The share of SAES funds coming from federal sources has been declining recently, and the composition of those funds has changed too, with an increase in competitive grants and a decline in formula funds. The federal government is also involved in financing extension conducted by the states. In 1915, the first year in which federal funds were made available for cooperative extension between the USDA and various State extension agencies, almost $1.5 million dollars of federal funds were combined with $2.1 million dollars made available from various state and local government sources for a total of $3.6 million. This total grew by 3.76 percent per annum to reach $1.6 billion by 1999. The public provision of extension services in the United States is essentially a state or local activity. Consequently, funds from within-state sources accounted for 74 percent of the total funds for extension with federal funds accounting for the remaining 26 percent in 1999.These factors combined mean little total growth in funds available from the federal government for agricultural R&D, and an ambiguous effect on the efficiency with which those funds are being used. Together these factors have resulted in a significant reduction of funding for research, and especially extension, in California, with cuts over two years in the range of 20 percent for research and 35 percent for extension. Further cuts may be anticipated in future years. California’s public research and extension is mainly undertaken through the UC Division of Agriculture and Natural Resources . In FY2001-02, ANR reported the spending of $336.4 million,macetas 7 litros of which $240.6 million was spent on CAES research, and $92.0 million was spent on cooperative extension.

The sources of funds for CAES research have varied over time. The biggest single source of funds is provided through the state legislature, accounting for about two thirds of the total funds going to CAES in recent years. The areas of most rapid growth in non-federal funds are from the sale of products and from industry grants and agreements, including check-off funds . Industry-sourced funds now account for over 10 percent of the total CAES research budget.19 In recent years, some large distributors of high-value crops have developed their own research and are trying to establish their own fruit and vegetable varieties. Some of these producers have even signed technology transfer agreements with the University, hoping to establish proprietary rights. There is a growing effort in the University to encourage commodity groups and cooperatives to invest in R&D. 20The rise of genetic engineering has encouraged closer collaboration between public and private enterprises in research and product development, at least partly because of the profit motive. Technology transfer activities, which are already significant in medical biotechnology, are starting to take place in the agricultural sector. For example, university researchers who discover the specific properties of a gene or develop a new product apply for a patent. The UC Office of Technology Transfer then can sell the rights to use the products, and to take advantage of the patents, to private companies. The University of California has engaged in several such arrangements,and the University receives significant royalties, for example, from rights to use its strawberry varieties. Much more radical and exciting bio-technologies are now being developed, as for instance new pest-control alternatives. Some organizations that are considering biotechnology transfer agreements with the University include chemical and seed companies. Some large food and vegetable marketers have bought rights to university developed technologies, and some grower cooperatives are seriously considering investing in this area. Private organizations are also tending to sponsor certain research projects in order to have the first right-of-refusal for the innovation that they produce.

This practice has already occurred in the chemical and medical fields and seems to be occurring in agriculture. Furthermore, although most California grower groups in the past supported research at the University of California, they are undertaking research contracts with other universities. This may lead to more competition among universities, and may also alter the nature of university research from more basic toward more short-term, applied questions. One of the most interesting trends in university research is growing transfer of rights to proprietary technology from the university to the private sector. University researchers, in many cases, develop patents that are basically concepts and ideas, and their commercialization requires significant investment. Companies will not engage in this investment unless they are sure that they will capture the benefits from the investment. Lack of investment in university technologies was one of the reasons that motivated the U.S. Senate to pass the Bayh Dol Act in 1980, and that gave universities the right for a patent of research financed with federal money. Once this Act passed, the process of commercialization of university innovations accelerated.In many cases, universities do not sell the right to innovations to establish multinational companies, but instead university professors establish alliances with venture capitalists and start startup companies, which may become major players on their own , or may be taken over by a multinational . Technology transfer has been a source of significant revenue to universities, and the University of California has been the leading income earner from royalties . Nevertheless, the royalties cover, at most, 2 percent of university expense on research, and the main benefit of technology transfer is that the university becomes a source of innovation and competitiveness. In many cases, the main threat to established companies is new innovations that originate at universities The technology transfer from the university to the private sector has been crucial for the evolution of medical biotechnology, and has been important in agricultural biotechnology. Many crucial ingredients of agricultural biotechnology , were patented by universities, but the rights were sold to private companies. Companies, such as Monsanto and Dupont, have invested in university technologies, and there has been a growing tendency for university-private sector alliances. For example, several years ago Novartis gave the University of California, Berkeley, $5 million annually for research for five years, where Novartis received the first rights to consider commercialization of the results of this research. The success of technology transfer is a testimony to the complementarity between the university and private-sector research. Scientists are pursuing, as Graff et al. suggest, fame, fortune and freedom. At the university, they are rewarded, mostly, for original research and expanding the frontier of knowledge; working in private companies, scientists may have less freedom and fame, but more fortune, and their research is more restricted to enhance product development.It has been shown, for several lines of research, that the share of university patents is declining as the products mature. The infusion of funds, as well as access to intellectual property of companies associated with university private sector partnerships, have helped to enhance university research. But the increased privatization of knowledge has a significant size effect. There are barriers to access to technology, and sometimes university scientists may not be able to utilize technologies that were originated in the university but were transferred to the private sector.

