Spirited debate on variety use agreements

At the January 9th annual meeting of Saskatchewan Pulse Growers, a resolution on variety use agreements, sometimes referred to as trailing royalties, received a great deal of debate culminating in a very close vote.

While all the crop commissions do commendable work, SPG was the first check-off established in the province and the organization has played a huge role in Saskatchewan becoming a world leader in pulse crops – lentils and field peas and to a lesser extent chickpeas.

Unlike the other crop commissions, the SPG levy is not refundable. The levy was decreased from 1.0 per cent to 0.67 per cent of pulse sales back in 2016. However, when pulse crop prices are strong, the levy is higher than what producers pay on other crops.

For 20 years, SPG had a royalty free breeding agreement with the University of Saskatchewan’s Crop Development Centre. The centre didn’t want to continue in the same manner and that agreement was not renewed.

SPG now has a deal with a new breeding partner – the private French-based company Limagrain. The agreement will mean royalties on new varieties. SPG says besides Limagrain, breeding agreements are anticipated with other entities including a new deal with the Crop Development Centre.

The National Farmers Union put forth an advance resolution for the AGM calling for pulse varieties fully or partially funded by levy payers to not have variety use agreements attached. With variety use agreements, producers can save their own seed, but have to pay to use it each year.

Many producers spoke both for and against variety use agreements. It’s rare to see such a well organized and thoughtful discussion at a meeting.

Those opposed to variety use agreements argued that producers shouldn’t have to pay twice. They worry about seed costs escalating and producers losing control.

Those in favour of variety use agreements, including present and past SPG directors, argued that royalties are needed to attract the necessary work to address problems like root rot saying private companies would otherwise not be interested in relatively small acreage crops like lentils and peas.

When it came to a vote, the resolution opposing variety use agreements was lost, but it was close with 53 per cent voting against the resolution. Levy payers could vote in-person or online.

The result was a bit of a surprise because five or six years ago, the concept of variety use agreements was the topic of public meetings held across the country. No votes were held, but producers in attendance voiced a great deal of opposition.

While no one wants to pay more for anything, I voted against the resolution (in favour of possible VUAs) for three main reasons. First, SPG has had dedicated directors and management working on this issue for years. They have determined that VUAs are the only way to get sufficient breeding capacity.

Second, unless a new variety is worth the cost, producers don’t need to adopt it. They can stay with existing royalty free varieties. With root rot such a huge problem in peas and lentils, a trailing royalty would be a small price to pay for varieties with disease tolerance.

Last, I believe a royalty system gives breeding companies a reason to have more skin in the game. They realize they’ll be able to make more money if they can develop new varieties producers are willing to pay for.

You can bet the entire seed industry will take note of the SPG debate and the voting results.