CASE STUDY

Strategic reviews should be undertaken on the basis of opening the minds of key executives and operational managers. Engaging an independent consultant to moderate the process, break down barriers mind sets and introduce a degree of lateral thinking well help shape and define future strategies.

1. Variety Licensing & Royalty Collection in Kyrgyzstan

MISSION

I was the lead expert on a multi task mission:

To make recommendations to strengthen the PVP regulatory structure;

To create a market driven seed supply chain;

To enhance output and competitiveness of the seed industry value chain;

To assist in formulating a strategy for the sustainable structure of plant breeding in the Kyrgyz Republic.

Challenge

Kyrgyzstan passed a PVP Law (Law of Selection Achievements) in 1998 and became a UPOV member in 2000 but had not implemented a system for royalty collection. In its absence Government Research farms where breeding was centred focused on commercial production which weakened breeding activities to a point where there was actually very limited primary crop breeding activity. There was no form of structured “in licence” procedures and without a royalty collection system there was little to attract foreign breeders to test and evaluate material. Morale within the breeding community was low and aged varieties dominated the field crop market with considerable areas being sown to outclassed varieties, many over 25 years or more from their release date. Whilst there was an agricultural advisory service there was no motivation to drive new varieties into the market. At the time interest rates were over 30%. The entire agricultural infra structure was weak with no inward investment nor visible strategic policies. The transition to a market driven economy was economically, culturally and socially challenged.

Approach

The mission commenced with an extensive information gathering exercise meeting with key stakeholders plant breeders, farmers (as in Union leads), variety evaluation centres, seed production and distribution units, the Patent Office, and Government officials. Consistently through the one to one interviews came the response that there was no cohesive agricultural plan, no transparent structure, and an institutional inertia. Whilst my principal task was to formulate an appropriate plant royalty collection scheme it became evident that to have any chance of success we had to embrace the wider issues. Reflecting on my interviews the key question that I then wanted to answer was;

"How do we underpin breeding by motivating growers to buy into new varieties?"

Recommendations

Taking into account the far reaching challenges that Kyrgyzstan faced - not least high interest rates and a detached approach to improving crop performance -I proposed a radical solution. One which if implemented, would provide economic stability to the breeding industry whilst considerably uplifting the gross agricultural output.

An obstacle with any new royalty system would be its cost to the grower, its affordability and acceptance by the industry and its ethical transparency. Added to this was the need to motivate the Government advisers to educate growers and drive forward change. With my recommendations being accepted by NICARS, to whom I was contracted, a collective meeting was convened with plant breeders from the various units together with key stakeholders.

My proposal endeavoured to address the collective challenges drawing them together into an integrated approach which would require cross industry buy in. Purely on a cost basis I discounted the traditional royalty approach of simply adding royalty to the cost of certified seed. With the prevalence of old outclassed varieties farmers had demonstrated their reluctance to accept new varieties and the situation would be exasperated by a seed cost hike due to royalty attachment.

In essence my interlinked proposal was to;

Adopt a royalty area collection approach on new released varieties with royalty only being collected when the grower had been paid or benefited after harvest. Consideration be given to a National Micro Finance Scheme attached to the purchase of certified seed of new varieties. The Micro Finance scheme would be at an attractive lower interest rate or would be subsidised by a tax incentive with repayments scheduled in line with grower income streams. This could provide a considerable motivation for growers to make the change and buy into the higher performing new varieties. Government advisers would take on a crop management responsibility of the registered growers ensuring adoption of appropriate protocols and practices. Crop benchmarking could be undertaken to clearly demonstrate to the Government and influencers the economic uplift as a result of this transitional change. This could also ensure a consistency of delivery of this policy encouraging more growers in following seasons. The scheme could be managed by a cross industry office or executive with the Patent Office taking a key role in legal implementation. Varietal demonstration trials should be implemented engaging the respective plant breeders who would be integral to a national plant development programme.

In addition to the above it was essential that mechanisms be put in place to encourage foreign breeders to become engaged in testing their material in Kyrgyzstan (hybrids and open pollinators). This could be achieved by a structured in licences with an appropriate transparent and audit royalty collection approach.

These far reaching proposals were readily accepted by the stakeholder present who spontaneously prepared an accord and which was duly signed by all.

And what about implementation? Well regrettably, as a result of political turmoil, the overall SIDA Strategic Crop Programme covering Plant Genetic Resources, Higher Education in Plant Breeding, Seed Industry development and Certification and Control was terminated early.

Regardless; this case history demonstrates how I can harness my skill set to bring forward a visionary and radical approach and one which embraces collective engagement.

2. Workshops on Intellectual Property

I have provided a bespoke IP workshops to the Executive Boards of a major German seeds company and an Institutional breeding company in Holland.

Developing a brief with the respective CEO the aim was to have a devoted session on Intellectual Property, its management and future challenges.

From considering the wider issues of IP, focusing on the trading environment of seeds, creating scenarios, and identifying holistic and specific company challenges this focused approach provided executives with a fresh insight and challenged their often misplaced perceptions and beliefs.

The outcome of the stimulating open exchanges from the forum discussions revealed a number of strategic options and actionable points for implementation.

3. Applying Contract Law To Managing Intellectual Law

Faced with continual evasion, limitations on the traditional methods of royalty collection and the need to have burden of proof I devised a new business model for royalty collection based on contract law. Through direct contracts with growers we not only have a burden of proof on usage but importantly create a dynamic relationship with the user of IP. Payment being collected on an area basis ensures that there is no hike in seed price. The traditional approach with the royalty element included in the seed price effectively hides the value of genetic improvement. Is this a business model for the future?

Somewhat unsurprisingly the growers as represented by the National Farmers Union rebelled against this transparent and fair approach; probably more as they saw a shift in control away from their collective position than for any rational business reason.

Having launched the scheme (referred to as Royalty Area Collection RAC) under the auspices of the British Society of Plant Breeders it became apparent that there was a need to create a bespoke and less political organisation to manage this new business minded approach to royalty collection and management. The result was that I formed a new company, the Breeders Intellectual Property Office Ltd. (BIPO) to exclusively undertake this new direction.

Having done so and with its successful adoption by a number of plant breeders I have subsequently released my shareholding interest to those breeders.

For details see www.bipo.org.uk.