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OSU, wheat commission reach royalty agreement

Oregon State University and the state's wheat commission have agreed on how royalties on OSU-developed wheat varieties will be split.

By MITCH LIES

For the Capital Press

Published on September 16, 2014 5:43PM

Last changed on September 17, 2014 8:18AM

E.J. Harris/EO Media Group
Maloree Moss of Hermiston, Ore., unloads wheat into a grain truck while working the harvest in this file photo. Oregon State University and the state wheat commission have reached an agreement on how royalties from OSU-developed wheat varieties will be allocated.

E.J. Harris/EO Media Group Maloree Moss of Hermiston, Ore., unloads wheat into a grain truck while working the harvest in this file photo. Oregon State University and the state wheat commission have reached an agreement on how royalties from OSU-developed wheat varieties will be allocated.

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SALEM — At an extension meeting here Sept. 16, an Oregon Wheat Commission administrator unveiled terms of an agreement between the commission and Oregon State University for how OSU spends royalties on OSU-developed wheat varieties.

Under the agreement, 75 percent of royalties collected by the university will be put back into the wheat breeding program. Five percent of royalties will go to the Crop and Soil Science Department, 10 percent to variety inventors and 10 percent to the OSU Research Office.

“That is much improved from the old system,” Oregon Wheat Commission CEO Blake Rowe said. “I think it is a very good agreement.”

The agreement, which was hammered out in a series of meetings between OSU personnel and wheat industry representatives, “sets in stone” a formula for dividing royalties that up to this year was operating under “a handshake agreement,” OSU Extension Cereals Specialist Mike Flowers said.

Also, Flowers said, it dramatically increases the percentage of royalty funds that will be pumped back into the wheat breeding program.

“It was contentious for a year or so,” Flowers said of the negotiations. “Now we have an agreement and everyone can move forward, and I think everyone is happy with it.”

OSU has collected between $1.2 million and $1.5 million a year in royalties the last several years through a 2 percent royalty on its Clearfield varieties, Flowers said. The varieties are the top selling wheat varieties in Washington and Oregon, he said.

Under the former agreement, about 44 percent of that revenue was going to the OSU wheat breeding program, 10 percent to variety inventors, 10 percent to the Crop and Soil Science Department, and about one-third to the OSU Research Office, which administers grants and other revenue brought in by OSU researchers.

“(The Research Office) has been getting $400,000 or $500,000 a year the last five years or so,” Flowers said. “That is a big chunk of change, and growers wanted to see some of that come back into the program.”

OSU public varieties that are currently being sold without a royalty attached to them, such as Bobtail, Rosalyn and Kaseberg, will remain open releases, Flowers said, and carry none of the plant-back restrictions attached to the Clearfield varieties.

All future OSU releases will be sold through OSU seed dealer channels and include royalty fees and plant-back restrictions, he said.

Flowers said the amount of royalty attached to new varieties has yet to be determined. “We don’t have a variety released right now,” Flowers said, “so we haven’t really had to face the issue of what the royalty would be.”

Flowers said he doubted the rate would exceed that of the Clearfield varieties.

“That could change as we write agreements with seed dealers, because they are the ones that collect the royalty,” he said. “But the Clearfields have been out since 2003, and we’ve never changed the royalty, and I don’t expect us to change the royalty.”

OSU recently hired its first cereal variety outreach coordinator to help market OSU varieties. Hannah Kammeyer came on board July 28 to advocate for planting OSU’s wheat and barley varieties with seed dealers and growers.

“Hannah’s main responsibilities are to market to seed dealers in Washington and Idaho, areas that we don’t typically reach out to,” Flowers said.



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