Many of us are relieved now that the 2019 tax filing season is over, but tax season doesn’t end for the Internal Revenue Service (IRS). The IRS works year-round checking tax returns for errors and discriminate information. An audit is arguably the most dreaded outcome of the tax filing process, and the situation carries with it some unsettling mystique. The image of IRS agents with badges showing up on your doorstep comes to mind, or the agency seizing the bulk of your personal assets like it’s a smorgasbord.
However, experts in the field say audits contrast greatly from their thriving myths.
In the agricultural industry, a wide variety of audits are used on a daily basis, many of which are simply to ensure food safety and consumer confidence. Examples of audits may include facility audits, food safety/good agricultural practice (GAP) audits, regulatory compliance audits, seed certification audits, Good Seed & Plant Practice (GSPP) audits and the list goes on and on.
Though audit programs can make extra work for growers, they can also open up wholesale markets and lead to better and safer products. If we didn’t have issues with financial reporting, food safety and seed quality among other things, then there’d be no need for audits or inspections. A system of checks and balances is needed to ensure compliance with intellectual property (IP) rights and contracts that apply to the use of germplasm and traits.
“A system of checks and balances is needed to ensure compliance with intellectual property rights and contracts that apply to the use of germplasm and traits.”
Misappropriation of seed and plant innovations has been a significant issue since ag biotechnology transformed the seed industry in the 1980s and 1990s. Since that time, audits have been conducted in the seed industry to check for compliance with contracts and agreements with respect to IP rights and stewardship. It is estimated that the seed industry invests close to $2 billion annually into research and product development. If integrated seed companies couldn’t protect their IP, then there would be no incentive to reinvest profits into research and development (R&D) and develop new innovations.
IP rights reward seed developers for these efforts and allow organizations to recoup their investments. It promotes further research and development and protects inventions that ultimately end up in the public domain. Seed innovations not only result in consumer benefits such as improved quality, taste and nutrition, but also provide growers with better seed performance, seed quality and seed health. Industry stakeholders, including dealers, growers and seed producers benefit from these innovations through increased product value/pricing and yield, ultimately resulting in increased profits. Therefore, it is in the best interest to comply with IP contracts and license agreements.
In the seed industry, audits have been conducted for field crops such as corn and soybeans for quite some time, preventing millions of dollars in losses due to IP and contract violations. Vegetable crops for the most part have not been subject to IP contract compliance auditing. Profits on products such as lettuce and leafy greens continue to increase in large part due to the R&D efforts of plant breeding, yet these crops are extremely vulnerable to IP theft and other misappropriation. An estimated 10% of sales of lettuce and leafy greens is lost due to IP infringement and contract violations.
The Seed Innovation and Protection Alliance (SIPA) is looking into options for verifying IP and contract compliance around various crops. The reality is that we need audits and other forms of investigation to ensure IP compliance. However, if industry stakeholders truly recognize the value of IP and that they are stewards of intellectual property, then we could significantly reduce or eliminate IP violations and focus on bringing innovative products to market and ensuring a safe food supply for all.