UK growers pay double in seed royalties

By Charles Abel

UK GROWERS are paying up to twice as much royalty to plant breeders as their Continental counterparts.

Figures from the Danish seed certification organisation show a commercial cereal rate of £26/t (30DKr/100kg) for a range of varieties including Brigadier, Encore, Hereward, Reaper and Rialto.

In the UK the same varieties attract charges as high as £52/t – twice the Danish rate.

For pulses, Danish growers pay just £38/t (43DKr/100kg) in royalty. That applies to Alfetta, Baccara, Eiffel and Solara. In the UK the same varieties cost up to £74/t for C2 seed, again nearly twice as much.

The picture is similar in France. This year French cereal growers will pay £39/t (39.5FF/100kg) royalty and £48/t (48FFr/100kg) for pulses, 25% and 36% less than in the UK.

Seed traders are angry at the discrepancy and are pushing for change. James Wallace of Peterborough-based seed firm Daltons, asks: “Why should UK breeders charge UK farmers up to 50% more royalty?”

Higher royalties are costing UK arable farmers £4m-£5m a year, he calculates. That is equivalent to an additional £12/t of seed bought or £2.45/ha (£1/acre).

David Neale for top UK seed seller Dalgety Agriculture agrees. As grain values fall, farmers expect seed costs to fall, yet royalty rates are consistently heading in the opposite direction, he notes.

“The trade is absorbing the pain big time. For the past two years we have been looking at prices sometimes below the cost of production.”

The result is a rise in royalty from a typical 15% of the on-farm cost of seed to nearer 25%, he says.

Although growers get a good response from royalties being reinvested in plant breeding, rates must reflect lower farm profits and the wider European picture, he adds.

Top yielder Savannah is 6% higher yielding than Riband, representing 0.45t/ha (3.6cwt/acre) on a 7.5t/ha crop. At £80/t that is worth £38/ha. The extra royalty cost for the newer variety equates to £3/ha (£1.25/acre).

“That is a decent return on investment. But one has to look at the wider EU picture, too,” says Mr Neale. Haulage costs make importing royalty-paid seed impractical.

‘Price lifted by specific needs’

  • BREEDING for the specific needs of UK growers, rather than the more general demands of European farming, partly explain royalty differences, says a spokesman for the British Society of Plant Breeders.

    That also means UK varieties are less easy to market in Europe, leaving less scope to recoup costs from a wider market. Unfavourable exchange rates, lower yield expectations and lower input costs in general also help explain the lower Continental royalty rates, he notes.

    Furthermore, UK farmers tend to grow higher royalty varieties anyway. While the average rate for UK varieties is £40/t, farmers pay an average of £45.70/t. “They are clearly voting with their wallets to buy better genetics.”

    Danish rates have been low since a deal was done between their farming union and the breeders, adds Gary Mills-Thomas of Novartis Seeds.

    “Growers agreed to use more certified seed provided royalties were kept low. They now use 90% certified seed.”

    He also points out that there is little re-investment in cereal breeding for Denmark, most varieties being bred elsewhere in Europe.

    “To get the breeding improvements we are now seeing growers need to pay the current UK royalty rates,” says Bram van der Have of Advanta Seeds. “We want to raise European royalty rates too, but such harmonisation will inevitably take some time.”

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