Compensating OP tomato breeders
 

I'm posting to invite some discussion from hybridizers and vendors as to what you feel is fair compensation to a breeder (from a vendor) for new tomato introductions. I'm offering a few scenarios for starters, but please offer any variations or alternatives you might think of, or now implement.

1. You have made a cross and carried it through to stability at F8. You haven't distributed seed to anyone in the process. You now are offering your seed exclusively to one vendor for sale. You will supply the stock seed to the vendor (the vendor will not grow the seed). What percentage of gross sales would you expect to get from the vendor?

2. You have made a cross and carried it through to stability at F8. You haven't distributed seed to anyone in the process. You now are offering your seed to two vendors for sale. Each vendor will grow out stock themselves from the seed you send them. What percentage of gross sales would you expect to get from each vendor?

3. You have made a cross and carried it through to stability at F8. Along the way you have freely distributed seed of various generations. This season, several vendors will be offering your variety for sale. What percentage of gross sales would you expect from each vendor?

Thanks for the feedback,
Steve

1. Zero
2. Zero
3. Zero

That is what you can [B][I]expect[/I][/B]. However, if you come across as a businessman...something I never could do...there may some solace.

The old 'Carrot on the end of a Stick' ploy will be used. "Let us grow it for one year to see if we want to sell it and we will give you a royalty of 10%."
That has been said to me hundreds of times. I run the other way.
'

3. You have made a cross and carried it through to stability at F8. Along the way you have freely distributed seed of various generations. This season, several vendors will be offering your variety for sale. What percentage of gross sales would you expect from each vendor?

$$$$$

Steve, could you please clarify this one for me?

First you say that various generations leading up to the stable variety have been distributed and then you say that the final stable one is being offered for sale by several vendors.

Why and where would those earlier generations be distributed and for what purpose?

As you know, in my annual seed offer here I have distributed varieties sent to me by various hybridizers that were not yet genetically stabilized.

Personally I'm not concerned about that b'c the seeds were sent to me freely for distribution, but how might that fit into what you posted above?

And I'd be interested to know your opinion of vendors, for there are small family run ones, and then much larger ones and I think it should, or could make a difference on any paybacks one might expect b'c of those vendor differences.

Carolyn

I'm curious as to what responses you'll get.

My understanding on scenario #1 is the norm is a 10% breeders fee added to the wholesale price of the seeds.

#2 is more challenging and I do not know. Perhaps Fred Hemple will drop in and offer insight.

#3 is likely close to #2 but has an added wrinkle that might lead to a 4th scenario:

4. If you're sharing the early generations, what happens if something interesting shows up in another person's grow out. It's not what the original breeder was looking for, but interests the other grower enough that they bring it forward to stability. What would be appropriate compensation for the original crosser in this situation?

A germplasm royalty of 10% net sales is pretty typical for exclusive, or perhaps co-exclusive distribution rights of an OP variety - as long as the exclusivity is maintained. Without PVP protection, maintaining the exclusivity is unlikely to last more than a year or two as various small seed companies buy seed of the new variety, produce their own seed and offer it for sale. If you also produce the commercial seed you will also be paid for that - but at a rate no higher than the seed company could contract that activity themselves. If seed of the finished OP variety, or earlier generations of the variety, are distributed widely - all bets are off on getting a seed company interested in paying a germplasm royalty.

Tom, Brad and Fred/me are all trying new and different business models to capture value for the efforts of breeders - I'd say with at least moderate success. Ultimately any model for rewarding breeders for their efforts will depend on seed buyer willingness to purchase directly from the breeder/developers, or from their authorized distributors.

Many of us out here are willing to pay for a breeder's royalty - I like sites that make it clear that xx% of gross price goes to the breeder (identified) so that I know who is accountable for what. But we support the breeders!!

[QUOTE=marktutt;345647]I'm curious as to what responses you'll get.

My understanding on scenario #1 is the norm is a 10% breeders fee added to the wholesale price of the seeds.

#2 is more challenging and I do not know. Perhaps Fred Hemple will drop in and offer insight.

#3 is likely close to #2 but has an added wrinkle that might lead to a 4th scenario:

4. If you're sharing the early generations, what happens if something interesting shows up in another person's grow out. It's not what the original breeder was looking for, but interests the other grower enough that they bring it forward to stability. What would be appropriate compensation for the original crosser in this situation?[/QUOTE]

Mark - I've learned that its best to formalize any agreement associated with sharing seed for early generation growouts so there is no doubt as to the relationship and responsibility between the parties in your scenario #4. It is best to get aligned early and before there is invested effort on everyone's part.

