Should Royalty Fees Be Charged for Black Sugar Barbie Wax Apple? Guo Huaren Revisits Variety Rights

By Guo Huaren (Professor Emeritus, Department of Agronomy, National Taiwan University)

According to press reports, the wax apple (bell fruit) new variety "Tainung No. 3" - Black Sugar Barbie, developed by the Agricultural Research Institute, was technology-transferred to several farms for a licensing fee of 189,000 yuan per hectare. Because this high-quality variety sells for as much as 700 yuan per kilogram when newly launched, farmers without authorization have been clandestinely grafting and rushing to plant it. This may give rise to numerous problems.

Is Black Sugar Barbie protected by plant variety rights?

One unauthorized fruit farmer said that the Agricultural Research Institute uses the people's tax money to do research, yet the varieties it breeds are not opened up to fruit farmers for planting, which is suspected of benefiting a small number of fruit farmers. But one authorized farmer believed that this way the fruit farmers who pay royalties are like suckers, and suggested that the government simply open it up entirely so everyone can plant it to seize the export market. The Agricultural Research Institute stated that the licensing mechanism is intended to prevent the outflow of our technology and maintain the competitiveness of agricultural products; if farmers illegally rush to plant, they can be traced once the product goes on the market, and legal action would not be ruled out if necessary.

However, the statement that "the licensing mechanism can prevent the outflow of our technology" does not hold up. Variety outflow is quite easy; anyone with the intent can send small samples abroad by mail or through customs. In fact, our country also frequently introduces varieties from other countries free of charge. Therefore, internationally, plant variety rights are applied for in the country where the market is located, so that even if the variety flows out, it cannot be legally produced locally.

According to the plant variety rights announcement query system of the Agriculture and Food Agency, as of the search results on the morning of March 10, among wax apples only "Kaohsiung No. 1" - Summer Love had applied for plant variety rights, and it was still under review (upper image). But when queried at 3 p.m. that day, two more items appeared, including Black Sugar Barbie (lower image), and none of the announced varieties could be viewed for more detailed information. It is presumed that after the Agricultural Research Institute applied, the Agriculture and Food Agency did not immediately post the announcement online, and hastily added it at noon on the 10th.

This is interesting: Black Sugar Barbie was first announced for licensing on March 12, 104 (2015), and according to law, an application for plant variety rights for this variety needed to be filed before March 11, 105 (2016). If no application is filed within one year, novelty is lost and plant variety rights can never be applied for again. Without plant variety rights, the Agricultural Research Institute has no legal basis to sue producers and sellers for infringement.

Wax apple plant variety rights application status, searched on 2017-03-10 (the upper part of the image was captured at 10 o'clock, the lower part at 15 o'clock, when the Black Sugar Barbie variety was newly added).

Is it appropriate for the government to collect royalties from farmers?

Since our country passed and implemented plant variety rights in 2004, there have been two major benefits, namely that strong categories such as orchids and edamame can also apply for protection in the countries where their markets are located, and certain excellent foreign varieties (such as cut flowers) can thereby be introduced for production and export.

At the beginning of the implementation of plant variety rights, applications for vegetable varieties were the most numerous. However, after getting on track, it is now flower varieties that have the largest number of applications. Our country's private seed industry has its most solid foundation in vegetable seeds, and seed companies mostly take hybrid F1 varieties as their main research and development target; these cannot themselves be saved for seed, so they do not necessarily have to rely on plant variety rights protection. In flower variety research and development, public and private sectors each have their own specialties, and some are introduced from abroad. Fruit trees are still mainly developed by the public sector, but private applications have also gradually appeared.

The problem is that research and development by public institutions relies on taxpayers' money for funding, so whether the government can justify charging farmers a licensing fee for varieties it has developed is open to question. This can be discussed from two opposite angles. First, fruit farmers are after all a minority, and fruit is not a species crucial to food security; even if public varieties use tax money, the huge amount is probably not something the few fruit farmers growing that variety can afford.

But on the other hand, agriculture as a whole is where the nation's lifeline lies, the government's agricultural budget is not small, and many times it cannot be viewed in such a narrow way as cost and benefit. Therefore, for the government to subsidize farmers with one hand while collecting royalties from farmers with the other sounds like it is not quite right.

The agricultural industry is divided into two types, "offensive" and "life-preserving." Projects that can capture export markets through agribusiness count as offensive, and in this respect collecting a bit more in royalties on varieties is no problem. "Life-preserving agriculture," which belongs to the national security level, although it cannot achieve brilliant results in foreign exchange, is something that must be carefully maintained in agricultural policy; in this part, the number of farmers and crop types is far greater than in the offensive type.

Now even rice has adopted a licensing approach. For relatively large-scale rice-farming enterprises there is of course no problem, but small farmers simply cannot afford it; fortunately there is a design exempting farmers from liability, so that small farmers who want to grow it can raise their own seedlings and sow them.

There is another problem with licensing fees after variety breeding. In the early days, to encourage breeding, public institutions often used the area over which a variety was promoted as the basis for rewards. At present this method has been abolished and replaced with the royalty method, allowing public breeders to receive a certain percentage of licensing fees as personal income. But there are so many crop types, and those that can generate considerable royalties are just a few; then, for official business needs, many breeders who also carry out breeding are inherently unable to compare with others in royalty income. Might this dampen morale? Or lead to the consequence that no one carries out breeding for many crops?

Whether it is the former reward system based on promotion area or the current royalty system, both may harm the diversity of crops and their varieties, and such diversity is so important in an era of climate change.

Conclusion: Plant variety rights should be broadly discussed with opinions solicited

Crop breeding is an important key to agricultural production, and the design of plant variety rights aims to promote the breeding industry. However, if any design is not placed in the appropriate position, whether too weak or too strong, it will hinder the achievement of the goal. Considering the complexity and fairness of agriculture, the current design for implementing plant variety rights is obviously rather simplified and needs to be improved by broadly soliciting opinions.

Note: For the March 10 media reports, see:
1. http://news.ltn.com.tw/news/focus/paper/1084597
2. http://news.ltn.com.tw/news/focus/paper/1084598
Plant Variety Rights Announcement Query System of the Agriculture and Food Agency:
http://newplant.afa.gov.tw/

The LV of the wax apple world: Black Sugar Barbie, large, red and juicy