A scheme is due to be launched this year after backing from the arable branch of Federated Farmers following talks with the New Zealand Plant Breeding and Research Association (NZPBRA).
Farmers pay a royalty when seed from a company-owned variety is bought for its first sowing.
NZPBRA argues that collecting royalties when harvested seed is saved by farmers for re-sowing is a logical next step.
General manager Thomas Chin said the scheme was built on provisions in the Plant Varieties Rights Act so plant breeders investing millions of dollars each year to develop new and improved cultivars received fairer returns.
A new cultivar typically cost more than $1million to develop and could take up to a decade to reach the retail market, he said.
"We are only talking about farmers who use farm-saved seed from protected varieties paying a royalty to the owner of the rights. Farmers can continue to freely use common varieties without paying royalties."
Finer details of the new scheme are still being developed, but will initially cover protected wheat and barley seed saved by farmers and used this year, before its scope widens to include other cereals, forage and pasture seed options.
An agency will be formed by the NZPBRA to manage the scheme and collect royalty payments from farmers on behalf of companies holding the rights of protected cultivars.
A list of them and royalty fees will be set each year. Farmers will be sent an online form in December to make a voluntary declaration on the weight of seed from protected cultivars saved for re-sowing.
They will then be charged a fee based on the information, which will be passed on to companies.
Mr Chin said gaining the support of Federated Farmers’ arable section was a major step forward.
"Federated Farmers arable agree that seed breeders should be fairly compensated for the development of new cultivars and they know that farmers will be the primary recipients of any improved options that come through the breeding programmes."
Cropmark chief executive Glen Jarvis said the royalty fees would help seed breeders meet the costs of sourcing new genetic material and creating cultivars.
That would help farmers cope with existing and new challenges, he said.
"Whether they are after disease tolerance, more production, better quality or lower greenhouse gas emissions, farmers are expecting more and more from seed breeders. Getting a workable collection scheme in place for farm-saved seed is a good outcome for farming and the country."
Royalty collection schemes for farm-saved seed are used in other countries, including Australia.
