Every bushel of KWA branded wheat seed is subject to a royalty upon sale. This royalty ranges from $1.80 to $3.00 depending on the variety and technology package. Your seed dealer pays this royalty at the end of the year to KWA. It is then KWA’s responsibility to collect all of these royalties and allocate them. We often get asked how these funds are allocated, and even though this data is public, it’s hard to find. So we decided to make this data completely available on our website.
How are KWA Royalties Split?
Herbicide resistant wheats (Clearfield, CoAxium) have an additional technology fee that goes to the technology developer. For the purposes of this article, we are only going to discuss the royalty splits that come back to Kansas Wheat Alliance. All the numbers below should be considered rough estimates, as the precise allocations are subject to change year to year.
About 15% of the royalty funds go to administrative overhead. This includes overheads to the Department of Agronomy or Western Kansas Research Stations depending on where the variety was developed, the College of Agriculture, and Kansas State University Research Foundation. The other 85% of the royalty goes to variety development in some way or another.
Variety Development
Of the portion that is put toward variety development, 38% of that goes directly towards breeding grants. This covers expenses like genetic screening, doubled haploid development, hiring student workers, and funding special projects related to wheat breeding. Another 12% of this portion is the inventors’ share, which supplements the salaries of the breeder and members of their team who helped develop the variety. Another 15% is used for equipment and facilities investment, including greenhouse equipment, combines, vehicles, planters, and more. As of the remaining funds; KWA operations are about 22%, marketing is 10%, and PVP and legal fees account for the last 3%.
Some of these splits, including KWA operations, are fixed costs and their percentage of the royalties goes down as the royalties collected goes up and vice versa.
KWA strives to be as efficient and transparent as possible with our royalty funds.