Cereal Investment and Innovation Presentation to Breadbasket 2.0, June 18, 2013

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Transcription:

Cereal Investment and Innovation Presentation to Breadbasket 2.0, June 18, 2013 Courtesy: CIMMYT

Consortium Steering Committee Members Alberta Barley Commission Alberta Seed Growers Association Alberta Wheat Commission Grain Growers of Canada Keystone Agricultural Producers Manitoba Wheat and Barley Growers Association (Interim) Manitoba Seed Growers Association Western Barley Growers Association Western Canadian Wheat Growers Western Grains Research Foundation Saskatchewan Seed Growers Association Saskatchewan Wheat Commission (Interim/Observer) Saskatchewan Barley Commission (Interim/Observer) Garven & Associates

History Canadian producers have a history of investing in wheat and barley variety development. Almost 20 years. Approximately 30% of the cost ($60 million).

Background Situation Strong recognition of the need for increased investment and innovation in cereals in Canada A desire by AAFC to move out of variety finishing and registration. A desire by producers to play a strategic role in cereal innovation while creating an attractive business environment for the private sector. Garven & Associates

Our Goals To create an Investment and Innovation model for cereals in Canada that will allow for breeders and the cereal value chain to transition from the current situation to a new model that makes the whole industry stronger. Currently a conceptual model has been developed for industry input and discussion. A consensus has already developed amongst producer representatives. Our goal is to reach a broad industry consensus for a new model over the next few months. Garven & Associates

1. Operate as a business Guiding Principles Model Will Do 2. Will allow two(2) systems to co-exist. 1. Private company breeding system. 2. Private producer/partnership system. Not either or its and 3. Two systems will create more varieties. Leads to more choice, increased competition- more innovation. 4. Will increase dollars invested in variety development.

Guiding Principles Model- Will do (continued) 5. Will increase dollars invested in germplasm development. 6. Provides a method and funds to ensure that adapted germplasm continues to be enhanced making it available for game-changing technology as and when it is available. 7. Contributes to an improved method of addressing FSS s payment for technology by EPR and changes mind-sets. 8. Contributes to a stronger environment for a return on investment to cereal breeding research.

Guiding Principle Model- Will not do 1. Will not get in other peoples businesses. 2. Will not prevent private company breeders from accessing early stage germplasm from AAFC and using it. 3. Will not re-invent the current system but instead lay an acceptable path for transition to private breeding in Canada that allows a role for producers. 4. Will not control where others collect royalty (on seed or grain) or how much is charged. 5. Will not change the Seed Act. (maintains the integrity of the pedigreed seed system)

A Global Perspective, Bridging the Yield Gap in Current Wheat Production 10000 8000 6000 4000 2000 0-2000 -4000 Attainable Yields Acutal Yield kg/ha Source: Bruinsma (2009) Actual yields based on 5 year average 2003-2007 Difference from agro-ecological attainable (AEZVS + S +MS, rain fed, high input) 9

Investment and Innovation Model Concept Canadian Wheat and Barley Producers Investment Core model components: 1. The establishment of a producer owned Grain Investment Corp. (GIC) financed by producer investment. Grain Investment Corp (GIC) Lines AAFC 2. GIC would become an agent for AAFC. Alone or in partnership with others, GIC would take on the role of finishing AAFC lines and registering varieties and licensing lines. 3. GIC varieties will be licensed to existing players in the seed industry. Seed Industry and Seed Growers Garven & Associates 4. Assumes continued AAFC funding in germplasm development at current level. New private sector investment is incremental.

