Covid restrictions meant there would be no international travel to study my topic of choice. Luckily New Zealand is a thriving hub for primary industry innovation. My domestic research has been aimed at gaining a deep understanding of plant variety rights (PVR), value creation, and the changing rules of the game.
There are two high profile super stars in the PVR space that I am particularly interested in – Zespri Sun Gold and the Rockit Apple. I draw examples from each throughout the report.
The owner of a PVR has the exclusive right to propagate and sell the fruit, flower, or other products of the variety under PVR, or the duration of the right. For kiwifruit, this timeline can be up to 20-23 years. The PVR owner can issue licence to third parties to grow and sell the product.
A fundamental clarification is that rights and royalties do not guarantee a successful product. The protection of the Plant Variety Right, the strength of the product and the branding creates value. The key benefit of having the plant variety right is control. The control to structure supply to meet demand, now and into the future. The licencing of a PVR variety allows supply to be controlled so demand from customers continues to be in excess of supply. Thus enabling the value chain participants of the variety to be rewarded.
Branding and marketing the brand involves significant investment, with returns generated over the medium term. A successful product that has PVR and IP protection has the funding available to spend on continued marketing and branding, without the threat of competitors undercutting and driving down revenue.
Premium commodity product attributes are easily replicated. The cost of commodity innovation and research and development not protected under intellectual property law, are worn by the first mover. The advantage is held by the fast followers.
The incorporation of sustainable Development Goals into policy and corporate values are positively driving change. They are an environmental and social guideline for governments and businesses. On a producer level the financial implications of not changing will be far reaching, from the availability of money to the availability of markets. As New Zealand producers embrace these goals, we should see a corresponding increase in demand for our exports. Environmental and social considerations are now within the rules of the game. Environmental legislation is a complex, fast-moving area with potential for unintended consequences.
Supermarkets dominate food supply, holding an unequal share in the balance of power. As such, they have the potential to drive change for a more sustainable future. As the conduit to the consumer, supermarkets could easily demand sustainable production methods.
New Zealand is currently updating the Plant Variety Rights Act 1987 to bring its standards in line with The International Union for the Protection of New Varieties of Plants (UPOV) 1991 update. It is expected that it will give PVR holders further clarification and ability under the legislation to protect their rights. As per the requirements of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
The CPTPP will open up markets for New Zealand exports to 480 million people and result in an estimated $222 million per year of tariff reductions. We will see the beneficial effect over the next 10–15 years as trade restrictions are reduced. This benefits all exports – aquiculture, forestry, horticulture including wine exports, dairy, and sheep and beef. The partnership also lowers the cost and time spent getting products into international markets with less boarder bureaucracy.
This update to the legislation is an opportunity for New Zealand to become a world leader in PVR legislation. To have fit-for-purpose legislation that incentivises the development of new varieties, and the importation of existing international varieties would create a competitive advantage. We can be world leaders in plant variety innovation, and research and development. Backed up by robust legislation that protects the IP that is created, ensuring the ability to take quick, cost effective and assertive action over infringements.
The tension between science-led and consumer-led research and development is unavoidable. There is a need for both. Successful consumer-led innovation directly produces economic value. Science for the sake of obtaining knowledge leads indirectly to economic, social, and environmental benefits.
