A decades-old breeding model helped make Canada an agricultural powerhouse. Now industry leaders warn the system funding future crop genetics is running out of steam — and tools like the Variety Use Agreement could determine whether Canada stays competitive.

For decades,  Canada’s grain sector has enjoyed a remarkable advantage: world-class crop genetics built on a foundation of public breeding, producer support, and scientific collaboration.

Farmers planted the varieties, breeders delivered the gains, and export markets rewarded the quality. The system worked until now.

Across Canada’s seed and crop innovation landscape, a growing number of industry leaders are warning that the country is approaching an inflection point — one that may determine whether Canadian agriculture remains globally competitive or gradually falls behind faster-moving international rivals.

And at the centre of that debate sits an issue that has stirred controversy, confusion, and increasingly urgent conversation: value creation. Specifically, how should Canada fund the next generation of plant breeding innovation? The question has lingered for more than two decades. But what was once theoretical has become operational: systems are no longer merely being discussed, they are being implemented.

The Variety Use Agreement (VUA), a trailing royalty mechanism attached to farm-saved seed, is already active in Canada. More than 30 varieties from seven breeding organizations now operate under the model. And while the broader conversation around value capture may have faded from headlines in recent years, the underlying pressure driving it has only intensified. 

The Innovation Paradox

Which raises the obvious question many producers ask: if things are working, what exactly is broken?

That question surfaced repeatedly during our recent Retail Strategy webinar featuring leaders from across the value chain — including breeders, producer organizations, seed companies, and commercialization partners.

The answer, according to panelists, is that plant breeding operates on timelines most industries never experience. A new variety can take 10 to 15 years to develop. Investment decisions made today may not fully reveal their consequences for another decade. And that’s precisely the concern.

“We’re still seeing the results of previous investments,” explained Limagrain Field Seeds’ Global Head of Cereals and Pulse Research Jason Reinheimer. “But inside the innovation pipeline, there are pressures building. If we wait until the problem is visible in farmers’ fields, the road back becomes very long.” 

Because while producers still see solid varieties arriving in seed bags, breeders increasingly see warning signs behind the scenes like declining public breeding funding, rising research costs, and a lot more. 

Why Value Creation Keeps Returning

The phrase “value creation” has become politically loaded in Canadian agriculture.

To some farmers, it sounds like another cost. To others, it sounds like privatization. And for many, it remains an abstract concept. But the irony is that value creation already exists throughout agriculture.

Every producer checkoff is a form of value creation. Certified seed royalties are value creation. Technology fees are value creation.

The real debate isn’t whether value creation should exist (it already does in spades), but about which model best funds future innovation. For years, the industry explored multiple options, including end point royalties and trailing royalty systems. Consultations stretched across the better part of two decades and consensus couldn’t be reached. Eventually, the industry moved toward voluntary implementation.

That’s where the VUA entered the picture. Under the VUA model, growers purchasing participating varieties can save seed for future use while paying a royalty tied to that farm-saved seed usage.

The system remains voluntary and farmers can still choose non-VUA varieties, but participating breeders gain a recurring revenue stream tied directly to adoption and performance. For supporters, that link matters. 

“The single stream of revenue for a private breeder is royalties,” explains KWS Seeds Canada Country Manager Kenny Piecharka. “Without confidence in return on investment, companies simply won’t invest at scale.” 

And increasingly, global companies are comparing Canada against markets that already solved this problem years ago.

Australia Did Not Wait

Few countries appear more frequently in Canada’s value creation conversations than Australia, and for good reason. Australia implemented an end-point royalty system in cereals more than two decades ago to positive reviews.

One striking example discussed during the webinar involved lentils. Australia has increased lentil production by leaps and bounds over the past 15 years — from roughly 288,000 tonnes to nearly 2 million tonnes annually.

At the same time, Canadian stakeholders point to stronger rates of realized yield gain in Australia compared to Canada in certain crops. The implication is difficult to ignore: countries with robust royalty systems appear better positioned to attract sustained breeding investment. 

