What is an EPR?

An End Point Royalty (EPR) is a mechanism of value capture used by plant breeding companies to enable a return on their significant investment in the development of improved plant genetics. EPRs differ from traditional seed royalties, which are collected at the original point of seed sale as part of the seed cost. Instead, EPRs are calculated on the grain produced by the licensed grower.

EPRs comprise mostly of a breeder royalty and, if applicable, a trait fee (for example Clearfield technology), collection fee and a management fee to commercialise and market the variety.

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What are the benefits of the EPR system?

Traditional seed royalties increase the upfront purchase price of the sowing seed – a cost to the grower even in the event of crop failure.

The advantage of EPRs is that risk is shared, as the royalty is calculated only on what the grower actually produces. The initial cost to the grower (per an up-front seed royalty) is removed and the breeder’s return is dependent on the performance of the crop.

Royalties based on production rather than seed purchased is considered the most equitable means of ensuring continued investment in plant breeding.

Improved varieties producing higher yields will increase the return to both the grower and the breeding company. Conversely, poor seasonal conditions or lower yielding varieties reduce grower returns and the royalty received by the breeder.

EPRs and Growers

The grower must pay the royalty on every tonne of harvested grain whether sold or retained on farm, except for seed saved for sowing purposes. EPR also applies to each successive crop produced from the grower saved seed. Grain that is consumed on farm for stockfeed is also EPR applicable.

EPR may be deducted from grower payments by Accredited Grain Marketers and paid to the Breeder’s agent OR the agent may invoice the grower directly.

Growers are responsible for retaining records regarding the tonnage of EPR grain either sold or retained.

EPR is payable on each year’s production for the commercial life of the PBR variety (up to a maximum of 20 years).

It is an offence to ‘mis-declare’ varieties in order to avoid payment of EPRs. A person who infringes PBR may face both civil and criminal proceedings for infringement.

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