47 



ducer would have x volume of potential seed sales? A producer that 

 is not in the seed business, has no intention of being in the seed 

 business, but suddenly there is a market opportunity, let's say, for 

 the sale of seed? 



If that producer contacted the breeder, the certificate holder of 

 that particular seed, and said, hey, I have this. I want to sell it. 

 What do I owe you if I sell it and make the contract with the owner 

 of the certificate of that seed? Is that OK? 



Mr. Schmidt. I would think that is happening today. We have 

 that example in several cases where a seed company will make a 

 contract with someone else to grow the seed. In most cases, if there 

 is a chance to sell that seed, the seed company will most likely be 

 the one that sells it because they know the markets quite well, and 

 they will in certain instances probably arrange a royalty payment. 

 I don't think that is unusual. 



Mr. Stenholm. That is routine. But I am saying with an auto- 

 matic licensing idea — I mean, here we have somebody that didn't 

 plant their crop, didn't plant the seed with any idea of selling seed, 

 but suddenly there is a market opportunity that he wants to avail 

 himself to as a producer. If he then decides to do that, it is not a 

 problem? 



Mr. Schmidt. I wouldn't say it is not a problem because it could 

 be a problem. 



First of all, you have to start with certified seed or foundation 

 seed. 



Mr. Stenholm. We have done all that. He is qualified all the 

 way through to sell maybe not certified seed, but we are not talk- 

 ing about necessarily selling certified seed which is variety protec- 

 tion, isn't it? 



Mr. Schmidt. We should also understand that the new law pro- 

 vides for any farmer to still grow any kind of seed that is not a 

 certified seed after the enactment. He can continue to do whatever 

 he did before, but if a breeder company has developed this variety 

 he must be certainly asked if that seed can be sold by a farmer 

 through a licensing agreement, and I am sure those examples exist. 



Mr. Stenholm. Then that is not a problem? So long as the breed- 

 er received compensation for the certificate value of that variety, 

 it is not a problem? 



Mr. Schmidt. Correct. 



Mr. Allard. Mr. Chairman. 



Mr. Stenholm. Mr. Allard. 



Mr. Allard. On this issue of certifiable seed, the grower grows 

 the seed on his place. A company isn't going to certify that seed un- 

 less they have supervised the growing of it to assure that it is of 

 proper quality and standards. Otherwise, they would become per- 

 sonally liable, I would think. 



So it wouldn't be a simple matter of just letting them know that 

 you are going to sell the seed and that you are going to send them 

 a check. It seems to me like there is some certification issues that 

 come up at that particular point in time. And if they have done 

 that, then what happens to the — if they haven't done the certifiable 

 part of it, then what happens to the value of the seed? 



