Evaluating your Options for Growing Patented, Proprietary Varieties

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Evaluating your Options for Growing Patented,
Proprietary Varieties

• December 6, 2000
• Washington State Hort Association
• David Marshall

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Bottom Line Question

• How much more money will this new variety have to
  return to me in order to JUSTIFY additional
  royalty costs?

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Planning is Needed

1. Sharpen the MIND and

1. Sharpen the PENCIL

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Supply Control Systems
Base System
Royalty per tree 0.00
Royalty per box 0.00
Percent of sales 0.0
Sales Charge 0.40
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Supply Control Systems
Base System System A
Royalty per tree 0.00 0.50
Royalty per box 0.00 0.50
Percent of sales 0.0 0.0
Sales Charge 0.40 0.40
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Supply Control Systems
Base System System A System B
Royalty per tree 0.00 0.50 1.25
Royalty per box 0.00 0.50 1.25
Percent of sales 0.0 0.0 0.0
Sales Charge 0.40 0.40 0.40
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Supply Control Systems
Base System System A System B System C
Royalty per tree 0.00 0.50 1.25 2000 Per acre
Royalty per box 0.00 0.50 1.25 --
Percent of sales 0.0 0.0 0.0 11.0
Sales Charge 0.40 0.40 0.40 --
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Assumptions

• 10 Acre plot 20 year life

• Land Cost 3000 per acre.
• 210 per acre rent at 7

• Variety X on M9 root

• System 4-wire Vertical Trellis

• Spacing 12 x 4
• 907.5 trees per acre

• THE ORCHARD WORKS!

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Assumptions Yield Curve
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Establishment Costs
5.65 per tree
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Operating Expenses
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Return Statement Sales 100 bins

• 65 of packs Grade A

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Return Statement Net Returns

• 18 packs per bin
• 41 lbs per pack
• 900 lbs per bin
• 18 culls
• 65 of packs Grade A

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Inflows and Outflows (Base)
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Cash Flow (Base Scenario)
Internal Rate of Return 20.0
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Results Internal Rate of Return
Price for Top Grade Base System System A System B System C
30 / box 20.0 18.8 17.0 14.6
Compare the computed IRR with your Required Rate
of Return
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Results Internal Rate of Return
Price for Top Grade Base System System A System B System C
30 / box 20.0 18.8 17.0 14.6
27 / box 15.6 14.2 12.2 10.1
Compare the computed IRR with your Required Rate
of Return
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Results Internal Rate of Return
Price for Top Grade Base System System A System B System C
30 / box 20.0 18.8 17.0 14.6
27 / box 15.6 14.2 12.2 10.1
24 / box 10.1 8.6 6.1 4.3
Compare the computed IRR with your Required Rate
of Return
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Results Net Return per Bin
Price for Top Grade Base System System A System B System C
30 / box 299 290 276 258
27 / box 255 246 233 220
24 / box 212 203 190 181
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Required Rate of Return 15
Base System System A System B System C
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Required Rate of Return 15
Base System System A System B System C
Return / bin before any royalty 251 262 280 303
Return / bin before any royalty 11 29 52
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Required Rate of Return 15
Base System System A System B System C
Return / bin before any royalty 251 262 280 303
Return / bin before any royalty 11 29 52
Top Grade f.o.b. 26.66 27.47 28.68 30.32
Top Grade f.o.b. 0.81 2.02 3.66
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Required Rate of Return 20
Base System System A System B System C
Return / bin before any royalty 299 312 331 363
Return / bin before any royalty 13 32 64
Top Grade f.o.b. 30.00 30.89 32.22 34.46
Top Grade f.o.b. 0.89 2.22 4.46
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Contact Information
David Marshall 408 North First Street Yakima, WA
98901 509-453-4851 dwmarshall_at_agrimgt.com
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