The roll-out of Royalty Area Collection (RAC), an alternative method for paying plant breeders for intellectual property, is gathering pace with the establishment of a dedicated collection agency.

The move has been designed to help support the breeding programmes of minor crops, most of which are under threat unless they can evolve.

For this autumn, BIPO Ltd (Breeders Intellectual Property Office) will take administrative charge for the companies wishing to adopt this new contract-based royalty collection approach, as well as looking at other innovative royalty models.

At this stage, only certain oat, pea and bean varieties from Senova, Wherry & Sons and Daltons Seeds are affected, although some potato varieties are likely to be included soon.

The new payment method is based on a fixed sum per hectare, payable on both certified and farm-saved seed, for the life of the variety while it is being grown on the farm.

It was established to try to address the issues of continued evasion and inequity payback to the breeder where farm-saved seed is used, particularly with small, specialist crops grown on contract, explained one of BIPO Ltd’s directors, Chris Green.

“Our case has always been that variety performance is all about genetics, rather than seed. The genetics are the same, regardless of whether the seed is certified or farm saved, so the royalty should be the same.”

For growers, it meant that the royalty was detached from the cost of the seed and invoiced directly to the farm business. The rate was lower than that for certified seed, but higher than the current farm-saved seed payment.

The intention was that growers would become more aware of the royalty cost, so that they started to put a value on genetic improvement and treat it as an input cost, in much the same way that they do with fertilisers and agrochemicals.

“The traditional approach has served the industry well,” continued Mr Green. “But a finite production area and the use of lower seed rates means that it’s becoming increasingly difficult to secure the returns required to run breeding programmes, especially with the minor crops.”

He acknowledged that critics of the scheme saw it as a means of plant breeding companies making more money.

“Businesses have to adapt and respond to the environment in which they trade,” he responded. “In the case of oats, it’s extinction or evolution.”

He stressed that BIPO Ltd would run in parallel with BSPB, with the latter remaining in charge of all trials, technical affairs and the collection of mainstream royalties.

All of Senova’s new oat varieties will be released on an RAC scheme, confirmed the firm’s commercial director Jeremy Taylor. “Oats are a minor crop and we continue to invest heavily in their future. Remember that royalties are reward for innovation – and there’s been plenty of that in the oat market in recent years.

For this season, Brochan, Tardis and newly recommended Balado, are included in the RAC scheme, he noted.

“A single royalty rate is not only fair to all; it also allows us to have a dynamic relationship with growers and optimise returns.”

Rising development costs in minor markets were behind Daltons Seeds’ decision to include the marrowfat peas Genki and Sakura in the scheme some two years ago, said the company’s James Wallace.

“It’s a fairer and more transparent system for both growers and breeders,” he pointed out. “Simply raising the price of certified seed through higher royalties creates further cost disparity between certified and farm-saved seed.

“And with marrowfats in particular, pea size can vary, which means seed rates can also be quite different. This way, everyone pays the same.”

James Wherry of Wherry & Sons reported that the winter bean varieties Sultan and Arthur were also in the RAC scheme.

“It’s a means of safeguarding our investment in the winter bean crop, as well as a way of having a direct relationship with the growers. Evasion is a bigger problem with beans.”

Bringing a new winter bean variety to the market takes twelve years, he added. “It’s a long-term process. We need to be able to manage our intellectual property better, for the benefit of everyone. UK farmers would be at a disadvantage if there wasn’t a healthy plant breeding industry in this country.”

Theo Labuda, managing director of LSPB, supported the principles behind RAC. “If you take pulse crops, it’s becoming very difficult to generate enough income to cover their development costs.

“So we will need to look at alternatives if we’re going to continue with our current activities.”

The next step – End-point royalties?

End point royalties, where the end user pays at off-take, are being used with greater frequency in Australia, France and North America.

“These are royalties paid by the miller or the maltster, for the innovation that a particular variety offers to their business,” explained Mr Green.

It’s just one of the other royalty models being looked at by BIPO Ltd, he said. “The HOLL oilseed rape varieties are a good example of where an end point royalty could be considered.”

New business models for collecting royalties have only become necessary since the demise of public-funded plant breeding, added Mr Green. “Breeders need to secure a return for today’s higher costs and risks.”