UC-Davis Responds To California Auditor’s Recommended Improvements To Strawberry Program

Following a six-month review of the University of California (UC)-Davis Strawberry breeding program, the California state auditor’s office has released recommendations — including suggestions for future funding and revenue collection — for the acclaimed program.

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Legal issues between the university and the strawberry commission were settled out of court in February. The strawberry commission and UC-Davis then announced their commitment to work together to ensure a new future for the public strawberry breeding program at UC-Davis.

“The audit addressed many of the same issues also covered in an internal UC-Davis audit of the strawberry breeding program, issued in April,” said Mary Delany, executive associate dean of the College of Agricultural and Environmental Sciences.

At the same time, UC-Davis announced the hiring of plant scientist and breeder Steve Knapp to lead the strawberry breeding program following the retirement of its two former breeders. Knapp, who came to the university most recently from Monsanto’s Vegetable Research and Development program in Woodland, CA, brings a wealth of research experience to the breeder’s position. He has served on the faculty of Oregon State University and the University of Georgia, and holds a doctoral degree in agronomy and plant breeding.

Campus and college leaders are pleased that the state audit confirmed many of our own findings, indicating that the program is operating well within state regulations and university policies,” she said. “We have responded to the audit’s recommendations and will be incorporating several of its suggestions as the strawberry program moves forward under the direction of our new strawberry breeder.”

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Below are recommendations from the state auditor’s report (in bold) avaliable online at BSA.CA.gov, with responses from UC-Davis (in italics):

UC-Davis should ensure that the breeding program is adequately funded and consider allocating more of the university patent income directly back to the program.
In response, UC-Davis confirmed that as it plans for the continued stability of the strawberry breeding program, it is considering all funding options, including use of discretionary patent income allocated to the College of Agricultural and Environmental Sciences to support the program. However, given that the program has not operated in deficit and as of April 30 had approximately $1 million in surplus and reserve funds, there are currently no plans to alter overall campus policies that guide patent revenue distribution.

UC-Davis should regularly reassess whether the royalty rates charged to strawberry nurseries and growers — licensed to sell patented strawberry varieties — are appropriate, and adjust the rates as needed to support the program.
In response, UC-Davis will continue to assess the strawberry program’s royalty rates, informed by input from the California Strawberry Commission, a strawberry advisory committee, licensees and other industry members, and will report those rate analyses annually. Royalty rates may be adjusted if justified by changes in market conditions and other factors. The breeding program has no plans at this time to raise royalty rates charged for licensing its strawberry varieties. The university’s mission is not to maximize revenues from licensees but to work collaboratively with all areas of California agriculture to provide research, education and support as mandated by its land-grant origins.

UC-Davis’ Department of Plant Sciences, home to the strawberry breeding program, should prepare annual budgets specifically for the breeding program.
In response, UC-Davis confirmed that as soon as the new strawberry breeder completes his assessment of the current program and the scope of its future activities, a separate budget will be prepared specifically for the program, rather than rolling the program’s budgetary process into that of the overall department. The budget will ensure that the breeding program continues to operate in a cost-efficient manner.

UC-Davis should in the 2015-16 fiscal year implement a program to begin accounting for the strawberry breeding program’s financial activities separate from the financial activities of the program’s breeder.
This recommendation also resulted from the college’s internal audit, and the campus plans to now establish separate accounting codes for the strawberry program and for the program’s breeder.

UC-Davis should periodically review the financial records of the companies that hold licenses to grow and sell the program’s patented strawberry varieties, making sure that the university is receiving all of the royalties it is entitled to.
In response, UC-Davis will complete a cost-benefit analysis of this recommendation, using the findings to determine whether periodic auditing of its licensees is advisable or if case-by-case auditing would be more appropriate, based on licensee reporting and input from field representatives and others.

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