Viewpoints: Looking for Win-Win Scenarios

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From the future of variety development, regional variety trials, and value capture models in Canada, to the importance of applied research groups in Alberta, Alan Hall, Agricultural Research and Extension Council of Alberta’s executive director, shares his thoughts with Alberta Seed Guide on the shifts taking place within the province and the country.

ASG: Do you see any shifts occurring in seed variety development or regional seed trialing?

AH: Over time, we’re seeing more varieties being developed by private companies as opposed to government or university breeding programs — that’s an evolution. We’ve already seen this happen in canola. It’s beginning to happen in pulses, and we’re seeing it in cereals. We’re going to see more of that, particularly in the wheat area.

With that, will come changes to how variety trial work is financed. Right now, it’s financed from fees paid by variety owners or those who have distribution rights. To some degree, the trials are subsidized. For example, the applied research groups that I’m involved with, they don’t get full cost recovery on the trial work they do, but they still do it because it’s very useful to farmers in their areas, and these associations are owned and operated by farmers. However, I suspect over time they’ll want to move to a more self-sufficient business model.

Farmers want reliable, comparative data to help them select varieties. They want to see head-to-head data about different varieties from public and private breeding programs, to determine how they perform under the same conditions, relative to each other — that helps farmers with their selection process. Farmers value this consumer report style where there are neutral third parties doing the testing.

ASG: Why are the protocols put in place for regional variety trials so important?

AH: Protocols are important to keep the data that’s being collected consistent — so that you’re comparing apples with apples. For example, if organization number one designed their own trials and organization number two designed their trials differently, and company number three did them differently yet again, we wouldn’t be able to roll that data together and get anything meaningful out of it in terms of statistical analysis.

Having common protocols is critical for solid, dependable data that can be pulled together and analysed. It ramps up the quality and confidence in the results, otherwise all you’ve got is a collection of anecdotal information.

Every year a breeder science committee reviews the process and what adjustments need to be made, whether that’s protocol design or the operations of the program. There is scientific oversight to maintain quality.

ASG: How do you see the future shaping up with more varieties developed by private companies? What have other countries experienced having undergone similar shifts?

AH: If we look at the canola industry in Canada, what it has done is it has given farmers considerably more choices. The number of varieties available to them will be significantly larger than what’s currently there, which will increase the need for regional testing.

If we look at Australia, they have what’s called the National Variety Testing Program. Australia has university-, government-, and privately-generated varieties, which is a similar mix to what we have here. The program involves more than 600 sites across the country where varieties are trialed. What they have found is microclimates affect a variety’s performance. For example, when the same variety is grown at two different sites, say, 40 miles apart, that variety may perform better at one site simply because of changes in soil or the agroclimate.

From this, they have found niche opportunities for varieties in Australia. Having many varieties available improve the odds that farmers will find one that fits their niche. This is highly valued by Australian farmers, and they say is most helpful to their bottom lines in the variety selection process.

In Canada, we have a limited number of sites, and for some farmers they can be a hundred miles away. As private companies come on board with more breeding, in a perfect world, we will see a more robust regional variety trialing process than what we have in the province today, which is in the neighborhood of 20 to 25 sites. Perhaps in the future that might be 300 to 400 sites in Western Canada. I have a suspicion it could be a growth area in terms of trialing. How do you finance something like that? It takes more money. It takes more in-field delivery capacity to run the plots.

In Australia, the national variety testing program is funded through the Grains Research and Development Corporation. Farmers support the organization with a one per cent of sales levy, which is sort of like our checkoff system in Canada.

This farmer-run organization takes in about $150 million per year in checkoff money as well as another $40 million from the Australian government and $10 million generated from intellectual property. The organization funds a lot of research and development in various areas, such as agronomy, cropping practices and genetics, but one of the key benefits it provides is the regional variety trial testing. Farmers in Australia love it.

I’m not sure if, over time, something like this will emerge in Western Canada. There has been lots of coffee talk about that sort of an approach, but I don’t see any evidence that western Canadian farmers are moving in that direction at this point.

ASG: Do you have any thoughts about current and future funding models for agricultural research?

AH: One of the reasons for our trip to Australia was to look at how that country is organized and conducts its affairs. The Grains Research and Development Corporation model is great. Basically, what it has done is it has provided a good scale of operation — with $200 million you can do a few things. So, they’re not fragmented and it’s very well organized.

