The Economic Impacts of Processing Based Intellectual Property Protection:The Case of Red Lentils
Saskatchewan’s lentil producers are positively impacted when their temporary competitive advantage in the industry, which in part is derived from high yielding Saskatchewan-bred lentil varieties, is eroded though ineffective intellectual property (IP) protection. The ineffective IP protection occurs due to the inconsistency in the enforcement of policies and laws across countries, making it difficult to protect IP when exporting products. Additionally, intellectual property protection of lentils is inefficient is when viable seeds are obtained by other countries through the export of whole seeds. This is because lentils are an open pollinated crop and intellectual property cannot be protected through hybrid seed technology. This is an issue because the Canadian red lentil (CRL) varieties have been bred for the Saskatchewan climate, but are well suited to grow in countries that have similar climates, and therefore are well adapted to large regions of Russia and Kazakhstan. The similarity in growing conditions, coupled with the lack of IP protection for the CRL varieties makes it possible for Russia and Kazakhstan to use imported Saskatchewan bred lentil varieties to grow in their lentil industry. When Russia and Kazakhstan grow the CRL varieties it directly competes with Saskatchewan’s production in the world market, eroding the producer surplus of Saskatchewan producers. This thesis estimates the economic benefit to Canadian growers of restricting access to Canadian varieties through a value chain that genetically protects the CRL varieties by exporting only de-hulled red lentils. A dynamic, multi-country, partial equilibrium model is used to estimate the effects de-hulling CRL varieties before export will have on the Canadian lentil industry. This model determines the effects that de-hulling CRL's will have on Canadian lentil producer's welfare by comparing the results from when there is genetic protection (GP) for the CRL varieties before they are export and then there is no genetic protection (noGP) for the CRL varieties. In my thesis, I examine four potential scenarios for the future lentil production in Russia and Kazakhstan over the next twenty years. The four growth scenarios that are examined for Russia and Kazakhstan’s lentil industries range from no convergence to full convergence. No convergence is when Russia and Kazakhstan continue producing lentils with their 2011 lentil hectares until 2034. Full convergence is when both countries converge to the Canadian lentil industry’s ratio of lentil hectares to spring wheat hectares. The empirical model results show that producer surplus gained by Canadian lentil producers are increased when Canadian firms use GP to protect the intellectual property rights (IPR) of new CRL varieties. My results show that lentil prices in the global market will be modestly higher when there is GP for lentils versus when there is noGP for lentils over the next twenty years. The difference in the prices of the noGP case and the GP case gets larger as Russia and Kazakhstan go from no convergence to full convergence. The price impacts of GP in 2034 range from a $0.52 per tonne increase with no convergence to a $5.92 per tonne increase with full convergence. If the net processing margin is not increased, GP will produce a 2012 discounted price of $2.41 billion over the 2014-2034 period, suggesting only modest returns from GP. When all four convergence scenarios are evaluated and weighted by expected probabilities of occurrence, the estimated overall economic impact for Canadian lentil producers from 2014 to 2034 will be $47.12 million in additional producer surplus (PS), which is equal to an increased price of $3.41 per tonne. For this to be feasible the cost of de-hulling the lentils must be profitable to the processors at $3.41 per tonne or less.
DegreeMaster of Science (M.Sc.)
DepartmentBioresource Policy, Business and Economics
SupervisorGray, Richard S.; Micheels, Eric T.
CommitteeMcDonald, Jill; Farnese, Patricia
Copyright DateFebruary 2014
Genetic protection, de-hulling, red lentils, adoption, intellectual property rights, Saskatchewan Pulse Growers