Environment and Rural Affairs Department Agriculture Group

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1 Environment and Rural Affairs Department Agriculture Group To: All interested Organisations Pentland House 47 Robb s Loan Edinburgh EH14 1TY Telephone: Fax: Our ref: SPP/2/2/4/8 13 March 2002 Dear Sir/Madam FEES FOR PLANT BREEDERS RIGHTS AND NATIONAL LISTING I am writing to consult you on a proposal to increase the fees for UK Plant Breeders Rights (PBR) and National Listing (NL) by 5% from July Government policy is to recover fully the cost of the National List and Plant Breeders Rights systems. However, as you will see from the regulatory impact assessments we estimate that to meet this requirement in 2002/3 would require increases in fees of 43% for National Listing and 52% for Plant Breeders Rights. Ministers are fully aware that to increase fees by such amounts would be highly undesirable to the industry and its customers. It is therefore proposed that for this year, fees are increased by 5%. Details of the fees included and the changes proposed are contained in Annex 3 together with the current fee rates. In accordance with Government policy, regulatory impact assessments for National Listing and Plant Breeders Rights are attached at Annexes 1 and 2 respectively. We need to prepare a plan for achieving full cost recovery on both services for future years and in conjunction with officials of the Department for Environment Food and Rural Affairs (DEFRA), we will shortly be undertaking a review of statutory fees for both National Listing and Plant Breeders Rights. We will contact you separately about this review. =? =>?=

2 The Scottish Executive s usual practice is to allow 12 weeks for responses to consultations. However, to ensure that your comments are received and forwarded to DEFRA timeouly we propose, on this occasion, to allow a slightly shorter period to run concurrently with the DEFRA consultation. If you would like to comment on the fee proposals, please forward them in writing by post, fax, or e- mail by 13 May If this causes difficulty please contact me. Responses should be sent to:- Ms Carol Scott Scottish Executive Rural Affairs Department Plants, Horticulture and Potatoes Branch Room 127 Pentland House 47 Robb s Loan EDINBURGH EH14 1TY Fax: / In order to help inform debate on the questions covered by this consultation letter, the Department intends to follow its normal practice of making available to the public, on request, copies of the responses received. The Department will assume, therefore, that responses can be made publicly available in this way. If respondents indicate that they wish all, or part, of their reply excluded from this arrangement, its confidentiality will be strictly respected. Copies of the responses made available to the public will be held on an open file held in the Library at Saughton House, Edinburgh. Copies of documents from the open file will be forwarded to members of the public on request. A charge will normally be levied to cover the cost of copying. Yours sincerely Brian Cockwell Plants, Horticulture and Potatoes =>?=

3 REGULATORY IMPACT ASSESSMENT ANNEX 1 Title of the regulatory proposal 1. Proposals to implement increases in the statutory fees for National Listing of plant varieties Purpose and intended effect of the proposal Identify the issue and objectives 2. EC Directives prohibit the marketing of seeds of the main agricultural and vegetable species, unless it is seed of a variety entered on the UK National List or the EC Common Catalogue (an amalgam of Member States National Lists). Before a candidate plant variety can be added to the National List it must undergo tests and trials to show whether it satisfies prescribed criteria for Distinctness, Uniformity and Stability (DUS) and, for agricultural crops, Value for Cultivation and Use (VCU). Applicants are charged fees, including application, DUS test, VCU trial, award and renewal fees, to recover the cost of administering the system. 3. We are required to seek 100% recovery of costs. Fees are reviewed annually. The fee increases proposed in this assessment would achieve full or 73.5% recovery of operating costs. Risk Assessment 4. If fees are not increased, Departments will not be able to operate the National List system to a satisfactory level and maintain the current rate of recovery of costs. 5. Failure to operate the National List system adequately could lead to a reduction in the reliability of decisions to add new varieties to the UK National List. This might lead to objections from other EC Member States to the addition of UK varieties to the Common Catalogue, which in turn would restrict the market for UK bred varieties. There could also be a challenge from the EC for failing adequately to implement European legislation on National Lists and Common Catalogues. Options 6. Identify options ii ii Increase fees by approximately 43% to meet the full cost ( 2.169m) of operating the scheme. Increase fees by 5% and achieve a lower level of recovery.

4 Issues of equity and fairness 7. National Listing is an EC requirement, which ensures that only varieties of known agronomic value are marketable in the UK. The Scheme has run at a deficit for some years (approx. 636k in 2001/02). Otherwise, applicants pay costs. Benefits Identify the benefits 8. Applicants benefit from the ability to market their improved varieties initially in the UK and subsequently in the EC. The agriculture industry in general benefits from improved varieties coming into the market place. The majority of the costs of administering the National List system are borne by applicants and not the general taxpayer. Quantify and value benefits 9. Option i. This would bring in sufficient fees to meet full cost recovery for National Listing. Option ii. This would achieve a cost recovery of 73.5% of the total operating costs. Compliance costs for businesses, charities and voluntary organisations Business sectors affected 10. Around 80 plant breeding companies (about 30 of which are UK based) engaged in developing new agricultural and vegetable species for the UK market, are involved in the submission of National List applications. Compliance costs for a typical business 11. The majority of plant breeding companies are part of large multinational organisations. Company A (below) is typical of such a company, with breeding interests in a range of crops. Company B is a medium sized company. Company C and Company D are small specialist breeders with interests in a single crop and vegetables respectively. These typical compliance costs are, therefore, based on 4 companies, which are reasonably representative of a cross section of the industry involved in breeding agricultural and vegetable species.

