60 GERMINATION.CA NOVEMBER 2018 MANY YEARS OF discussion about how to ensure more innovation in cereal seed is finally coming to fruition. Historically, cereal seed breeding has been dominated by public institu- tions, supported by taxes and pro- ducer contributions. Because of this, and because Agriculture and Agri- Food Canada (AAFC) has indicated it will not be increasing its level of investment in cereal breeding, many industry players have been calling for a way to make sure private breeding firms are enticed to do more cereal breeding — by securing their return on larger investments. Some time ago, a task force called the Value Creation Working Group was created to look at the issues, and two leading funding models eventu- ally emerged. One is a producer- facilitated royalty collection system of varieties registered after Feb. 27, 2015 (known as an end-point royalty). Royalties generated would be distrib- uted to breeders based on a variety’s market share, possibly using exist- ing collection systems. However, if a royalty is collected on seed, no royalty would be collected on harvested material. The other contender — the preferred option of the Canadian Seed Trade Association’s Intellectual Property Committee — is a royalty collection system enabled by con- tracts, where breeders or their repre- sentatives use contracts when selling certified seed of varieties registered after Feb. 27, 2015. This system involves the collection of royalties on any farm-saved seed, known as a trailing royalty. The latter is clearly the winner, reports Lorne Hadley, task force VALUE CREATION IN CEREALS: HOWMIGHTITACTUALLYWORK? We ask some experts about the mechanics of funding innovation in cereals through the concept of value creation/capture. Treena Hein Darcy Pawlik is vice-chair of the CSTA’s Intellectual Property Committee. member and executive director at the Canadian Plant Technology Agency. “The seed industry has had long dis- cussions about this over the last eight years and both the CSTA and the Canadian Seed Growers' Association have endorsed the model of trailing royalties,” he says. “Certain compa- nies want to proceed with this and market this value to producers.” Hadley notes that producers already decide what seed to buy based on expected value, and those varieties that have value and are priced appropriately will have the market share. “We are trying to put in place a system to start by using pedi- greed seeds, and the best varieties among them get the most return.” For his part, Darcy Pawlik believes the trailing contract model is the right one as it’s based on well-understood principles of by existing contract law. The head of the Syngenta Cereals Portfolio for North America and vice- chair of the CSTA’s IP Committee notes the trailing royalty option is ideal for all acres grown of the varieties in question to be tracked, and also provides flexibility for the breeder in terms of the parameters that can be set. Rod Merryweather, CEO of FP Genetics and a member of several seed organizations, points out that this model could involve existing col- lection mechanisms already estab- lished by licensees of grain varieties, such as single-use contracts. He adds that the existing system for confiden-