Producer returns to hybrid canola research : the Western Grain Research Foundation program

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Kolody, Anne S.
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From 1985-90, the Western Grain Research Foundation (WGRF) has continued to fund hybrid canola breeding research conducted by Dr. P.B.E. McVetty at the University of Manitoba. The research found that substantial yield increases over Regent were possible using the cytoplasmic male sterility (CMS) system of pollination control to produce F1 hybrids. In addition, the research has resulted in students trained in hybrid canola breeding and a pool of genetic material and information for distribution to hybrid canola breeding programs. In 1988, the WGRF funded a study to estimate the benefits and costs to producers associated with hybrid canola breeding and to recommend a framework for assessing benefits and costs associated with subsequent project proposals. The results of a preliminary analysis are reported in a draft journal article. In general, previous models evaluating returns to agricultural research investment have focussed on the issue of social costs and returns. These models require modification for the WGRF case because the WGRF represents the private interests of agricultural producers. In this thesis, previous models and results are reviewed, modified and re-estimated using social criteria from a producer-investment perspective. Using the theory of producer and consumer surplus, the benefit/cost technique of evaluating returns to research is undertaken in addition to an estimation of canola supply and demand curves and analysis of actual producer costs and returns. Results indicate substantially higher benefits in comparison to costs for canola research at the University of Manitoba. Using the index number approach a favorable conservative benefit/cost ratio was obtained. Using a discount rate of 15 percent, sensitivity analysis of the results to economic and technical factors were positive with the lower limit of the range of benefit/cost ratio being over 1. An examination of the production practices of a select number of canola producers indicates low-cost producers will likely be positively affected by the newly developed variety. Additional research is required to more accurately estimate the benefits to producers over a longer time period to include the effects of low prices, unfavorable weather conditions, etc. Overall, the results indicate that producer-funded research provides substantial returns even when the benefit set is constrained to those attained within the producer sector.