Value Creation

Value Creation

Background

Agriculture and Agri-Food Canada (AAFC) and the Canadian Food Inspection Agency (CFIA) are currently conducting engagement sessions around “Value Creation” to discuss changes to the way new varieties of wheat, barley and other Canadian crops are developed in Canada. These consultations are currently underway and they are asking for producer input. Below are various presentations that have been made at various consultations.

View the ‘Value Creation Stakeholder Engagement Meeting’ presentation made in Winnipeg on November 16th: Government-Value-Creation-Consultation-Deck.

View the ‘Transforming Canada’s Cereals Sector Through Value Creation’ presentation made at CropSphere 2019: Value Creation Presentation at Crop Sphere 2019.

View the ‘Transforming Canada’s Cereals Sector Through Value Creation’ presentation made at Ag Days 2019: Value Creation Presentation at Ag Days 2019.

Press Release

On January 14, 2019, Western Canadian cereal commissions including the barley, oat and wheat commissions from Alberta, Manitoba and Saskatchewan sent a letter to federal agriculture minister Lawrence MacAulay calling for changes in the Government of Canada’s current consultation process on value creation. Read the full letter here. Read the press release here.

Proposed Changes

Under this consultation, AAFC and CFIA have proposed two models for evaluation.

End Point Royalties

  • A Plant Breeders’ Rights Act (PBRA) underpinned national non-refundable royalty payable on all harvested material (i.e., grain)
  • Leverages the exiting provincial check-offs system to collect the non-refundable royalty
  • Royalties to be distributed to breeders based on their respective market share
  • Need for a mechanism to provide rebates/exemptions, ensuring royalties not collected on production from certified seed

Royalty Collection Enabled Via Contracts

  • A Plant Breeders’ Rights Act (PBRA) underpinned mechanism allowing for contracts where producers agree to farm saved seed conditions
  • Purchasers of certified seed for eligible varieties agree to extended contract on farm saved seed use (e.g., agreeing to a “trailing” royalty on farm saved seed)
  • Participating producers report on their annual use of farm-saved as part of their contractual obligation
  • Will require at least some degree of centralization in royalty collection and distribution

What can you do as a producer?

Manitoba Wheat and Barley Growers Association – Our Principles on Value Creation

Date: January 23, 2019

Canada has a strong public plant breeding system that currently integrates government and producer funding and has resulted in major benefits to producers when compared to other countries.

MWBGA recognizes the importance of variety development through public plant breeding programs and includes funding of variety development as a key objective in our strategic plan. The MWBGA continues to be engaged and wants to proactively respond to potential changes in variety development investment, public research capacity and value creation to ensure producers are influential.

The MWBGA emphasizes many critical questions remain unanswered concerning which value creation model proposed by AAFC/CFIA best serves Manitoba spring wheat and barley farmers. MWBGA would like to see more detailed information, including an economic analysis, for the two proposed models and any other models that come forward through the consultation process. MWBGA would also like to see a fully explained value proposition for producers as part of the ongoing consultation. MWBGA will continue to engage and consult with AAFC and CFIA and will convey new information as it becomes available to membership.

The MWBGA has adopted the following five principles:

  • AAFC must continue its role in variety development, from upstream research to finishing of varieties. MWBGA emphasizes our continued support for public plant breeding and the continued role of AAFC in variety development as we strongly believe a healthy, public breeding program provides producers an option to privately-owned breeding programs.
  • Royalty revenue generated cannot replace or erode federal or provincial funding for public plant breeding programs, but instead add/increase government financial support. MWBGA expects government to be partners in supporting public plant breeding initiatives at the current or higher rates of financial investment.
  • Royalty revenue must support public breeding programs by directly returning collected royalties to the breeding programs and not into general revenue of government. Royalty revenue must directly contribute to public breeding programs to ensure adequate resources are available to breed and finish varieties that meet the merit requirements (disease, agronomic and quality) of the variety registration system.
  • If MWBGA continues to be a funder of variety development in partnership with AAFC or other partners (public or private), total royalty collected and distribution of royalties must be reported to ensure transparency and to determine effectiveness of royalty collection in creating value. MWBGA desires a value creation mechanism that allows for a return on investment for producers’ dollars invested in variety development while allowing for accountability, transparency and a voice in directing variety development. For the MWBGA to clearly communicate progress and success in funding variety development, and provide accountability to our membership, it will be critical that metrics are defined that would be used to measure progress and success, i.e. increased yield of new varieties, number of registered varieties, or number of acres grown to new varieties.
  • Any value creation model or mechanism must protect the producer’s right to save their own seed.

Additional Background/Information

In 2012, producers commissioned a study with Garven and Associates on producer involvement in variety finishing and funding mechanisms. View the report: Garven Report

In fall of 2014, a producer working group facilitated by Western Grains Research Foundation was formed to investigate options for producer involvement in wheat and barley variety development. The following reports were generated.

In fall of 2018, Canadian Seed Trade Association voices support of a trailing royalty system enabled by “Seed Variety Use Agreements”. Read more by visiting www.seedvaluecreation.ca. | Read the Seed Synergy Green Paper that was released in Fall of 2017: Green Paper on the Next Generation Seed System | Read the Seed Synergy Report: Seed Synergy Report by JRG Consulting March 2018. | Read the Seed Synergy White Paper that was released in Fall of 2018: Seed Synergy White Paper 4.0.