18 GERMINATION.CA SEPTEMBER 2018 WHAT’SATRAILINGROYALTY Placing a royalty on the use of farm-saved seed could mean more innovation and better products for producers. an end-point royalty approach) due to higher available investment dollars; •  The TR approach is based on contracts already in place between product devel- opers and farmers with restrictions on use of farm-saved seed; •  A TR approach applies to all acreage planted in farm-saved seed while an EPR does not capture royalties in certain market channels; •  Data and system architecture needed for a TR approach can become a major component of a traceability or Single Window system as intended under the Seed Synergy vision; •  Under a TR, the breeder has flexibility to set royalty rates on Certified seed and farm-saved seed; and •  A faster build-up of royalties under the TR system can provide greater incentives for entry into breeding sector by small and medium size breeding companies. How does a Trailing Royalty fit into the Seed Synergy model and the Proposed Single Window? The single window approach allows for product developers and seed companies to enter online product data, such as for data for registration, variety listing, PBR protection, and for the product profile. The contract system for trailing royalties can also be a key element of such a traceability system envisioned for the seed sector. Change should begin with providing additional investment dollars in product devel- opment and plant breeding. This starts with the implementation of a Trailing Royalty program. Other countries have such royalty collection in place and their best practices can be leveraged into Canada’s cereals and pulse crop sector. Source: Economic Impact Assessment and Risk Analysis Summary Report, prepared by JRG Consulting Group for the Seed Synergy Collaboration Group AT ITS ANNUAL meeting in Montreal in July, the Canadian Seed Trade Association’s Intellectual Property (IP) Committee had a decision to make: which of two models would best facilitate value creation in cereals and pulses. The two options were •  an end-point royalty (EPR) on delivered grain •  a trailing royalty (TR) collected from the use of farm-saved seed. The IP Committee ultimately chose the TR option. First, a little background. Why is Value Creation Needed in Cereals and Pulses? Within Canada, there are two rather differ- ent seed supply chains; one is the canola, corn, and soybean seed supply chain where the private sector supplies most of the new varieties, and the other is the cereal and pulse crop seed supply chain where the public sector supplies most of the new seed products. These two seed supply chains are different due to the former being character- ized by either hybrid crops and/or crops with patent protection and very effective intellectual property rights (IPR), and use of genetic modification technologies. In cereals and pulse crops it is more difficult to enforce IPR without patents and the self-replicating nature of these crops have a significant effect on private sector investment, since farmers can save part of the harvest for planting next year’s crop. Why is a Trailing Royalty (TR) a Better Option than an End-Point Royalty? •  For a given level of royalty revenues, per tonne costs are less with a TR •  A TR generates more royalty revenue for investment by product developers/plant breeders and improves plant breed- ing sector performance (in relation to ANDHOWDOESITWORK?