Thanks all for the responses so far!

[QUOTE=Tom Wagner;345615]That is what you can expect. However, if you come across as a businessman...something I never could do...there may some solace.'[/QUOTE]

For experienced breeders I would be interested in not only what you "expect" but also what you "would consider fair" (in an ideal world)

[QUOTE=carolyn137;345631]
Steve, could you please clarify this one for me?

And I'd be interested to know your opinion of vendors, for there are small family run ones, and then much larger ones and I think it should, or could make a difference on any paybacks one might expect b'c of those vendor differences.
[/QUOTE]

I am seeing scenario #3, or similar, quite often with the increasing number of breeders. Yes, your experimental seed offerings would fall into this category if, in a few years, the original breeder decided to offer his/her stable selection to several vendors.

Good point about the size of vendors. Should the small vendors pay more/less than the larger vendors?

[QUOTE=marktutt;345647]
4. If you're sharing the early generations, what happens if something interesting shows up in another person's grow out. It's not what the original breeder was looking for, but interests the other grower enough that they bring it forward to stability. What would be appropriate compensation for the original crosser in this situation?[/QUOTE]

Yes, it could get quite convoluted. I would be interested in your personal opinion of the first 3 scenarios, particularly, do you think the current model is fair to the breeder.

[QUOTE=frogsleap farm;345656]Tom, Brad and Fred/me are all trying new and different business models to capture value for the efforts of breeders - I'd say with at least moderate success. Ultimately any model for rewarding breeders for their efforts will depend on seed buyer willingness to purchase directly from the breeder/developers, or from their authorized distributors.[/QUOTE]

You/Fred, Tom and Brad all have experienced this from both sides so I value your input. As vendors, because of the price fixing laws, I understand we can't discuss specifics or come to a common agreement, but generalities are appreciated.

[QUOTE=ScottinAtlanta;345658]Many of us out here are willing to pay for a breeder's royalty - I like sites that make it clear that xx% of gross price goes to the breeder (identified) so that I know who is accountable for what. But we support the breeders!![/QUOTE]

I'm sure the breeders appreciate your support! (I know the vendors do)

Steve

Steve, I started a response but it went away and when I came back Mark's post was there.

I have trouble seeing a situation where breeders would be sharing early generations of varieties before stability, and no, I don't want to discuss what's happening at another message site.

Would ANY of you expect compensation from Tania, Adam Gleckler, Mike Dunton, Jeff in Canada, Carol Knapp, Steve Whitteaker, Lee at J andL,to name some names, or is the focus places such as Tomato Growers, Johnny's, Territorial, Seeds of Change, Totally Tomatoes and the like.?

Carolyn

1 20.
2 10.
3 0.

But in reality you may get nothing in few years.

If you breed yourself and supply the seeds and the variety is a big hit on the market.

You can name your price for a hybrid.

But you said OP so you lose because in no time folks will distribute seeds everywhere.
Conglomo will package it call it improved an leave you in the dust.;)

Worth

So if the breeder were to sell directly to the public over a web site and get 100% of the revenue, a vendor offering 10% would have to sell ten times as much seed just for the breeder to break even on the decision to use a vendor? Will a vendor sell over ten times as much as a well-optimized web site?

[QUOTE=carolyn137;345687]

I have trouble seeing a situation where breeders would be sharing early generations of varieties before stability, and no, I don't want to discuss what's happening at another message site.
[/QUOTE]

That scenerio exists right now. There are quite a number of 'amateur' (but very serious) breeders out there who are crowd-sourcing early-generation growouts. Mark at Frogsleap did it in a big F2 seed offer a few years ago, Brad Gates has a few people growing out his stuff. As long as you have some faith in the people you're working with, you can see a lot more segregates with 5 growers than you can see with one.

[QUOTE=Cole_Robbie;345692]So if the breeder were to sell directly to the public over a web site and get 100% of the revenue, a vendor offering 10% would have to sell ten times as much seed just for the breeder to break even on the decision to use a vendor? Will a vendor sell over ten times as much as a well-optimized web site?[/QUOTE]

Yes, easily, and you are assuming that a zero-sum game between the two. They are actually additive.

