New varieties of "self pollinated" crops have, in the past, been released by the public sector. Self pollinated crops refer to those where farmers can save the seed after harvest, replant next year, and expect to have a new crop that is the same as the previous year (i.e., the "kids" are the same as the "parents"). Wheat is a staple crop that his both "self pollinated" and "inbred."
A lot of the research on wheat breeding has occurred in the public sector because of the belief that it would be difficult for private companies to recoup their investments when farmers can save their seed. As a result, it is thought that private investment in wheat breeding would be "sub optimal" from a social welfare standpoint.
However, in recent years, a variety of changes have led to public and private companies being able to license new varieties and capture some of the benefits of the improvements in genetics. Most controversial is the specter of GMO wheat, in which new varieties may have genes protected by intellectual property laws. Unsurprisingly, some farmers and industry organizations don't like variety protection because it raises the cost of seed. A cost that was previously borne by all taxpayers is now borne by the smaller group of farmers, millers, and bread consumers.
A new paper in the American Journal of Agricultural Economics by Russell Thomson studies the effect of the introduction of new plant variety protection laws in Australia that allowed breeders to capture royalties on their new varieties. Thomson argues that the protection laws in Australia are "stronger" than in the US - giving breeders greater potential returns to their investments.
I have to admit that the findings are not what I would have expected. Thomson writes: