Canada: Farm-saved seed royalties are next battleground

Get ready for a heated debate over royalty payments on farm-saved seed. This contentious issue will be a centre of attention for the Canadian grain sector over the winter.

All the players in the seed industry make a strong case for why more funding is needed for wheat and other cereals, and the same model could end up being applied to other crops as well.

Canola is the exception. With canola, the vast majority of seed is purchased every year. Hybrids dominate, which eliminates saving your own seed even if you were allowed. On top of that, seed treatments for canola must be commercially applied.

Presto, there’s a lucrative revenue stream and companies tripping over themselves to come out with better varieties. Producers gripe about the ever-increasing cost of canola seed, but they keep buying because the crop is typically a top money earner, even after paying dearly for the seed every year.

In contrast, industry estimates put certified seed use at only 20 or 25 percent for wheat. Producers will buy certified seed of a new variety and save their own seed for a number of subsequent years before trying out a new variety.

According to researchers and seed companies, there just isn’t enough money to fund good breeding programs. This has spurred the development of proposals on how to collect royalties on farm-saved seed.

The proposal would apply to newer varieties covered under the updated Plant Breeders’ Rights Act. The money would flow to both private and public plant breeding institutions.

Two potential models have been forwarded to focus discussions.

One of them allows for a national non-refundable levy on all the newer varieties. These royalties would then be forwarded to the breeders based on their market share.

The proposal calls for the existing provincial check-off systems to be leveraged for collection. Many wonder about check-off fatigue.

It’s interesting to note that while the Plant Breeders’ Rights Act allows for end-point royalties, you can’t have an end-point royalty in a year when you’ve charged a royalty on the certified seed.

The other model is royalty collection enabled by contracts. When buying seed of a new variety, a producer would have to sign a contract agreeing to pay a trailing royalty on farm-saved seed. Part of the contractual obligation would be reporting the annual use of the farm-saved seed.

This sort of contractual arrangement could be done without any amendments to the regulations of the act. However, many in the seed sector believe it would be best to have regulations to bring about some consistency and standardization.

When Canada updated its Plant Breeders’ Rights Act to be compliant with the international standard called UPOV 91, the right for farmers to save their own seed was enshrined in the legislation. In fact, the provision was used to diffuse opposition.

The seed sector should expect the opposition to be reinvigorated and broader now that there’s money at stake.

The federal government has continued to put money into wheat breeding and hopefully that will continue. However, it’s naive to believe that public money will greatly increase in the years ahead.

There’s no free lunch.

Private companies will invest in wheat and barley only if they have a way to generate sufficient revenue. Unfortunately, for farmers who feel that everyone has a hand in their pocket, that’s a tough pill to swallow.