growers Association (MWBGA), Saskatchewan Wheat Development Commission, Saskatchewan Barley Development Commission, Alberta Wheat Commission (AWC), and Alberta Barley — say the pilot project undermines the consultations on the two options that Agriculture and Agri-Food Canada started in the fall of 2018.

“The five wheat and barley commissions are not a party to, nor supportive of this pilot SVUA program,” they said in a release. “The pilot is separate from the federal government’s consultation process on a new seed royalty structure and signals the seed industry’s commitment to the SVUA model despite the ongoing consultation.”

MWBGA chair Fred Greig says the pilot isn’t as much concern if the varieties on offer are private. Farmers can decide whether they want to grow them and pay a fee to plant saved seed.

“A big concern is, is there going to be a clear path, especially on farmer-funded varieties… so we can guarantee that we are not getting charged twice, and if we are at least it’s going back to the appropriate breeder and not someplace else,” Greig said in an interview Feb. 27.

There’s no risk of paying twice because what farmers contribute now falls short of covering the whole cost of publicly funded variety development, Todd Hyra, SeCan’s business manager for Western Canada, said in an interview Feb. 27.
SeCan, which has been investing in public varieties for 40 years, doesn’t want to see publicly funding plant breeding shrivel on the vine, he said. SVUA is a way to support public plant breeding.

“If they (farmers) like the product and believe the variety offers value to them then they would sign the agreement and away they would go,” Hyra said.

“It’s a new system. We need to walk before we run and lots of people say it sounds good but say, ‘show me the details, show me how it’s going to work.’ This is the opportunity to answer some of those questions, gain some experience and find out what’s working and what’s not.”

The commission says it wants farmers to know if they participate in the pilot it will prevent them from planting saved seed for free.

“It is critical that the government complete its consultations with grain producers and put a transparent and accountable process in place to demonstrate that the extra money producers are paying is advancing varietal development,” said Alberta Barley chair Dave Bishop.

“AWC believes that any trailing royalty system on varieties developed through the public breeding programs of AAFC (Agriculture and Agri-Food Canada) and the western universities must take into account the fact that farmers have already made a substantial investment in the development of those varieties,” said AWC chair Todd Hames.

The SVUA concept has been around awhile, but with advances in digital technology — apps and smartphones — it’s now easier to implement and administer, Hyra said.

The commissions are important partners in value creation, he added.

“So I look forward to working with the funding partner, which includes the various commissions across Western Canada… to make sure that we are advancing both the public and the private breeding programs across Canada,” Hyra said.

Syngenta’s decision to abandon its Canadian plant-breeding program last year is seen by some as a symptom of underfunding by farmers.

But a survey of farmers last year found a majority don’t support either royalty option.

“For each proposal, between 65 and 66 per cent of respondents disagreed, or strongly disagreed, that the models were worth further consideration,” the survey conducted by the three Prairie general farm organizations concluded. “The majority wanted to express an opinion about the two models, with less than 25 per cent selecting ‘more info needed’ or ‘neither agree nor disagree.’ Of those expressing an opinion, 79 per cent disagreed, or strongly disagreed, they should be pursued further.”

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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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However, a final decision doesn’t seem likely any time soon as different groups continue to grapple over the best way to collect royalties on newer varieties of seed.

As well, knowledge of the seed royalty issue is still limited, at least among many of the country’s farmers.

Why it matters: The future system for collecting seed royalties will have wide-reaching effects on research, varietal development and farmers’ pocketbooks.

Meanwhile, government officials gathering industry feedback confirmed that the next steps in the consultation process have been delayed.

The online phase of the federal government’s seed royalty consultation, initially scheduled for spring of 2019, has still not materialized and government officials who spoke in Whistler offered no definitive timeline for when the process is likely be launched.

What’s more, a long-awaited economic analysis on seed royalties — an element that some groups consider critically important — has not been completed and timelines for its release have not been established.

Federal facilitators shared preliminary details of Ottawa’s economic analysis on July 9, but a complete economic assessment that looks at how much revenue might be generated and how farmers’ bottom lines are likely to be impacted could still be months away, sources in the federal government said.

Lorne Hadley, executive director with the Canadian Plant Technology Agency (CPTA), said despite challenges, work aimed at implementing a new seed royalty collection system is moving forward.

He said the discussions at the July 7-10 Whistler meeting suggest more groups, including farmer-supported lobby organizations, recognize the need for greater investments in plant breeding.

During a panel discussion on the topic, representatives from the Alberta Federation of Agriculture (AFA) and the Western Canadian Wheat Growers Association (WCWGA) acknowledged that greater investments in plant breeding would be beneficial.