Furthermore, the increased reliance on private sector research for product development may result in “orphan crops,” that may be too small to warrant private investment in product development, even though the total benefit to consumers and producers combined would justify the investment. The specialty crops of California are examples of possible orphan crops, and indeed, the private sector has not invested much in biotechnology for such crops. In many cases, lack of access to intellectual property rights is an added barrier to investment in technologies for these crops by either the private or the public sectors. One solution that was introduced recently is the clearinghouse for Ag Biotech ,maceta 5 litros where universities have pooled their intellectual property together to develop a public sector “pool” of patents that will reduce reliance on private sector IPR, and increase the bargaining power of public sector research as they try to negotiate rights to private sector IPR. The organization PIPRA also aims to develop precise technology transfer arrangements that would lead to universities transferring the rights to their innovations, only for applications that would be pursued by the private sector partners, and retaining rights for applications that are most likely to be pursued by others. Graff et al. show that universities have 24 percent of the patents in agricultural biotechnology, which is more than any private company, and thus, pooling their intellectual property rights together may be indeed a mechanism to enhance their productivity and independence in pursuing product development.The transformation of California agriculture that began over one hundred years ago entailed the progressive adoption and adaptation of various types of new technologies, including mechanical innovations, new chemicals, biological breakthroughs, and information systems. Improved methods of production, in conjunction with changing markets for inputs and outputs, have promoted dramatic changes in the range, mix, and total value of California’s agricultural products, with a concurrent reduction in the use of land and labor. The value of agricultural production today is over twice what it would have been without post-war productivity improvements. These improvements have resulted from private and public investments in California and elsewhere, especially other countries sharing a Mediterranean climate, in a complex international web of agricultural research and technology development, where knowledge and ideas are constantly interchanged. Of course, these changes have not been welcomed by all; there are always some who do not benefit from new technology. The agenda for agricultural R&D is shifting as a result of changing perceptions of science and society. While it remains important to continue to improve productivity, the new agenda stresses the importance of issues such as the environmental effects of agriculture, alternatives to agricultural chemicals, and food safety. Simply sustaining productivity in the face of sharper demands for more environmentally friendly, safer production practices will provide challenges for the new century that will require technological solutions. Both the private and public sectors must sustain their commitment to, and their rates of investment in, the future. The United States has in the past provided a substantial share of the world’s agricultural research investments, and technologies produced in the United States have spilled over to many countries, especially in the developing world. The long-term trend is for a rising proportion of agricultural R&D to be conducted in the private sector, and this will have implications for the nature of research undertaken and the mixture of research products that are available and on what terms.

Some countries and commodities are increasingly likely to become agricultural technological orphans in a world where research is conducted increasingly on a for-profit basis, and where technological regulation is progressively eliminating technological options and raising the cost of developing alternatives.Much of California’s agriculture operates in the direct shadow of urbanization. In this state, the nation’s leader in both farm production and ongoing population growth, the agriculture-urban edge problem has economic, land use, life style, and health dimensions. With so many people living so close to so much commercial farming, the negative impacts flow in both directions. For farmers, operating in the midst of urban neighbors often means reduced productivity and income, regulatory constraints, vandalism, and legal liability. For urban neighbors, the issues concern the dust, noise, odor, and even health affects of living adjacent to industrial-like activities that use chemicals, heavy machinery, and concentrated animal facilities.The geographical proximity of agricultural and non-farm residents is not a new pattern in California. Edges have existed in this state for the past century and a half, since the development of commercial farming and since European settlers began to build country homes. What is relatively new is the scale and intensity of residential encroachment into rural areas and the further industrialization of farm activities. Just in the half-century since Word War II, urban and suburban populations have rapidly spread out and converted close to a million cropland acres, first in coastal agricultural areas and then increasingly in the vast Central Valley. As well as creating numerous edges, this growth brought to rural areas numerous residents with urban backgrounds who, while desiring the amenities of country living, were not acquainted with its discomforts including the industrial aspects of farm practices. At the same time, plant and animal agriculture activities intensified greatly, applying new technologies that increased production but also generated more off-farm impacts.