AAFC Cereal Research 7 9 years 3 6 years Winter nursery F2 F3 F4 F5 Registration Reg. trial 1 F6 F7 F8 Reg. trial 3 Reg. trial 2 (Productivity, pest resistance & end use quality) Population improvement Row evaluation Pedigreed Seed production (Productivity and pest resistance) AAFC exiting this space Double haploid production and seed increase Ongoing Cross Parental Lines and grow hybrid seed Germplasm resource base Acquisition, evaluation, characterization, development, utilization, preservation, distribution 1 1 1/2 years

7 9 years 3 6 years Winter nursery F2 F3 F4 F5 F6 GIC fills the gap Licensing to Others for Bulk up, distribution and sale Registration Reg. trial 1 F7 F8 Reg. trial 3 Reg. trial 2 (Productivity, pest resistance & end use quality) Population improvement Row evaluation Pedigreed Seed production (Productivity and pest resistance) GIC Double haploid production and seed increase Ongoing Cross Parental Lines and grow hybrid seed Germplasm resource base Acquisition, evaluation, characterization, development, utilization, preservation, distribution 1 1 1/2 years

Investment and Innovation Model Concept Canadian Wheat and Barley Producers Grain Investment Corp (GIC) Role: Line & Variety Development and Licensing Grain Investment Corporation: 1. It is envisioned that the GIC would: Be established / owned by Canadian producers and open for investment from global breeders and others. Be Not for Profit (NFP) business. Have a board governance structure made up of producers and industry experts. 2. The primary focus is to ensure the continued flow of new and improved AAFC genetics to producers and the cereal value chain. 1. GIC will develop the capacity to provide market based input into germplasm development at AAFC. Garven & Associates

Investment and Innovation Model Concept Partnerships Canadian Wheat and Barley Producers GIC s mandate and business focus would be: 1. Finishing AAFC lines and registering varieties developed from AAFC lines. Partnerships with Private, University Breeders, Others Grain Investment Corp (GIC) Seed Industry and Seed Growers Lines AAFC Garven & Associates 1. Licensing lines to other breeders or the finished varieties to the broad seed industry. 2. Developing partnerships / collaborations with cereal breeding organizations private and university. Examples: Germplasm exchanges Other technology licensing Trait integration

Funding GIC We are recommending funding GIC via an End- Point Royalty (EPR) An EPR funding model creates: A significant and predictable funding pool in a fair and cost effective way. Breeding investment can likely be doubled at AAFC with an EPR of $2 to $3 per tonne Garven & Associates

Recommended Funding Mechanism An End-Point Royalty (EPR) collection method appears to be the best fit for royalty collection on cereals produced in Canada for the following reasons: 1. Most of the cereal grain is sold through a relatively small number of buyers. 2. Buyers have established the administrative systems for collection and remittance of levies based on grain sales. 3. It has a low administration cost. 4. More practical to implement than a royalty on farm-saved seed (FSS) because of number of our farmers and locations. 5. Less offensive to producers than a collection/monitoring system that is needed for FSS. 6. Performance-based royalty system. Producers and breeders share risk of variety performance. Garven & Associates

Investment and Innovation Model Concept Model enablers and features: Ratification of UPOV 91 enabling End Point Royalties(EPR) Partnerships Partnerships with Private/Grain Marketers Canadian Wheat and Barley Producers Grain Investment Corp (GIC) AAFC Research Support Financial+ Human Decision to utilize a EPR or seed royalty will be the choice of each breeder, however all varieties registered and licensed by the GIC would have EPR on production as opposed to royalty on the seed. Seed Industry and Seed Growers Royalty Collection Grain Production EPR

The varietal development continuum Foundational research Germplasm development Breeding Pre- Breeding Functional Genomics, gene discovery, trait development, molecular research, breeding technologies Ongoing Parental Germplasm development, introgression of traits Ongoing Breeding (crosses and selections ) to develop new varieties. Ongoing Variety Registration Varieties (Canadian Wheat Alliance) What s needed What s possible