“I appreciated that we heard from… farmers who had opposing views on how to (generate more revenue for plant breeding) but who were both absolutely convinced that this has to be done,” said Hadley.

“Producer groups, that were, in the past, somewhat questioning whether or not there needed to be a change now seem to have moved to a point where they now understand the need for more investment in plant breeding.”

Work on a new royalty collection system for farm-saved seed has been underway in Canada for years.

In late 2018, Ottawa held a series of meetings across the country to gauge industry support.

In Whistler, federal government officials Carla St. Croix with Agriculture Canada and Anthony Parker with the Canadian Food Inspection Agency acknowledged that they heard a variety of viewpoints on the topic, some from farmers who support the need for a new royalty collection system and others from growers who strongly oppose the idea.

Parker said Ottawa is committed to hearing the views of all stakeholders and has established a producer panel of grain growers and seed consumers that will offer additional views on the impacts of a new seed royalty collection system.

When Ottawa launched its seed royalty consultations in late 2018, the government was seeking feedback on two proposed collection models — an end-point royalty (EPR) collected on all commercial sales of royalty eligible seed varieties and a trailing royalty, which would allow farmers to replant farm-saved seed for a pre-determined fee.

Since then, other models have emerged, including a system supported by general farm organizations in Manitoba, Saskatchewan and Alberta.

That system, presented in Whistler by Alberta Federation of Agriculture president Lynn Jacobson, would collect revenues through end-point royalty.

The majority of the revenues collected would be distributed to private-sector and public-sector plant breeding programs, but another portion — in the range of 15 per cent — would be retained as a producer “carve-out.”

The producer carve-out portion, which would be managed by grower groups and invested at their discretion, could be used to support breeding investments in minor crops or in areas that do not typically attract private sector investors.

Jacobson described it as a variation of a royalty collection system currently used in France.

The three prairie farm groups announced this week that they will be conducting an online survey on the seed royalty issue.

This article was originally published on the Western Producer.

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Agriculture and Agri-Food Canada is in the midst of a consultation process on a proposal to determine whether royalties on saved seed should be included in regulations.

The idea is to build a market driver for private companies to invest in research to develop new seed varieties, particularly in cereals.

Traditionally, public funding has fueled much of that process, but that has been waning over the years and is not going to be the case in the future — at least, not to the same extent.

A royalty of $1 to $3 per acre would cover 10 to 20 percent of the costs of producing a new variety, $20 to $60 million for the Prairies if fully utilized.

Producers are not embracing the idea. Many believe their right to plant saved seeds is sacrosanct, though the term “privilege” is now being used, which irks many of them.

Few dispute that there is a need for improved varieties to address pests and disease, and to increase yields. Some farmers accept that there is an argument that royalties on saved seed would generate private research. Still, many producers are deeply suspicious of the process and the extent of the benefits, and would prefer the accountability of public breeding.

Farmers have long paid front-end royalties, which are included in the price of pedigreed seed, but royalties on saved seed are anathema to many.

Agriculture Canada is looking at two proposals: end point royalties that are collected on eligible commercial grain sold in Canada, and trailing contracts on farm-saved seed that would see growers pay fees on planted acres (or tonnes).

The argument for royalties is that with growing demand in Asia for more food, there will be a demand for more wheat. That will require an investment in research to create improved varieties for growers. It’s thought that with industry consolidation and the number of acres involved, there just isn’t enough incentive for private investment into research for some crops.

The United Kingdom, France and Australia have royalty systems that have sparked more growth in privately funded research that has produced benefits to farmers through desirable traits and better yields.

Some farmers want more say in the process. Others want more transparency. How, for example, do farmers know royalties will encourage more private investment — to the extent of the money collected — rather than corporate dividends?

And why is government intervention needed when seed companies currently have the option of negotiating royalty contracts with farmers? The explanation is that balance and transparency are needed when funding models are being developed, and that certainty in regulation is desired.

Farmers are also concerned that older varieties will be rapidly delisted and they will be forced into buying genetics that impose royalties.

Suggestions for change include limiting the number of years to collect royalties on saved seed, and possibly providing a tax credit for farmers who purchase seeds that are eligible for royalties.

A report by University of Saskatchewan agricultural economists Richard Gray and Katarzyna Bolek on crop-research funding models observed that “the challenge will be to recognize the imperative of increasing research investment, objectively examine the options and to summon the courage and conviction to change our funding system.”

If so, as one farmer pointedly said at a well-attended consultation session in Saskatoon recently, this should be a negotiation, not a consultation.

This editorial first appeared in the Western Producer. The authors named above collaborate in the writing of Western Producer editorials.

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