Western Grains Research Foundation (WGRF) is re-investing royalties received on farmer Check-off-funded wheat and barley varieties into further research to benefit producers.

The farmer funded and directed WGRF administers the Wheat and Barley Check-off Funds, which are based on producer Check-off dollars and are used to support breeding programs toward new varieties of those crops in Western Canada. As part of its funding agreements with breeding institutions, the Foundation receives a share of the royalties generated by varieties that were developed with partial Check-off support.

WGRF's producer Board has decided to funnel these royalties - over $250,000 in 2003 - back into further wheat and barley research at research institutions that developed the varieties, says Lanette Kuchenski, Executive Director of WGRF. The funding will go towards projects aimed at improving yield potential, Fusarium Head Blight resistance and wheat stem sawfly resistance. Since 1998, over $800,000 in royalties has been re-invested by the Foundation.

Traditionally, royalties haven't played a big role in WGRF's research funding capacity, but that is changing as more varieties developed with Check-off support become commercially available, says Kuchenski. "It can take approximately 10 years to breed a cereal variety. Since the Check-off did not start until the 1993/94 crop year, most new varieties that have become available in recent years were developed with little or no Check-off funding. This is now quickly changing.

The WGRF received the first portion of royalties in 1998, but it wasn't until 2000 that royalty funds reached substantial levels with $33,000 collected. In 2002 and 2003, the level has jumped to approximately $250,000. "This rise in royalties received is a strong indication that wheat and barley varieties developed in part with farmers' Check-off funding are becoming widely available and well accepted by farmers."

By having royalties come back to WGRF before being re-invested in research, farmers retain control of their investment, says Kuchenski. "Also, funds coming from WGRF qualify as industry funding and they often produce double the amount of research through matching grant programs."

With current Check-off funding agreements set to expire at the end of 2004, WGRF has been working with research institutions on new long-term funding agreements to begin in 2005. As part of this process, WGRF is continuing to examine options for how it handles royalties. "Producer feedback is welcome throughout this process," she says.

It's important producers realize the royalty system was in place long before the Check-off Funds began and is an entirely separate system, she says. "Producers need to know that WGRF does not control the royalties process. The Check-off is a completely different system operated by farmers that exists to serve farmers."

Royalties resulting from plant breeders' rights are based on the same principle as royalties paid to a musician on CD sales or to an author on book sales - they are intellectual property charges that are directed back to the original creators of a product, as compensation for the use of that product.

When a plant breeding institution licenses the rights for Pedigreed seed production and marketing of a variety it developed, it negotiates a royalty rate into its contract. Kuchenski says the rate differs with each variety and market situation, but most royalties on cereal seed are between five and 10 percent.

Royalties are typically not a major funding source in Western Canada. Most wheat and barley breeding takes place at public research institutions with government funding covering approximately 80 percent of the costs. Royalties typically pay less than 10 percent of the cost of running the breeding programs.

More information on royalties and how they relate to WGRF, research and the cost of seed is available in a new article in the June edition of Western Grains Research Magazine, available on the WGRF Web site, www.westerngrains.com.

Western Grains Research Foundation is the largest grains research funding organization for farmers in Western Canada. It is funded and directed by producers, who allocate approximately $5 million annually to research through the Wheat and barley Check-off Funds and the Endowment Fund.