[QUOTE=Heritage;345683]Yes, it could get quite convoluted. I would be interested in your personal opinion of the first 3 scenarios, particularly, do you think the current model is fair to the breeder.
[/QUOTE]

I don't think the current model is fair to breeders developing OP lines, there is a lot of work that goes into carrying a cross forward to stability. At best they're going to get a couple of years where the value of their work isn't diluted by companies producing their own seed without an agreement to compensate the breeder. Applying for a PVP is both time consuming and relatively expensive, plus requires being able to fund defending it. It creates a barrier to entry for a small breeder, i.e. are you willing to gamble a non-trivial amount of money that your tomato variety will be a commercial success?

That said, I don't think there is a way to fix it and that is why most of the focus for commercial breeding is in hybrids today.

[QUOTE=carolyn137;345687]I have trouble seeing a situation where breeders would be sharing early generations of varieties before stability, and no, I don't want to discuss what's happening at another message site.

Carolyn[/QUOTE]

I was thinking in particular of Tom's model, where early generations of interesting germplasm is sold to the public. I know of a couple of situations where enthusiasts of Tom's work are growing unusual selections that bore little similarity to the stated goal of the original variety. Tom made the original cross and sent out F2 seed, but the other grower found something they liked and carried it forward to stability.

While I sometimes consider getting into the seed business with my kids as something they could do at their age and am dabbling at breeding, it's only a hobby for me. I just see this particular area as being very murky as amateur breeders exchange germplasm unless they formalize an agreement as Mark from Frogsleap suggests.

I think it might be a good idea to distinguish amateur from professional breeders and that's been touched on in some previous posts in this thread.


I would have a different opinioon of compensation depending on whether someone says they are hobby amateur breeders as opposed to professional breeders.

Yes, I know that Tom has been selling seed for unstable varieties, that's been discussed here at Tville a lot.

And yes, I do know that some give their initial crosses to others for growout and it was only a few weeks ago that I found one of them, not amateur, was having someone in NH do growouts.

And yes, I know that Mark ( Frogsleap)also has growouts done for him in various places.

And yes, I also know that some amateurs are doing many many directed crosses and I can't believe they would even expect any compensation.

So in my mind the questions remain: how to define amateur as opposed to professional breeders who might expect compensation, and for the latter are the targets for placements what I posted above as in small family run businesses or the larger ones I named, at least some of them, above.

Carolyn

Hate to rain on the party, but you are all missing the most fundamental parts. How much time and effort went into developing the new variety? What benefits does it offer to the grower?

If I spend 8 years making complex crosses to introgress 5 disease tolerance traits into a fabulously good flavored tomato that looks and tastes like Lucky Cross, then I might expect more compensation than the average person who has a new tomato that happens to be round, red, highly productive, and decent flavored. In other words, I want to be paid for the sweat equity.

What about the benefits to the consumer? Would they pay a premium to get a fabulously pretty worry free tomato with fantastic flavor?

The simple reality is that no professional breeder can afford to develop a variety under the conditions given above. The time and effort involved simply can't be recovered from an open pollinated variety. This is why commercially developed tomatoes are all hybrids.

In the end, what you have to do is beat the Rutgers mafia. This is the group of OP tomato lines that are already available that have most of the traits being discussed above. You have to come up with a Green Zebra or something similarly novel and useful. Then you have to market it effectively.

DarJones

As others said, you shouldn't expect revenue for an OP variety. Saving seeds is far too ingrained in people's minds.

If you were to set a high price like was done with a variety like Marianna's Peace (I think it was $20/pack) , then an industrious individual out there will do the world a favor, buy a few packets of your seeds, grow a hundred plants, and then give the seeds away for free. I just don't see any money in OP breeding.
[QUOTE=Heritage;345614]3. You have made a cross and carried it through to stability at F8. Along the way you have freely distributed seed of various generations. This season, several vendors will be offering your variety for sale. What percentage of gross sales would you expect from each vendor?[/QUOTE]This to me is the worst case scenario as you have created a tremendous amount of confusion and dilution of the "brand". You would also completely invalidate any trademark/copyright/plant patent/whatever you try to apply by unrestricted distribution.

If you called your variety "Steve's San Diego Cropper" and you distributed F2-F6 seeds to random people, then by the time you get to F8, there will be dozens of different strains of it with varying degrees of quality and traits out there. Who has the "real" one? Some of the recipients of your seeds may widely distribute their own strain of your variety and overshadow your work.

