Strawberry growers pick on UC

Strawberry growers are literally being cheated out of the fruits of their labors by the University of California, according to a lawsuit filed against the Board of Regents by the California Strawberry Commission.

UC Davis is ending its strawberry breeding program and replacing it with a private company created by its two long-time strawberry researchers. The two plan to sell strawberry varieties, including those they developed over the past 30 years at UC Davis backed by annual payments of $350,000 by the strawberry commission.

UC stopped taking the commission’s money, which increased royalties on growers using UC-created strawberries, and announced their strawberry research program would end and that future strawberry breeding would be done on a contractual basis with Shaw and Larson.

Filed in Alameda County Superior Court, the commission’s eight-page lawsuit wants to block the move, saying the university “seeks to appropriate to itself and a private entity… the fruits – both literally and figuratively – of decades-long research the commission funded.”

In return for the commission’s funding, strawberry growers who used the new UC-crated types of strawberries paid lower royalties and got two years of exclusivity before non-California growers could use the new varieties.

That changed in 2012 when the university’s strawberry breeders, Doug Shaw and Kirk Larson, said they were going private.

UC stopped taking the commission’s money, which increased royalties on growers using UC-created strawberries, and announced their strawberry research program would end and that future strawberry breeding would be done on a contractual basis with Shaw and Larson.

“The University of California, Davis, has a long and valued relationship with the California Strawberry Commission and we continue to work closely with the commission and its members to build on that relationship.”

Neither Shaw nor Larson are named in the commission’s lawsuit.

A spokeswoman for the University of California said it doesn’t comment on pending litigation but offered the following prepared statement:

“The University of California, Davis, has a long and valued relationship with the California Strawberry Commission and we continue to work closely with the commission and its members to build on that relationship.”

According to the strawberry commission’s prepared statement, strawberry growers have paid $60 million to the university since the 1950s both to directly finance the breeding of hardier, tastier and prettier types of strawberries and in royalties for the privilege of planting those new varieties their money helped create.

“The commission has filed a complaint to protect our rights,” it said in a statement before adding it had not further comment.

 The strawberry commission says in it’s complaint that allowing Shaw and Larson to leave after 32 years and take the germplasm with them means a “majority of the commission’s growers will not obtain the new strawberry varieties that (they) will develop … because Shaw and Larson intend to exclusively distribute the new strawberry varieties to select growers.”

California accounts for nearly 90 percent of all US strawberry production and 25 percent of strawberries grown worldwide, the commission and a 2012 University of Florida study say.

Of the 40,000 acres planted by California’s 400 strawberry growers, 58 percent are blanketed with varieties created through the University of California’s breeding program. Larger growers, like Driscoll’s, have developed their own patented strawberries.

UC touts its soon-to-be-eliminated strawberry breeding program on its website saying the program “boosts (the) California strawberries industry.” UC’s varieties have “improved flavor, color and shipping qualities.”

Among UC’s creations are Albion, Benicia and Monterey strawberries.

All types of strawberry have their own “germplasm” or genetic material. Manipulation of the “germplasm” is what creates a new variety, which UC then patents.

Unlike other plants, the genetic information for strawberries isn’t found in the seeds but in the runners of the plant, similar to crabgrass.

The strawberry commission says in it’s complaint that allowing Shaw and Larson to leave after 32 years and take the germplasm with them means a “majority of the commission’s growers will not obtain the new strawberry varieties that (they) will develop … because Shaw and Larson intend to exclusively distribute the new strawberry varieties to select growers.”

Requests to UC Davis for information on the current breeding program’s annual revenue and expenses were ignored.

Michael Carriere, manager of UC’s strawberry licensing program, wrote in  a 2007 article in the Concept Foundation’s ipHandbook of Best Practices, that the program grossed $4.7 million licensing its new varieties to sellers around the world.

Licensing revenues were $3.4 million in 2000, Carriere says.  The nearly 28 percent increase in revenue came because of a rate increase that year and “market expansion in Europe, North Africa, South America and Mexico,” Carriere writes.

California sales represented 45 percent of the $4.7 million. Another 5 percent are United States sales outside of California. The remaining 50 percent of licensing income came from sales outside the United States and Canada.

However, purchasers from outside California and the United States paid $650,000 in “research fees,” which Carriere says was “the lion’s share of funding” for the program.

“This amount contrasts with the $350,000 support from the California Strawberry Commission, the second largest contributor to the breeding program,” Carriere says.

He predicts income will increase after 2007 because of market expansion in areas like Brazil, China and Turkey. The program’s revenue appears to have more than doubled over the past six years.

By refusing to take the strawberry commission’s annual contribution, UC was free to boost the royalties paid by California growers who use UC’s varieties or “cultivars.”

In his 2007 article, Carriere explains that California growers paid $3 per every 1,000 plants purchased. There is an average of 18,000 strawberry plants per acre, the commission’s website says.

Canadian and U.S. growers outside of California paid $4.50 per 1,000 plants and growers in other countries paid $10.50 per 1,000 plants purchased.

The research fee that yielded $650,000 in 2007 was calculated at $1 per 1,000 plants but each $1 paid in research fees results in a $1.50 royalty fee reduction.

“The structure of the strawberry licensing program is driven in part by UC’s presence as a public institution in the state of California,” Carriere writes.

“Nurseries and fruit growers in California are given preferential treatment, in addition to the reduced royalty rates for California.”

The commission’s lawsuit appears aimed at ensuring that status quo is preserved.
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Ed’s Note: Greg Lucas, the editor of California’s Capitol, is a contributing editor of Capitol Weekly. His stories can be viewed at www.californiascapitol.com.