WHEREAS Agriculture and Agri-Food Canada (AAFC) and the Canadian Food Inspection Agency (CFIA) are considering implementing a system to collect royalties on farm saved seed;

WHEREAS paying royalties on farm saved seed will increase the price of seed and decrease profit margins for farmers;

WHEREAS royalties on farm saved seed could limit seed choices for farmers as seed companies move to deregister old varieties, which could mean farmers would be forced to pay royalties and to grow only newer varieties;

WHEREAS AAFC and CFIA have not outlined details on how much a royalty would be, how it would be collected or how potentially $100 million in royalties would be dispersed;

WHEREAS farmers currently pay check-offs on almost all grains they deliver to elevators, some of these funds are funneled through the Western Grain Research Foundation (WGRF) and used for variety breeding programs;

WHEREAS the WGRF Endowment Fund has received the Canadian National and Canadian Pacific rail overages and penalties under the Maximum Revenue Entitlement Program every year since 2000 and had a balance of just under $132 million at the end of 2017.  This money has been collected from farmers via excessive freight charges, and could be used to fund research;

WHEREAS a royalty system has potential to decrease farmers’ ability to operate profitably and make sound agronomic decisions;

THEREFORE, BE IT RESOLVED that the Rural Municipalities of Alberta request that Agriculture and Agri-Food Canada and the Canadian Food Inspection Agency abandon the proposal to implement the adoption of End Point Royalties or farm saved seed “trailing royalty contracts”.

“Consultation” meetings on the issue of royalties on farm-saved seed took place recently in western Canada with the final meeting being held at the Renaissance Airport Hotel in Nisku on Dec. 6^th, 2018. This concern has come to light following the regional consultations.

Issues

• Agriculture and Agri-Food Canada is considering a proposal in which farmers could pay royalties on seeds they produce.
• Royalties are being recommended by Seed Synergy, Canadian Seed Trade Association (CTSA) and Canadian Seed Growers Association (CSGA) to increase funds to support programs for wheat and other cereal breeding programs.
• There is currently no information about how much a royalty could possibly be, how it would be collected or how funds collected from royalties would be dispersed.
• There is potential for $100 million plus to be collected annually from royalties on farm saved seed.
• The Government of Canada has continued to put money in to wheat breeding and hopefully that continues. However, it is possible that they eventually back out of funding seed developers and place the financial onus on the producer paying through royalty profits.
• AAFC has already completed consultations with farmers across western Canada seeking feedback on two proposed royalty models, farm saved seed contracts and end-point royalties
• The two models proposed are:
  • Model one: royalty collection enabled by contracts. When buying seed of a new variety, a producer would have to sign a contract agreeing to pay a trailing royalty on farm saved seed. Part of the contractual obligation would be reporting the annual use of the farm saved seed.
  • Model two: would allow for a national non-refundable levy on all the newer varieties. These royalties would then be forwarded to the breeders based on their market share. The proposal calls for the existing provincial check-off systems to be leveraged for collection.
• Royalty rates under both models have yet to be determined but regardless of which system is implemented, farmers would be paying more for seed each time they plant a crop using farm saved seed.
• The Government of Canada plan could see royalties charged on farm saved seed begin within two to three years.
• At this point in time, the Plant Breeders Rights Act allows for end-point royalties, although breeders cannot have an End Point Royalty in a year when they have charged a royalty on the certified seed.
• Currently, industry estimates put certified seed use at only 20% or 25% for wheat.
• Producers will buy certified seed of a new variety and save their own seed for several subsequent years before trying out a new variety.

As of January 10, 2019, Agriculture and Forestry Minister Oneil Carlier has indicated that “he is a big advocate of research but unclear why multibillion-dollar international companies need money from our farmers for their research when they are already extremely profitable companies.” Minister Carlier is not convinced collecting royalties is the right approach and is concerned the cost of research will be downloaded on to farmers.

The Western Grains Research Foundation’s Mission is: WGRF will continue to build on its unique strength of being a farmer-funded, farmer-directed organization focused on funding field crop research for western Canadian farmers.

According to the 2017 Annual Report – Statement of Financial Position as of December 31, 2017, the WGRF balance was just under $180 million, including the Endowment Fund which has just under $132 million.

More details about the proposed royalties on farm saved seed can be found in the attached articles from the Western Producer.

6-19S Background 1

6-19S Background 2

RMA has no active resolutions directly related to this issue.

Canadian Food Inspection Agency

As you may be aware, Agriculture and Agri-Food Canada and the Canadian Food Inspection Agency were asked by the Grains Value Chain Roundtable, a consultative body with broad representation from across the value chain, to launch public consultations on two proposed seed royalty models. The purpose of these proposed “value-creation” models is to stimulate greater investment and innovation in Canada’s cereal sector. The first phase of the consultative process was launched in late 2018 and is an initial step in what government views as a multi-stage discussion process.

The Government of Canada understands that many farmers place considerable value on their ability to save seed and often choose specific crop kinds and varieties that allow for replanting of saved seed in subsequent years. At the same time, a large number of agriculture sector stakeholders have signaled a desire for Canada to consider some form of value-creation model that would allow increased investment in wheat variety development by both public and private breeders across the country. Many producers see increased investment in research and breeding as key to ensuring the long-term profitability and competitiveness of Canada’s cereals sector.

The government remains open to hearing all perspectives on this matter, and will consider the feedback heard to inform next steps on the consultative process.

The Canadian Food Inspection Agency (CFIA) response outlines the rationale for seed royalties on farm saved seed: to increase research investment in Canada’s cereal sector. CFIA also acknowledges the interest of farmers to save seed for their own use in the next growing season. A planned online consultation for spring 2019 was delayed, and there has not been an update since. An industry-led pilot, separate from the CFIA program, launched in 2020 using a seed variety use agreement for three crop varities. Because RMA has not received notice that the program is formally ending, this resolution is assigned the status of Intent Not Met. RMA will continue to engage with CFIA through consultations on this topic.