It's a fine line allowing or disallowing distribution of F2-F6 seeds while a variety is segregating out. On the plus side, varieties that may fall outside the focus of the project organizer would have a chance to continue developing. On the negative side, you have the potential for dilution and confusion as mentioned above.

Great replies, all-the-way-around, especially given the subjectivity involved in the given scenarios:)

I will be considering your remarks when I (re)design my personal vendor model this upcoming season.

Thanks again,
Steve

The OP tomato seed market has a lot of similarities to the present music industry. The product can be obtained free and replicated at will without any payment to the creator. The up side is that people who really appreciate the product but don't have money at the time can enjoy it, and also raise the profile of the product because of their enthusiasm. Although there isn't a material return from those users, it builds reputation which is valuable to the professional breeder in the long haul. Obviously though, the overall returns are not at all equal to those for hybrid seeds, and never will be.

I like your model, Steve. When I look at your site and see that a percentage is returned to the breeder, it makes me want to buy the seed from you, if I can't from the originator.

[QUOTE=bower;345808]
I like your model, Steve. When I look at your site and see that a percentage is returned to the breeder, it makes me want to buy the seed from you, if I can't from the originator.[/QUOTE]

My model was originally inspired by Carol Knapp and the royalties she paid to a certain breeder a few years back. I'm not sure if she still does it, but, at the time, I thought it was a genuine, thoughtful gesture.:) Certainly no breeder is going to get rich on the royalties I, or any single vendor pays them, regardless of the percentage. (e.g., my 2013 royalty check to Fred Hempel for sales of 'Blush' won't even buy him a double latte) However, if every vendor paid a small royalty to breeders, it would total a nice income and possibly provide an incentive to develop new OP varieties.


Steve

Steve,

I’m neither a hybridizer or vendor, but there have been responses from others that don’t meet this criteria.

I can only add that C.R. Lawn of FEDCO has seed distribution agreements.
Legalize or handshake buddy-buddy setups probably apply to demand, or potential demand, which he might share by request.

The problem- (for income), as stated before, is with O-P seeds being non-protected.
I really cannot fathom the latest and best open-pollinated tomato plant becoming the next ‘Big Boy’ of America. IMHO -Randy

[QUOTE=Fusion_power;345759]Hate to rain on the party, but you are all missing the most fundamental parts. How much time and effort went into developing the new variety? What benefits does it offer to the grower?

If I spend 8 years making complex crosses to introgress 5 disease tolerance traits into a fabulously good flavored tomato that looks and tastes like Lucky Cross, then I might expect more compensation than the average person who has a new tomato that happens to be round, red, highly productive, and decent flavored. In other words, I want to be paid for the sweat equity.

What about the benefits to the consumer? Would they pay a premium to get a fabulously pretty worry free tomato with fantastic flavor?

The simple reality is that no professional breeder can afford to develop a variety under the conditions given above. The time and effort involved simply can't be recovered from an open pollinated variety. This is why commercially developed tomatoes are all hybrids.

In the end, what you have to do is beat the Rutgers mafia. This is the group of OP tomato lines that are already available that have most of the traits being discussed above. You have to come up with a Green Zebra or something similarly novel and useful. Then you have to market it effectively.

DarJones[/QUOTE]

I'm thinking of niche/boutique varieties like Blush, Maglia Rosa, the new Tigers & Bumblebees that Fred/Mark have released. I think these do have good value for the grower & consumer, even if they were not bred specifically with disease resistance in mind. I have to believe that it's hard if not impossible to turn the work of creating these kinds of OP lines into a reasonable return.

I totally agree that if your goal is making money at breeding developing F1's is the only game that works.

If your intent is to make (anything approaching serious) money off your breeding efforts, I can only think to offer the following suggestions:

Don't free-share your F1 seeds with anyone.

Don't free-share your F2 or early f-gen, still segregating lines.

Don't distribute for free your finished, stable lines.

Create your own Web site, and sell your seeds for 100% of the gross.

Go to the expense of PVP-ing your best stuff.

Only distribute seeds for cooperative grow-outs under rock solid contractual seed agreements.

Only sell seeds to seed vendors in small bulk lots under exclusive agreement deals at 25 to 33% of retail price (or some similar "consignment" price point).

Or only sell F1 hybrid seed at 50c to $1.00 per seed.

