GROWERS are being asked to ensure they pay end-point royalties (EPRs) on grain produced this harvest, even if rain-related downgrading pushes deliveries into feed categories, or the grain is used on farm.
The reminder has come from Australian Crop Breeders (ACB), which formed in 2019 to represent Australian focussed breeding companies.
“Every time an Australian farmer pays the EPR, they are contributing to the success of our sector,” ACB chair and InterGrain chief executive officer Tress Walmsley said.
“It’s the best way we can deliver premium genetics to maintain our world-leading reputation for high quality crops.”
EPRs are payable by growers at a fixed rate per tonne of $1-$4.50, depending on the variety, for barley and wheat, and $2.50-$3.50 on durum.
They are also payable on pulses, oats, triticale and selected canola varieties, and are by far the largest funders of Australian breeding programs.
Except for pulse breeding, all programs have transitioned from the public to the private sector in recent years, but some retain links to state governments through partnerships.
Ms Walmsley said in countries including the United States, crop-breeding programs in public institutions are now under pressure from a lack of investment and innovation.
“The number of skilled breeders is falling to dangerously low levels due to factors such as insufficient funding and experienced staff nearing retirement without enough succession planning.
“Our structure here with the royalty system is different and really does help us avoid many of these problems, but it only works while people understand its importance and do the right thing.”
EPR are payable by the grower on grain sold as well as for grain used on farm. Only seed retained for planting is exempt.
Non-payment or underpayment can occur when growers do not correctly declare their grain production, sales and farm-use figures on their harvest declarations, or they inaccurately declare a variety at the point of sale where the effect can be a lower per-tonne rate paid.
“We are challenged by ensuring compliance in the domestic use and/or feed markets where auto-deduction is not as strongly supported, and there is therefore reliance on grower completion of harvest declarations.”
The EPR system is production based, and was designed to ensure the production risk is shared between plant breeders and growers, as was shown in the eastern Australian drought years of 2017-19.
Breach of Australian Plant Breeders Rights Legislation can lead to fines of $55,000 for individuals and up to $275,000 for companies, and plant-breeding companies are also able to charge interest.
Identity loss a contributor
Breeders universally aim to improve yield and provide traits like disease resistance, and also seek to develop and improve characteristics sought by specific end-users.
They include maltsters and flour and semolina millers, who recognise and value traits of specific varieties of wheat and barley.
However, drought and wet harvests can prompt a loss of identity in grain produced by pushing it into feed use.
Be it on or off farm, grain used for feed is where EPRs are not efficiently collected.
As one source in the feedlotting industry said: “I don’t care what variety I’m buying; feed’s feed to me.”
While volume customers for feedgrain can be found in the sectors including dairy, feedlots, pig, and poultry, the feeling is it is growers not paying EPRs for grain they use on farm that is a big part of the problem.
The Seedvise agency helps 14 ACB members collect EPRs through an interface with around 100 Australian grain buyers.
They include traders, maltsters, and millers of flour and stockfeed, and Seedvise director Denis McGrath said EPR payment compliance varies depended on the commodity being grown and the harvest year it is grown in.
“EPR payment compliance is poorer in the feed sector, predominantly because the variety name is poorly captured at the first point of sale in this market segment,” Mr McGrath said.
“In an average crop year, I’d estimate approximately 15 per cent of wheat and barley EPRs that should be paid through to the respective plant-breeding programs that own these varieties are not being captured or paid.”
Mr McGrath said individual plant-breeding companies are responsible for engaging growers about their EPRs.
“Most interactions will be directly with a company representative and the individual grower.”
One criticism of the EPR system is that it is onerous for growers to fill out harvest declarations for return and payment to numerous seed companies to cover all the varieties they grow in any given year.
Work is being done to further simplify the process for the large number of growers across Australia on the National Grower Register (NGR), so one form can satisfy the harvest declaration requirements of numerous companies.
Indications are that lupins, field peas, oats and barley retained by mixed farmers to feed to their own stock contribute to undercollection of EPRs.
The demise of the triticale breeding program is a case in point.
It was shelved in 2017 because it was not paying its way through a transition to the EPR system.
The NSW Government’s sale of its lupin germplasm to a commercial breeding program based in export-focussed Western Australia is another example of limited confidence in EPRs to generate an income for breeders in localised feed industries.
Rising feed use
According to the Feed Grain Partnership’s most recent supply-and-demand report, Australia’s domestic grain use between 2000 and 2018 averaged 13 million tonnes (Mt), or 37pc of production, and stockfeed is believed to account for around 9Mt.
Australia’s largest feedlot operation, Mort & Co, is one of many organisations which grows some of the grain it uses in house, and pays EPRs accordingly.
“Mort & Co Farming declares and pays all EPRs per grower agreements,” the company said in a statement.
The company uses around 250,000t of grain a year to feed up to 86,700 head of cattle, and grows mostly silage and up to 2pc of its grain requirements on its farms on Queensland’s Darling Downs.
“Mort & Co is well aware that the funds from EPRs assist with crop-breeding activities across Australia, along with the research that goes into disease resistance, grain quality and yield success, all of which is vitally important for our industry.”
Stock Feed Manufacturers’ Council of Australia executive officer Duncan Rowland said the problem had more to do with misunderstanding than dishonesty.
“You will always get your rogues, but in general, the stockfeed industry supports it,” Mr Rowland said.
“There’s a whole education that needs to be undertaken from growers to consumers.
“It’s a relatively new system, and awareness needs to be raised.”
Grain Central: Get our free cropping news straight to your inbox – Click here
HAVE YOUR SAY