Investment and Innovation Model Concept Partnerships Partnerships with Private/Grain Marketers Canadian Wheat and Barley Producers Grain Investment Corp (GIC) AAFC Research Support Financial+ Human Model enablers and features: Z% (eg.10% or other) of the EPR collected on GIC (and its Partners) developed lines and varieties would re-invested into long term public / private collaborative strategic research efforts. The remaining EPR (X %) funds will be reinvested by GIC in variety development and provide financial and human resource support to AAFC strategic long term germplasm development. Existing capacity already exists to collect EPR. Seed Industry and Seed Growers Public/ Private Germplasm Collaborative Research x % z % Royalty Collection Grain Production EPR

Investment and Innovation Model Concept Canadian Wheat and Barley Producers Other breeder partnerships with GIC: When partnerships are established with private breeders or universities to develop varieties from AAFC lines, then the EPR would be shared to recognize each partner s contribution to finishing and line and registering the variety. Partnerships Partnerships with Private/Grain Marketers Grain Investment Corp (GIC) Seed Industry and Seed Growers AAFC Research Support Financial+ Human Public/ Private Germplasm Collaborative Research Actual EPR rates and % allocations will be defined in the agreement between GIC and the partner breeders. (eg GIC X% and Partner Y %). Multiple partners will be present. X % Z % Royalty Collection Y% Private Breeder Partners Grain Production EPR

Cereal Investment and Innovation Model Wheat and Barley Producers via Provincial Commissions Investment Universities Multiple GIC Partnerships with Private Breeders/ Grain Marketers Partnerships Varieties Grain Investment Corp (GIC) Business (NFP) Value-Chain Board of Directors Role: Line & Variety Development and Licensing Lines AAFC Financial + Human Support + Market Targeted Partnerships Germplasm x % Public/ Private Germplasm Collaborative Research z % Royalties y% Canadian Wheat Alliance Private Breeders Seed Industry and Seed Growers Grain Production EPR Royalty Collection

Increasing Crop Innovation Two different and independent approaches to assessment.. Cereal Producer Organizations initiative to to develop a new model for Cereal Investment and Innovation... Breadbasket 2.0 Roundtable discussions different people but similar conclusions reached. Garven & Associates

Breadbasket Roundtable Key Findings 1. Need to increase crop production through innovation 2. Private Sector partners are often outliers in a process and unable to access the system. 3. Key Focus focus areas are needed (renewed focus on wheat research) 4. Pan Prairie initiatives are needed. 5. The challenge lays in engaging producer to lead the effort and need to be the chief participants in a new system. 6. Long term funding is needed to support research. 7. Current R&D support systems inadequate to engage industry partners. Garven & Associates

This Concept s Linkage to Roundtable Findings 1. Need to increase crop production through innovation 2. Private Sector partners are often outliers in a process and unable to access the system. 3. Key Focus areas are needed (renewed focus on wheat research) 4. Pan Prairie initiatives are needed. 5. The challenge lays in engaging producer to lead the effort and need to be the chief participants in a new system. 6. Long term funding is needed to support research. 7. Current R&D support systems inadequate to engage industry partners. Garven & Associates

Important Outcomes Producers having a strategic role in cereal innovation Creating of GIC as an agent for AAFC while and increasing investment in Germplasm development Address emerging gaps Increased investment and innovation in cereals in Canada. The model will likely result in double the investment in breeding and balanced investment across all cereal crops and pre-breeding through to acutal breeding Creating an attractive business environment for all investors. GIC to take over AAFC s role of variety finishing / registration / licensing ensuring continued flow of new and improved AAFC genetics to producers and the cereal value chain More private sector investment and private / public partnerships in germplasm development Important aspect of GIC s mandate The allocation of a percentage of the GIC s EPR into pre-breeding collaborative research. AAFC is free to continue licensing. Garven & Associates

Unlocking the Potential for Innovation in Cereals Requires Mind-Set Changes Producer Mind-Set change Willingness to pay more for genetics via a EPR on cereal grain production. Private Breeding Companies Paradigm Shift Willingness to partner with customers to create maximum value and capture all opportunities. Garven & Associates