RETURN TO SPENDER
BY MELANIE EPP • PHOTO BY TWO STONE PHOTOGRAPHY
Two recently published reports conclude no single investment delivers greater ROI than varietal development. Both were authored by Richard Gray, University of Saskatchewan professor and Canadian Grain Policy Research chair. The barley report was published in July 2021, the wheat report in March of this year.
Gray’s research determined check-off dollars produced a cost-benefit ratio as high as 1:33 in wheat (1995-2020) and 1:26 in malt barley (2004-2019). This confirms the immense value of Canada’s cereal breeding programs, but it also must be noted the country lags behind its global competitors in the amount invested. Furthermore, uptake of new varieties is notoriously slow. There’s no question their introduction offers huge returns, but can industry do better?
Great strides have been made in varietal development over the past decade, some of which may not be immediately obvious. According to the 2022 wheat study, farmers received $32.90 in benefits from every dollar invested in the production of new varieties. A 2012 report, by comparison, pegged the benefits closer to $20.
According to Gray, wheat yields have increased 40 per cent since 2005, a number that was calculated using actual acreage of newly adopted varieties. While agronomics accounted for half that gain, the other half is attributable to improved genetics, he said.
“Producers got that genetic gain for about $1 an acre,” he said. “Imagine how much agronomic gains cost them—billions.”
To err on the conservative side, sawfly and Fusarium head blight resistance were excluded from the calculations. “I’m certain producers can’t name anything that’s got that kind of return,” said Gray. “There’s nothing else that comes close, and yet there’s still a discussion around it.”
Lauren Comin, regulatory affairs manager at Seeds Canada and former Canadian Wheat Research Coalition president, said there are two reasons behind the elevated rate of return for wheat. When the Western Canadian Deduction ended in 2017 and was replaced by provincial wheat commission levies, the three commissions added provincial check-off dollars to the pot.
The second driver, said Comin, is innovation. She pointed to gene editing technology and the sequencing of the wheat genome. “Investments in research are really important, and farmers are really getting their money’s worth when their levy dollars are invested in public variety development,” she said.
Barley has an even better story. In 2019, total farmer investments in barley breeding were valued at $52.3 million. In return, farmers have seen the release and adoption of new varieties generate yield-induced benefits at a value of $1.36 billion, a cost-benefit ratio of 1:26 and an internal rate of return of 32 per cent per year. Important to note is that the above figure is the result of a base calculation. Early adoption nearly doubles the ratio.
Widespread adoption of new cultivars can be incredibly slow. Maltsters and brewers need time to test the performance of new varieties before they’ll risk adoption. “If you could speed up variety adoption, you would get even higher rates of return,” said Gray. He added early adopters of varieties such as CDC Copeland or Synergy got a benefit-cost ratio of nearly 1:46.
Gray suggested one way to tackle slow adoption would be to take the emphasis off variety names by giving them numbers, the way Apple does with its next-generation iPhones. Rather than placing an order for Harrington, for example, maltsters would place an order for CDC barley. “It would be nice if we did this faster, for sure,” said Gray. “But that doesn’t mean we’re not getting a high return from what we’re doing.”
Jill McDonald, Saskatchewan Barley executive director and Canadian Barley Research Council president agrees. She said breeders have done a great job of keeping up Canada’s international reputation as a producer of high-quality grain. But she’s concerned about the need to keep up with international trade competitors. “One of our main competitors is Australia, which spends significantly more in barley breeding than what we do in Canada,” said McDonald. “That could be a challenge for us in the future.”
By Gray’s calculations, Australia invests approximately $10 an acre, or 10 times more than Canada. But as McDonald points out, outcomes are more important than dollars invested. Canada’s breeding system needs to ensure the creation of high-quality attributes that separate this country’s varieties from those of its competitors. On that front, she believes increased investment could assist breeders in development of a longer-term vision to further improve outcomes.
Most breeding programs run in five-year cycles. “From a federal perspective, governments change, priorities change,” said McDonald. “Those programs can be at risk when we’re only dealing in five-year cycles.”
Olds College Field Crop Development Centre barley breeder Flavio Capettini and molecular cereal geneticist Jennifer Zantinge agree. With such uncertainty, it’s a challenge for breeders to accurately predict future needs. These could include genetics that bolster resilience under changing climatic conditions, or address new disease challenges or even serve changing market demands such as have been produced by the tremendous growth of craft brewing. “We are making decisions in our program today that are going to be seen 10 to 15 years from now,” said Capettini.
Funding is also required to successfully market new varieties. And while some believe more money should be spent on marketing, Zantinge said there will be nothing to market without covering foundational breeding costs. In fact, inconsistency in funding is one of her lab’s biggest challenges. “In order to build a better breeding program, we need strong, long-term projects,” she said, and emphasized the need for cross-sector collaboration. “It is hard to develop long-term strategies if we are unsure of future funding.”
In her own lab, Zantinge believes money would be well spent to bring in new germplasm, and quickly. “The way to do that is to have almost a library available to the breeders, where we already have a good understanding of what’s in our germplasm,” she said. “If we already have some lines that have gone through a certain amount of pre-breeding, it’s quicker for breeders to integrate them into their program.” In order to be successful, this should be paralleled with quick access to information on changing diseases, climatic challenges and shifting markets.
Capettini agreed and added breeders’ time could be better spent if they weren’t so busy chasing funding. He noted past projects had a five-year timeline and received $200,000 to $400,000 per year. Now, he said, they come in for one to three years at $20,000 to $60,000 per year on very specific topics with several collaborators. Much of his time is spent writing letters of intent and reporting on projects to prove their relevance to the industry. “That is all administrative time that could be better used in carrying out research, writing papers or academia,” he said.
Comin agreed, and added the results of the two reports justify further support. “It shows there is still room for growth and that it makes a strong case for future investment in breeding for varieties that are going to help farmers overcome the various challenges they face on their farms.” These include the need to address climate change, lower emissions, bolster national food security and ensure their own financial stability.
“There’s no downside to investing in genetic research,” said Comin. “The return on investment is really strong, and it’s kind of an undeniable value to the farmer. That’s their money and their fellow farmers’ money that went into developing those varieties. It’s a really valuable investment.”
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