Grain Producers Australia is working with the plant breeding sector to ensure the end point royalty (EPR) system works fairly for both growers and breeders.
This comes in light of the national peak body for plant breeders saying it will look to implement audits on growers it suspects of dodging EPR payments.
The EPR system is different to legislated levies such as the Grains Research and Development Corporation or biosecurity levies mandated under government legislation.
It is compulsory but EPR recipients rely on the traders gathering the levy, which they claim may not be happening in all circumstances.
The grain grower peak body has updated its policy on EPRs to reflect the need for fair EPRs to ensure continued investment in breeding and to create a more cost effective structure for growers.
GPA has been working with representatives from Australian Crop Breeders (ACB); the peak body representing organisations that generate new varieties for Australian grain producers to modernise its EPR policy.
ACB has raised their concerns about the decline in EPR compliance from growers and industry and the impact this is having on EPR collections, and the subsequent impact on the capacity to drive continued investment into crop breeding and the development of improved varieties for Australian grain growers.
As a consequence, ACB has informed GPA and other industry stakeholders that the affected crop breeders will be commencing audits this month of growers they suspect may be intentionally avoiding paying their EPRs.
For its part, GPA has said the annual harvest declaration process used to calculate EPRs for individual growers was too cumbersome and needed to be updated to reflect the better technology available today.
ACB acknowledged this point and have committed to reviewing the harvest declaration system, with the aim developing a more simplified and grower friendly tool.
In order to gain ideas on how to create a more functional gathering system ACB recently conducted their first grower focus group to discuss a proposed improvement to the harvest declaration process; including grower representatives from GPA.
Following on from this, ACB intends to run a further three focus groups between now and mid-2024, with the goal of implementing a new process for the 2024 harvest.
The organisation is also set to run further marketing and education work with growers on the role EPRs play in stimulating investment in plant breeding.
GPA's relevant policy is being reviewed with a discussion paper to members, and current states:
GPA supports end point royalties as the most equitable method of collecting a royalty on a new variety. However, GPA believes that in order to ensure continued grower support for EPR collection there should be some measures put in place.
These include:
- 1. Collection needs to be cost effective and collected at the first point of sale
- 2. Time limits on how long after commercialisation a levy can be collected
- 3. Percentage based price limits
- 4. No closed loops,
- 5. Full transparency regarding the setting of levies
- 6. Allowance for grower-to-grower sales
- 7. That revenue collected from royalties is returned to breeding.
GPA chief executive Colin Bettles said growers supported the system in principle but did not want to pay top dollar for old or under performing genetics.
Given the increase in farmer to farmer trade he said it was important the system had a means for growers to include these royalties from grower to grower sales.
Finally, he said growers were adamant the funds raised needed to flow back to future breeding initiatives.
The EPR system is widely regarded internationally as one of the jewels of Australian plant breeding in terms of a fair way of raising revenue.
Getting paid a small percentage on the total amount of tonnes produced rather than a flat upfront fee means the breeders are sharing some of the risks of the season with the growers.
ACB has warned farmers need to meet their commitments in terms of payments in order to keep the breeding sector healthy.
"To ensure the long-term competitiveness of the Australian field crop industry and on farm profitability we need the field crop breeders to continue to make the long-term investment in plant breeding," it said.
"This will only be done if they have sufficient EPRs to invest."