JULY 2018 GERMINATION.CA 13 reward breeders for successful varieties,” says Steve. “The purpose of this value creation discussion is to determine if we’re leaving any stones unturned.” University of Saskatchewan agriculture economist Richard Gray says there will be significant consequences for the entire value chain if the status quo is maintained. “It means less investment, slower growth in yields, reduced competitive and comparative advantage of our farmers, and less activity for seed growers,” says Gray. “Everybody loses.” In fact, Gray is surprised by the response, or lack thereof, to the amendments made to the Plant Breeders’ Rights Act in February of 2015, which brought the act in line with the 1991 Act of the International Convention for the Protection of New Varieties of Plants (UPOV 91). “It’s three years later and we haven’t done anything yet. There should be a sense of urgency, if there isn’t one. We need to do something to enact this — the federal gov- ernment has got to move. The message must be there isn’t an option to do nothing,” says Gray. Investment, Innovation and Competition According to the Canadian Seed Trade Association member surveys and Statistics Canada, certified seed use for spring wheat, winter wheat, durum and barley in 2014 was 21, 50, 13 and 30 per cent, respectively, of the seed required to plant the crop. “That’s not a very high rate of return,” says Armstrong. To keep Canada competitive, the country needs a means of securing a return on investment in cereal vari- ety development, she says. This investment then supports further breeding innovations, as well as access to new technologies and germplasm from around the world. “It’s not just about sustainable funding for cereal breed- ing, but increased investment in cereal breeding. It’s about innovation, and ensuring Canada continues to be on the cut- ting edge. That investment then drives the application, adop- tion and development of innovative technologies, which are used in developing new cereal varieties for Canadian farm- ers and keeping Canada competitive,” she says. Ultimately, the increased competition and varieties generated from royalty flows are advantageous for farm- ers, says Armstrong. “The new varieties have to be better, or this makes no sense. If the varieties aren’t better, then there won’t be the royalty flow, and programs will go out of business,” she says. “Every breeding program wants to produce the best varieties, and that can only benefit farmers. Competition can only benefit farmers.” Implementation of a value creation mechanism will also support variety development from many differ- ent programs. “This isn’t about displacing public sector programs. It’s about providing a level playing field, so that whether it’s public, private, large or small, any program, assuming they’re producing successful varieties, can con- tinue to operate and invest,” says Armstrong. Increasing competition from other countries for wheat markets is another reason to raise investment in variety development in Canada, says Steve. “The overall performance of our varieties has served us well in the past. But are we doing enough to implement new technologies, cutting edge technologies? To do that, typically we’ve looked to private investment,” he says. Western Canada is up against wheat production from many countries, including Kazakhstan, Russia, Ukraine and Australia, which are producing and exporting wheat to a much larger extent than in the past, says Steve — especially countries from the former Soviet Union. “We pride ourselves in producing higher quality, higher protein wheats, but there’s also a huge market for mid-protein wheat products in the world. Frankly, those regions are eating into that market share, so we need to be constantly upping our game as far as yield and quality go,” he says. Models and Misconceptions One model developed by the task force is a producer- facilitated royalty collection system. Royalties are collected on harvested material of varieties registered after Feb. 27, 2015, at delivery points. The royalties generated would be distributed to breeders based on a variety’s market share, possibly using existing collection systems. However, under this system, if a royalty is collected on seed, no royalty would be collected on harvested material. “One of the concerns I’ve heard from farmers is that they will get hit twice — so they pay the royalty on seed and then pay the end-point royalty as well,” says Simon Ellis of Ellis Seeds. “Under the system, this wouldn’t be allowed — it would be one, but not both.” This is one of the misconceptions Ellis quashes when- ever value creation comes up in his discussions with pro- ducers. Another fact Ellis often clears up is the difference between a royalty on seed and a tax. “I’ve heard people calling it a seed tax — that’s completely incorrect. Farmers are seeing there’s going to be money coming off their cheques at the end of the season, and they don’t want that. But we need to all work together to make sure this industry stays competitive with the rest of the world.” On this point, Armstrong is clear. “Royalties are not a tax,” she says. Rather, they are payments made to devel- “THERESHOULDBEASENSEOFURGENCY,IF THEREISN’TONE.WENEEDTODOSOMETHINGTO ENACTTHIS—THEFEDERALGOVERNMENTHAS GOTTOMOVE.” –RichardGray