They have a good committee system from the local level right up to the national level, so there is farmer input and farmer guidance to GRDC activities all the way along. The board of governance is farmer-dominated, albeit there are other people on the board as well, but the majority are farmers, and a farmer is always the board chair.

It was interesting to see the GRDC’s ability to react quickly with funds. It was probably 15 years ago now that chickpeas were getting pretty common in Australia. It got to the point where farmers started experiencing some disease pressures in their crops. The GRDC simply stated, “We’re going to solve this problem.” They didn’t solve it with a small project here and there. The GRDC basically threw a few million dollars on the table, organized a team of plant researchers, and they solved the problem within two to three years.

They’re able to get things organized because of the scale they operate at. If that was Canada, you might see a whole series of small projects, and in ten years you’d still be spinning tires.

We don’t react as quickly because we don’t have the same set of resources to work with. When I say “we” I’m talking about all the stakeholders, not just any one group. Typically, if we have a problem we look to government — we knock on Ag Canada’s door. In Australia, with the GRDC model and significant revenues at hand, they’re not going to the government to ask for help, they’re going to the government saying “We’re doing this, and if you want to be involved we’d welcome you, but we’re going to do it anyway.” It’s a different mindset.

ASG: Could the Australian funding model work in Canada?

AH: Just because it works there doesn’t mean it’ll work here because people think differently and there are cultural differences, et cetera. You have to work it through. Right now, we operate on seed royalties. There’s a limited income from seed royalties that goes back into supporting breeding programs.

In Australia, they implemented end-point royalties. Farmers are paying royalties on all of the crops they produce with a variety as opposed to paying a royalty on the seed. That model has generated significant revenues for ramping up breeding programs. They have evolved from being relatively small — and running on nickels and dimes — to really strong breeding programs because they have a good revenue stream through end-point royalties.

When that system came in around the year 2000, had Australian farmers been able to vote on it, they would have turned it down. All they could see was money going out the door. But today, they would not want it taken away. Australian farmers say they love the system because they get better varieties quicker than they would without the end-point royalty system. Now they think of it not as a cost but as an investment. However, it took a decade to get there.

ASG: How do you think an end-point royalty model would be received here?

AH: The way farmers know it’s a good thing, is if they get a return in their pocketbooks from the investments they’re making. Unfortunately, it takes a leap of faith. You have to do it in order to see if you get a return on investment. I don’t know how they will get past that, but that’s where some of the discussions on this are going.

End-point royalties provide Australian seed companies with a better revenue stream, so they are ramping up their breeding efforts. Australian farmers are putting more money into the system, but over time they found they were getting better results in terms of varietal performance. Farmers told us they’re capturing value with their yields or disease resistance, or whatever it might be, and the companies are capturing value in that they have added revenues to operate breeding. It’s a win-win scenario.

However, when the system was implemented not everybody looked at it that way, but farmers have come around to that way of thinking after a decade’s experience. I think it will be the same thing in Canada. If Canadian farmers want to go down that road, then there’ll be some angst in the early years. They’ll wonder why all this money is going out with nothing coming back. However, if it’s well run, they’ll get returns. Over the longer term, they’ll wonder why they were so worried.

ASG: Where are farmers getting value for their money with respect to research in Alberta?

AH: The applied research groups in the province are filling a very critical piece. These groups are adapting and applying varieties and technologies so they work at the local level, bridging the gap between regional farm needs and the materials released by research stations and universities. The groups also work with farmers to develop better practices to deal with issues farmers are facing, like disease or drought.

Those organizations are owned by farmers and run by farmers and are providing some solid information back to farmers to incorporate into their operations.

The applied research groups are active on two fronts — on the crop front and the forage and beef front. Those organizations are running on nickels and dimes. We need to get behind these groups because they’re doing excellent work, especially in remote locations, such as Oyen, Falher and Fort Vermilion. And it could only get better if they have more resources to work with.

Those groups, such as the MacKenzie Applied Research Association and SARDA Ag Research, exist in various forms right across the province. Information, varieties or technologies from research stations or universities don’t always work in these regions without some adaptations.

For instance, these regions experience different climate conditions and have five or six hours of extra daylight in summertime — they’ve got more in common with northern Russia than they do the southern Prairies. Those research groups are developing information that’s very useful to farmers in those areas.

Farmers need to keep the foot on the gas directing these groups to make sure they’re working on the problems, barriers, or opportunities that affect their farm businesses. If they’re doing the right work for farmers, and they do it well, it seems to me we have another win-win situation.