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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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Presentation on theme: "Evaluating your Options for Growing Patented, Proprietary Varieties December 6, 2000 Washington State Hort Association David Marshall."— Presentation transcript:

1 Evaluating your Options for Growing Patented, Proprietary Varieties December 6, 2000 Washington State Hort Association David Marshall

2 Bottom Line Question How much more money will this new variety have to return to me in order to JUSTIFY additional royalty costs?

3 Planning is Needed 1. Sharpen the MIND and 2. Sharpen the PENCIL

4 Supply Control Systems Base System Royalty per tree $0.00 Royalty per box $0.00 Percent of sales 0.0% Sales Charge $0.40

5 Supply Control Systems Base SystemSystem A Royalty per tree $0.00$0.50 Royalty per box $0.00$0.50 Percent of sales 0.0% Sales Charge $0.40

6 Supply Control Systems Base SystemSystem ASystem B Royalty per tree $0.00$0.50$1.25 Royalty per box $0.00$0.50$1.25 Percent of sales 0.0% Sales Charge $0.40

7 Supply Control Systems Base SystemSystem ASystem BSystem C Royalty per tree $0.00$0.50$1.25 $2000 Per acre Royalty per box $0.00$0.50$ Percent of sales 0.0% 11.0% Sales Charge $

8 Assumptions 10 Acre plot – 20 year life Land Cost = $3000 per acre. –$210 per acre “rent” at 7% System: 4-wire Vertical Trellis Variety ‘X’ on M9 root Spacing 12’ x 4’ –907.5 trees per acre THE ORCHARD WORKS!

9 Assumptions: Yield Curve

10 Establishment Costs $5.65 per tree

11 Operating Expenses

12 Return Statement: Sales 100 bins 65% of packs Grade A

13 Return Statement: Net Returns 18 packs per bin 41 lbs per pack 900 lbs per bin 18% culls 65% of packs Grade A

14 Inflows and Outflows (Base)

15 Cash Flow (Base Scenario) Internal Rate of Return: 20.0%

16 Results: Internal Rate of Return Price for Top Grade Base SystemSystem ASystem BSystem C $30 / box 20.0%18.8%17.0%14.6% Compare the computed IRR with your Required Rate of Return

17 Results: Internal Rate of Return Price for Top Grade Base SystemSystem ASystem BSystem 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

18 Results: Internal Rate of Return Price for Top Grade Base SystemSystem ASystem BSystem 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

19 Results: Net Return per Bin Price for Top Grade Base SystemSystem ASystem BSystem C $30 / box $299$290$276$258 $27 / box $255$246$233$220 $24 / box $212$203$190$181

20 Required Rate of Return = 15% Base SystemSystem ASystem BSystem C

21 Required Rate of Return = 15% Base SystemSystem ASystem BSystem C Return / bin before any royalty $251$262$280$303 +$11+$29+$52

22 Required Rate of Return = 15% Base SystemSystem ASystem BSystem C Return / bin before any royalty $251$262$280$303 +$11+$29+$52 Top Grade f.o.b. $26.66$27.47$28.68$

23 Required Rate of Return = 20% Base SystemSystem ASystem BSystem C Return / bin before any royalty $299$312$331$363 +$13+$32+$64 Top Grade f.o.b. $30.00$30.89$32.22$

24 Contact Information FOR MORE INFO... Copies of this material are available in the back. This Power Point presentation can be downloaded at: David Marshall 408 North First Street Yakima, WA


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