Germany transitioned toward stronger farm-saved seed royalty systems in the early 2000s. Today, half of seed sales occur through certified seed channels.

“Across mature wheat-growing markets, the pattern is pretty consistent: public funding pressure leads to value capture systems, which in turn stabilize and accelerate breeding investment. Canada remains one of the few major grain exporters still navigating this,” Reinheimer adds.

The Private Investment Gap

The conversation around value creation is often framed as public versus private breeding. Industry leaders increasingly argue that framing misses the point entirely. The future, they say, requires both. But breeding is becoming more technologically demanding — and more expensive since it now involves artificial intelligence, genomic selection, advanced trait stacking, disease resistance complexity and climate resilience. These tools require enormous long-term investment.

“We can’t just rely on grower levies and government dollars anymore,” says Saskatchewan Pulse Growers Executive Director Carl Potts. “The opportunities and challenges have become too complex.” 

That complexity affects public organizations as much as private companies. Western Crop Innovations (WCI), formerly part of the Government of Alberta before becoming an independent producer-governed not-for-profit breeding organization, represents a case study in how the landscape is changing.

WCI Executive Director Trevor Sears argues stable funding is now essential simply to maintain continuity.

“You can’t turn a breeding program off and on,” he explains. “Stable funding allows organizations to maintain staff, infrastructure, and breeding pipelines.” 

The Trust Problem

If the economic logic behind value creation appears increasingly compelling, why does the issue remain so contentious? Because agriculture is built on trust, says SeCan Western Business Manager Todd Hyra.

And producers are understandably cautious about systems that introduce new costs. Farmers consistently ask valid questions, Hyra notes: Where does the money go? Who benefits? Will this improve varieties? Am I paying twice through levies and royalties?

Those concerns surfaced repeatedly throughout the webinar discussion. “Grower levies and royalties serve fundamentally different purposes,” Potts says.

Levies support broad industry activities like market development and public research. Royalties, meanwhile, compensate the use of specific intellectual property — namely the seed variety itself.

Still, organizations recognize the transition creates overlap. Many producer groups continue investing levy dollars into breeding while royalties simultaneously begin flowing through VUA systems.

To address that concern, some organizations are negotiating royalty-sharing arrangements tied to the varieties they helped fund. The long-term vision, supporters say, is not perpetual double payment. It’s a transition toward more self-sustaining breeding systems.

Why Retailers Matter More Than Ever

One theme emerged repeatedly throughout the discussion: retailers and seed growers themselves may ultimately determine whether value creation succeeds in Canada, because when farmers decide whether to adopt a VUA variety, the conversation usually happens with someone they already trust.

“The retailer is really the linchpin in this system,” Hyra says. 

That trust relationship becomes especially important because the VUA system itself is not purely transactional. It requires understanding of how the agreement works and what benefits accompany participation. And perhaps most importantly, retailers must help producers connect the royalty to actual on-farm value. 

“The issue becomes much less ideological when tied directly to agronomic performance,” Reinheimer notes.

One subtle but important dynamic surfaced during the conversation: younger producers may view value creation through a different lens. For younger growers accustomed to investing in precision agriculture, software platforms, automation, and advanced equipment, the concept of paying for innovation feels less foreign.

“New generations tend to embrace technology more readily,” Reinheimer says. “And seed is technology.” 

That generational shift may matter enormously over the next decade, especially as succession accelerates across Canadian farms.

Canada’s Defining Choice

The deeper question underlying the entire value creation debate is strategic: what kind of innovation ecosystem does Canada want to build? KWS Seeds Canada, Limagrain, and other multinational breeding companies already operate across dozens of countries. They continuously evaluate where investment makes sense. And according to multiple panelists, Canada currently trails competing markets.

That does not mean Canada lacks strengths. Far from it. But the global innovation race is accelerating.

“Countries that solve funding challenges faster tend to attract more competition, more breeding programs, and ultimately more innovation,” Reinheimer adds.