Economic and public good benefits of plant variety rights

Protections for plant breeders essential for the success of primary industries

New Zealand’s Plant Variety Rights (PVR) scheme is a form of intellectual property right that serves as an incentive for plant breeders to invest their time, effort, and resources into developing new plant cultivars. PVR allows them to recoup their investment, which, in some cases, can take over two decades and cost millions of dollars.

BERL was commissioned by the Ministry of Business, Innovation and Employment (MBIE) to research the economic and public good benefits of the PVR scheme. This research will inform future options for funding and fees charged by the Intellectual Property Office of New Zealand (IPONZ).

The report combined desk research, data collection, literature scans, and stakeholder engagement. We talked to organisations undertaking breeding activities, agents and/or importers of international cultivars, intellectual property managers, farmers and growers, manufacturers, and industry body representatives.

The research concluded that the PVR scheme underpins the performance of New Zealand’s primary sector by incentivising investment in improved cultivars that lead to better performance, higher productivity, and lower costs. PVR-protected cultivars bring significant economic gains to New Zealand, including:

Of the $2.9 billion worth of export revenue generated by kiwifruit exports in the year to March 2023, a total of $2 billion was attributable to PVR-protected cultivars
PVR-protected apple cultivars generated an estimated total of over $216 million in export revenue during the year ending June 2022
PVR-protected vegetable cultivars contributed approximately $635 million to domestic Gross Domestic Product (GDP) in 2022
The sales of PVR-protected arable seeds contributed a total $346.4 million to domestic GDP, and accounted for at least $162 million of arable exports in 2022.

The PVR scheme incentivises plant breeders to invest in the research and development of new varieties by offering a robust mechanism for protection. Some of the key benefits that the scheme promotes and enhances include:

Higher yielding varieties offer increased food production and security, reduced land pressure, efficient use of resources, and enhanced profitability and efficiency of farms
Disease resistant cultivars help with yield preservation, reduce wasted produce, and result in cost savings for growers
Cultivars that are resistant to pests, diseases, and adverse environmental conditions are less reliant on chemical inputs such as pesticides and fertilisers
Without PVR, not only would the domestic breeding of plants of economic significance to New Zealand reduce significantly, but imports of the latest cultivars would also slow
The development of new cultivars for high-value export markets supports New Zealand’s efforts to be competitive in the global market
Increased choice and access to a wider variety of plant types throughout the year.

The PVR scheme was set up on the basis of full cost recovery, and users of the scheme are expected to cover the full cost of operating the Plant Variety Rights Office (PVRO). The PVRO is operating at a deficit, however, and a new regime must be in place for 2025/26 in which MBIE will seek to set costs at full cost recovery levels, if appropriate.

Our research observed that PVR applicants rarely considered the costs associated with obtaining and maintaining protection in isolation. What the costs entailed, and how applicants viewed their costs, depended on a number of factors, including plant type, whether they were an international or domestic player, the economic viability of their plant type, including the size of the market, and the size of their own operation. Some of the potential impacts of a move to a full cost recovery system could include:

For large breeders, the move to a full cost recovery model is unlikely to have a significant impact on the decision to develop and register new cultivars, or their ability to obtain an economic return
Smaller commercial and recreational breeders (backyard breeders) are likely to be impacted by any move to recover the full costs of the PVR scheme as their ability to recover these costs is limited given that they cater to a smaller market
Any reduction in domestic breeding, as a result of full cost recovery, would be likely to lead to reduced innovation and competition, and fewer domestically bred plant cultivars available
For agents and importers an increase in PVR fees would mean that they are likely to become more selective in what they bring in, and reduce the cultivars they import.

A full version of the report can be accessed on the IPONZ website.

BERL would like to express our gratitude towards the stakeholders who provided their valuable time to participate in this research and share their expert views and experiences.