A third option has been thrust into the seed royalty review fray — but whether it will be the answer farmers are looking for remains to be seen.
“At this stage, there are still more questions than answers about all of the models that have been put forward,” said Tom Steve, general manager of Alberta Wheat and Barley.
“So now we have three models that are very difficult for farmers to assess in terms of what the outcomes might be.”
Two royalty options were put on the table this winter — both intended to spur private investment in cereal breeding.
“The ultimate goal would be to have a healthy system where there is strong public sector presence and the option of private sector varieties as well,” said Steve.
“But right now, we have a system that’s dominated by public varieties. We don’t have a significant amount of private investment in wheat and barley breeding. So how we partner with the private sector is probably one of the major questions we have.”
The first model is called an end-point royalty, which would be collected when grain is delivered to an elevator (with the money later distributed to breeders based on their market share). The second is a trailing royalty — it would be paid to the variety developer on a per-acre or per-bushel basis. It would oblige farmers to remit a royalty on the farm-saved seed they plant.
Both options received a cool reception from producers last winter. In the months since then, the conditions around farm-saved seed have been the real sticking point for wheat and barley producers across the Prairies — the growers who potentially stand to gain the most from additional private investment in plant breeding.
The third option doesn’t seem to address that, said Steve.
Seeking a middle ground
Developed by Alberta Federation of Agriculture and its counterparts in Saskatchewan and Manitoba, the third model is being pitched as a middle-ground alternative that will attract private-sector breeders, enhance public variety development, and give producers some say in plant breeding.
This model is also an end-point royalty but some portion of the funds (a “carve-out”) would be held by a collective research entity with representation from producers, the seed industry and the public sector. This money — an as yet unspecified percentage of the royalty — would fund projects such as plant breeding for minor crops, exploring under-researched traits deemed important to Canadian producers, and supporting other activities that address gaps in plant breeding.
But it also appears to include a mechanism for seed companies to create contracts that could limit the number of years a farmer could use farm-saved seed — a non-starter for wheat and barley producers.
“The ability to save and reuse seed in Western Canada is a long-standing tradition, and I think most farmers see it as a right, or at least a privilege,” said Steve.
“In the current environment, the right to save and reuse seed is of paramount concern, and any new model will need to be able to preserve that right.”
But as far as Steve is concerned, that’s only a symptom of a bigger problem in the royalty review process — a lack of clear cost-benefit analyses for each of the three options.
“For none of the three models have we actually seen a detailed economic analysis of how they would work,” he said.
“Our criticism on the consultation process for the end point royalty and the trailing royalty was that the government did not provide the economic analysis. They still haven’t provided that.
“And while I commend the organizations that put together a third model, we need to see more evidence of the cost-benefit analysis for the outcomes.”
Farmers want to know if any of the models will actually attract private breeders, said Steve, adding organizations like his are already investing in cereal breeding.
“So in some respects, the third model is a reinvention of the wheel,” he said. “It’s simply repurposing what we’re already doing. ”
The industry may need to go back to the drawing board for a better solution, he said.
“We need to come to a decision point: Do we want to have additional private investment in breeding, or do we want to continue down the same path?” said Steve.
“If we want to continue down the same path, the mechanisms are already in place to do that. We still haven’t seen clear evidence that any of these models will do that over and above what we’re already doing today.”
The complexity of the issue — and the lack of specific details — makes it difficult for farmers to evaluate what’s being proposed, he said.
But ultimately, they will “gravitate to the arrangement that makes them money.”
“We don’t want a system that adds costs to farmers for growing wheat or barley. We want a system that has a net benefit,” said Steve.
“If it’s imposing additional checkoffs or costs, we would have difficulty supporting it.”
While the consultation process is expected to carry on after the federal election in the fall, the prospects of any big changes are likely years away.
But it’s an issue that producers need to be involved in.
“It’s important to their economic future and the bottom line of their farms to understand where the varieties are coming from today and the producer contribution to those varieties, because it is significant,” said Steve.
“Farmers need to understand the whole picture — what their investment is, and what the potential return is.”