1. The yield of plant variety protection Russell Thomson Swinburne University of Technology 1

2. What government policies are best for farmers and society? What role can Plant Variety Protection play? 2 Overarching questions:

3. 3 Policy Rationale

4. Policy evaluation What information do we need? 4

5. Evidence based policy 5 Public breeding (free seeds) Plant Variety Protection (royalty funded breeding)

6. Australia as a natural experiment Historically new wheat varieties bred by government 1994 Plant Breeders’ Rights Act – not motivated by concerns regarding wheat breeding 1996 End-Point Royalty system introduced – Privatization or discontinuation of government breeding programs – New private breeders enter market 6

7. Compare output from two business models Number of varieties released and their ‘performance’ Free seed (government funded) Royalty funded VS

8. Index of variety performance 250 wheat varieties, 1976–2011, (i) 23 regions (k) Sources: NVT, historic sowing guides, U Sydney rust program 8

9. Predicted Yield National Variety Trial, Multi Environment Trial predicted yields. Yield data from historical sowing guides (SG) – Multi-year average relative yield – Scaled by yield of varieties common to both data sets 9

10. Market price indicates quality Grade classification Price per tonne Prime hard$274 Hard$259 Noodle$261 Soft$257 Premium White$242 Standard White$232 General Purpose † $225 Feed$199 10 Long run average price of each grade AWB pool returns by pay grade (10 year average), 1997/08–2007/08 (A$/tonne)

11. Value of rust resistance via representative control costs Seed DressingFoliar applicationCost Resistance RatingFungicideRateFungicideRateApps Very SusceptibleFluquinazole450Expoxiconazole3752$64.25 SusceptibleFluquinazole450Expoxiconazole3751$38.12 Moderately Susceptible Triadimenol150Propiconazole3751$20.04 Moderately Resistant Triadimenol150Triadimefon7501$14.39 ResistantTriadimenol100---$1.69 Very Resistant --- $0.00 11

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13. Measuring breeder business model Structural shift around policy reform Private breeder dummy Share of breeders’ varieties that attract royalties. 13

14. Control variables Hybrid variety Clearfield Time trend Rainfall Selection model (Inverse Mills Ratio) 14

15. Main result Change in business model measured by: Released after 2000-7.7 % Private breeder (t-5)-2.5% Share of breeders recent varieties that attract end point royalties (t-5) -2.8% 15

16. Result Varieties released by royalty funded breeders exhibit a lower productivity advantage What does this mean?... Most new varieties below the frontier in most regions anyway. Result holds when focusing on best varieties in the largest regions. 16

17. What’s going on? Theory: Less knowledge sharing and exchange (spillovers) Inadequate incentive? Interviews: Less sharing of information and germplasm Commercial imperative to release varieties with no clear advantage = exactly what I found 17

18. Implications 18

19. Thank you for listening 19