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6 Example of plant breeding companies Company Policy Implementation Current 2001/ /03 5% 2002/03 43% Current and Systems A 115, , ,823 0 B 16,910 17,756 24,181 0 C 7,750 8,138 11,083 0 D 1,590 1,670 2,274 0 Total compliance costs 12. The total income we expect to receive from application, test, trial, award and renewal fees in 2002/03 is 1.51 million compared to 1.49 million in 2001/02, an overall increase of approximately 1% when estimated reductions in throughput are taken into account. Impact on small businesses 13. The majority of plant breeders with interests in species covered by National List requirements are large multinational enterprises. There are very few truly small plant breeding companies and the examples at C and D are typical of such smaller business as exist in this sector. Other Costs 14. There are no other costs to citizens, the environment or Government. Results of consultation 15. To be added when consultations are completed. Summary and recommendations 16. To be added when consultations are complete. Enforcement, sanctions, monitoring and review 17. The collection of fees for National Listing is carried out by the Plant Varieties and Seeds Division of DEFRA. The level of demand for National Listing and the fee rates are monitored and reviewed annually.

7 Plant Varieties and Seed Division March 2002 ANNEX 2 REGULATORY IMPACT ASSESSMENT Title of the regulatory proposal 1. Proposal to implement increases in the statutory fees for Plant Breeders Rights. Purpose and intended effect of the proposal Identify the issue and objectives 2. The Plant Varieties Act 1997 continues the system of Plant Breeders Rights introduced by the Plant Varieties and Seeds Act Plant Breeders Rights are a voluntary intellectual property system for the protection of new plant varieties. Before a candidate plant variety can be granted Plant Breeders Rights it must satisfy prescribed criteria for Distinctness, Uniformity and Stability (DUS). Breeders are charged various fees, including application, DUS test, grant and renewal fees to recover the cost of administering the system. 3. We are required to seek 100% recovery of costs. Fees are reviewed annually. The fee increases proposed in this assessment would achieve 87% or full cost recovery on Plant Breeders Rights in 2002/03. Risk Assessment 4. Failure to operate the Plant Breeders Rights system adequately could lead to a reduction in the reliability of decisions and hence the quality of protection. Plant breeders who wanted protection, would be likely to apply instead for EC Plant Breeders Rights, which would adversely affect throughput. Options 5. Identify options i. Increase fees by approximately 52% to meet the full cost of operating the scheme ( 0.887m) and the accumulated deficit of 0.229m. ii. Increase fees by 5% and achieve a lower level of recovery.

8 Issues of equity and fairness 6. The system of Plant Breeders Rights is voluntary. Once a variety has been granted Rights a breeder is able to prevent others from carrying out certain acts in relation to the propagating material of that variety. Normally, however, the breeder recovers his investment in developing the variety by licensing others to use the propagating material of the variety and by charging the licensee a royalty. Given the financial benefits that the system confers on the holder of Rights, it is Government policy to recover the full cost of administering the system from the holders themselves and not to pass on costs to the taxpayer. For 2002/03, because of the difficulties in achieving full cost recovery, we aim to recover 87% of the cost, which is the best that can be obtained under current market conditions. Benefits Identify the benefits 7. The benefits are as identified in paragraph 6 above. Quantify and value benefits 8. Option i. This would bring in sufficient fees to meet the full cost recovery for Plant Breeders Rights. Option ii. This would achieve a cost recovery of 87% of the total operating costs. Compliance costs for businesses, charities and voluntary organisations Business sectors affected 9. Around 140 commercial plant breeding companies (100 foreign based and 40 UK based) are involved in submitting Plant Breeders Rights applications. Compliance cost for a typical business 10. The plant breeding sector is characterised by a range of companies in terms of species in which they specialise and their overall size. Some, mainly in the ornamentals sector, are small independent breeding companies concentrating on a limited range of species. Others are multinational companies with large scale breeding programs in agricultural crops. These typical compliance costs are based on 4 companies, which are reasonably representative of the types of business. Company A (below) is part of a large multinational group. Company B is medium sized. Company C is a small

9 company specialising in one agricultural species and Company D is a small specialist ornamental breeder.

10 Example of plant breeding companies Company Policy Implementation Current 2001/ / /03 Current and Systems 5% 52% A 56,611 59,442 86,048 0 B 12,828 13,469 19,499 0 C 8,238 8,650 12,522 0 D 7,626 8,007 11,592 0 Total compliance costs 11. The total recurrent costs to companies arising from current measures are 0.73 million. Estimated costs with a fee increase of 5% are 0.77 million. Impact on small businesses 12. The majority of plant breeders in the agricultural sector are multinational enterprises with breeding interests. Companies C and D above illustrates the impact on small specialist breeders on the agricultural and ornamentals sector. Other Costs 13. There are no other costs to citizens, the environment or Government. Results of consultation 14. To be added when consultations are completed. Summary and recommendations 15. To be added when consultations are complete. Enforcement, sanctions, monitoring and review 16. The collection of fees for Plant Breeders Rights is carried out by the Plant Varieties and Seeds Division of DEFRA. The level of demand for Plant Breeders Rights and fee rates are monitored and reviewed annually. Plant Varieties and Seed Division March 2002

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