Or only sell plants at the highest price the market will bear.

[QUOTE=Heritage;345870]My model was originally inspired by Carol Knapp and the royalties she paid to a certain breeder a few years back. I'm not sure if she still does it, but, at the time, I thought it was a genuine, thoughtful gesture.:) Certainly no breeder is going to get rich on the royalties I, or any single vendor pays them, regardless of the percentage. (e.g., my 2013 royalty check to Fred Hempel for sales of 'Blush' won't even buy him a double latte) However, if every vendor paid a small royalty to breeders, it would total a nice income and possibly provide an incentive to develop new OP varieties.


Steve[/QUOTE]

Yours and Carol's is the model I've explained to the kids when we've talked about selling seeds & plants.

I described it as no different than with software, we make the investment in time to write something, then everyone who wants it pays a fee rather than trying to create it themselves.

The advantage with software is you can put a license key on it, where you have to go with F1's from secret parents to do the same for seeds.

I am not so sure about all this. Some very valid points. Don't get me wrong. But we are talking business models here.

To me the issue with a breeder making a business model with OP is that it is a specialized small market with fierce competition that can be easily "stolen" by simply saving seeds.

BUT That assumes your business model includes mainly seeds as its primary revenue stream. I believe, (I have no proof as I haven't done it personally) the best way to restructure the business model is to view it simply as a revenue stream that is part of many related revenue streams. Seeds, seedlings, and tomatoes at market, and possibly even processed product.

I think that is where "peppadew" found a niche. Sure we can grow them, but the manufactured product of peppadew pickled peppers still makes the company money. So if you take that model and throw out the unsavory parts of it, keep the good parts of the model, and combine it with actual breeding of new varieties. Then add up the many income streams resulting (even though some of those income streams may be small). I think it is possible to develop a business model that way.

I doubt that any of the independant breeders are planning on retiring from the revenue derived from seed sales, but it's an unfortunate reality that the work of growing out 7-8 generations of a cross to arrive at a unique new product is easily given away once the seed has been released and grown out by others.

Steve's question was what would be fair. My personal opinion would be closer to 15-20% of net sales going to the breeder for X number of years after release, with a decreasing scale after that for scenarios 1 & 2. Steve's scenario 3 and my scenario 4 are more murky and I honestly don't know the answer for those as I don't think they're really viable 'business' models but more indicative of an hobbiest situation.

[QUOTE=marktutt;345923]I doubt that any of the independent breeders are planning on retiring from the revenue derived from seed sales ... [/QUOTE]

No. People should plan for retirement. But even with careful planning, the post 2009 crash reality is that 12 to 20% of most folks' retirement savings disappeared whether thru recession or inflation.

As a consequence, some of us find ourselves comfortably retired, other than needing just a mite more income to pay for our Medicare supplementals :::wink:::

I like the music analogy. Let me take it one step further. Independent breeders are like garage bands, or unknown YouTube performers who are trying to create music. They spend considerable time and energy working on their craft, and occasionally they get paid pocket change or drinks for their efforts.

Discussing how to make money being a garage band is a frustrating exercise. Although many garage bands are creative -- the best case scenario for making money is probably limited to becoming a "cover" band and playing expensive weddings (something tangential to actually creating music).

Motivations for independent breeding are varied and I would guess money is not a top priority for most. However, I would guess that some of us do dream of creating a tomato that somehow opens doors that are typically closed. But, our chances of making money breeding are probably about as high as being the next Justin Bieber (a YouTube discovery by record execs, for those who don't know).

I don't really think there is a formula, although Travis' suggestions are reasonable.



[QUOTE=bower;345808]The OP tomato seed market has a lot of similarities to the present music industry. The product can be obtained free and replicated at will without any payment to the creator. The up side is that people who really appreciate the product but don't have money at the time can enjoy it, and also raise the profile of the product because of their enthusiasm. Although there isn't a material return from those users, it builds reputation which is valuable to the professional breeder in the long haul. Obviously though, the overall returns are not at all equal to those for hybrid seeds, and never will be.

I like your model, Steve. When I look at your site and see that a percentage is returned to the breeder, it makes me want to buy the seed from you, if I can't from the originator.[/QUOTE]

If independent tomato breeders wish to make any money from their creations (edit: after the first year of sale) they will need to avoid the OP route, this much is clear.

The only route to compensation i can see is in the creation of boutique F1 varieties.