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He would continue to pay the $0.05/bushel royalty on
all sold grain grown from the farm-saved seed in all future
years of production.
With the trailing royalty, a farmer buys 1,000 bushels
of seed and pays $500 in royalties. The farmer again grows
25,000 bushels of grain and sells 24,000 bushels, and keeps
1,000 bushels for re-use next spring. This time when he sells
the 24,000 bushels of grain, no royalty would be collected. But
the next year when the farmer uses the 1,000 bushels of farmsaved
seed he would pay a $500 royalty to the seed breeder.
This would continue every year the farmer continues to
use farm-saved seed of this variety.
The fear that the farmer will pay a double royalty is
unfounded according to Fossay.
He says: “You can only pay once. That’s legislated.
Another part of the legislation ensures that there is a limit
on what can be charged, but no minimum, something that
may foster greater competition among seed breeders vying
for customers.”
Farmers have also expressed concerns that royalties
will be added to varieties they are already using. Fossay says
this won’t happen.
“We have a lot of registered wheat varieties and companies
can’t go back and ask for royalties on varieties developed
prior to Canada signing the UVOP’91 agreement.”
Fossay says he’s noticed a shift in farmers’ views on the
royalty plans over the past several months as many of their
concerns have been answered during discussions at agriculture
events and meetings.
Todd Hyra, western regional manager at SeCan, agrees.
He also points out that farmers have voiced a fear that the
existing private Canadian seed breeders could be absorbed
by large multinational companies which would begin to
eliminate many existing seed varieties that aren’t subject
to royalty. Hyra notes there’s no backtracking on existing
varieties under current legislation and it takes some time
to declassify a seed variety in Canada.
Hyra says the industry will need a method of tracking
in which grain is subject to a royalty at the end point
or elevator. He suggests a “phase-in” model which relies on
electronic data collection of information about the variety
of grain that’s being delivered to the elevator could be an
option. The information would be provided by the farmer
when grain is delivered.
“With the phase-in point system, you would have to
have the entire data collection system built and ready to
go so that every producer, delivering every load of grain,
would be able to declare which variety they were delivering
so the farmer could be charged or not,” Hyra explains.
An electronic data collection system ensures farmers
growing older grain varieties protected under UVOP’91 see
below and its ensuing regulations won’t be charged royalties.
As older varieties fall out of use and more new varieties
are registered, royalty payments will be “phased in”.
Hyra says the advantage of a royalty collected under
any of the proposed collection methods is that the money is
paid directly to the breeder that developed the specific variety
of grain bought, instead of having a third party decide
who gets the money collected through either voluntary or
involuntary check-off contributions.
There’s a competitive value to these royalty collection
plans. Farmers want the best value for their dollar. They’ll
buy their seed from the breeder and grower who provide
the best variety for their needs at the best price. This will
push breeders to compete for their share of the market by
providing new varieties that outperform existing varieties,
at a competitive price, Fossay says.
The royalty collection methods discussed here can
work if royalties are applied to the seed or the volume delivered
to the elevator but a per-acre charge, which has been
mentioned by some, may prove to be less manageable for
both buyers and sellers.
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SEED ROYALTIES
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Manitoba Farmers’ Voice § Spring 2019 § 23
/kap.ca
