evaluating your options for growing patented, proprietary varieties
DESCRIPTION
Evaluating your Options for Growing Patented, Proprietary Varieties. December 6, 2000 Washington State Hort Association David Marshall. Bottom Line Question. How much more money will this new variety have to return to me in order to JUSTIFY additional royalty costs?. Planning is Needed. - PowerPoint PPT PresentationTRANSCRIPT
Evaluating your Options Evaluating your Options for Growing Patented, for Growing Patented, Proprietary VarietiesProprietary Varieties
December 6, 2000
Washington State Hort Association
David Marshall
Bottom Line QuestionBottom Line Question
How much more money will this new variety have to return to me in order to JUSTIFY additional royalty costs?
Planning is NeededPlanning is Needed
1. Sharpen the MIND and
2. Sharpen the PENCIL
Supply Control SystemsSupply Control Systems
Base System
Royalty per tree $0.00
Royalty per box $0.00
Percent of sales 0.0%
Sales Charge $0.40
Supply Control SystemsSupply 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
Supply Control SystemsSupply 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
Supply Control SystemsSupply 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 --
AssumptionsAssumptions
10 Acre plot – 20 year lifeLand 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!
Assumptions: Yield CurveAssumptions: Yield Curve
0 0
15
25
35
45
05
10152025
3035404550
2001 2002 2003 2004 2005 2006+
Bin
s pe
r A
cre
2001 2002 2003 2004 2005 Land Prep: Remove old orchard 4,000 Discing and Ripping 1,250 Adjusting Nutrients 2,000 Vapam Fumigant 2,993 Applying Vapam 300 Trees 51,274 Trees, royalty 0 Irrigation Materials 10,000 Planting & Irrigation Labor 6,000 Mainlines 2,500 Trellis Materials 4,900 Trellis Labor 4,200 Wind Machine 17,500 Irrigation Frost / cooling System 6,000
Total Capital Costs $89,417 $0 $0 $23,500 $0
Establishment CostsEstablishment Costs
$5.65 per tree
Operating ExpensesOperating Expenses
2001 2002 2003 2004 2005 2006 + Prune & Train 300 1,400 2,000 4,500 3,500 3,500 Harvest ($18/bin) 0 0 2,700 4,500 6,300 8,100 Thinning ($12/bin) 0 0 1,800 3,000 4,200 5,400 Chemicals & Fertilizer 2,500 3,000 3,000 3,500 3,500 3,500 General oper.($2300/ac) 11,500 17,250 23,000 23,000 23,000 23,000 Equip Share ($430/ac) 4,300 2,150 3,225 4,300 4,300 4,300 Ranch Overhead ($350/ac) 3,500 3,500 3,500 3,500 3,500 3,500
Total Op Expenses $22,100 $27,300 $39,225 $46,300 $48,300 $51,300
Land Cost ($210/ac) $2,100 $2,100 $2,100 $2,100 $2,100 $2,100
Return Statement: Sales 100 binsReturn Statement: Sales 100 binsStyle Label Size Quantity Price Amount
% Culls 18% CULLS (box equivalents) 395.122 4.03 1,592.06
TP Grade A 56 59 20.00 1,170.00 TP Grade A 64 176 30.00 5,265.00 TP Grade A 72 234 30.00 7,020.00 TP Grade A 80 293 30.00 8,775.00 TP Grade A 88 234 30.00 7,020.00 TP Grade A 100 117 25.00 2,925.00 TP Grade A 113 59 20.00 1,170.00
Label Total: 1,170 33,345.00$
TP Grade B 64 90 15.00 1,350.00 TP Grade B 72 90 15.00 1,350.00 TP Grade B 80 113 15.00 1,687.50 TP Grade B 88 90 15.00 1,350.00 TP Grade B 100 45 12.00 540.00 TP Grade B 113 23 12.00 270.00
Label Total: 450 6,547.50$ Style Total: 1,620 39,892.50$
12/3# Grade A 2 1/2" 135 11.00 1,485.00 12/3# Grade B 2 1/2" 45 9.00 405.00
Style Total: 180 1,890.00$
Total Sales: 2,195 43,374.56$
•65% of packs Grade A
Return Statement: Net ReturnsReturn Statement: Net ReturnsCharges:Regular Storage--After 10/1 100 18.00 1,800.00 Wash & Sort 100 25.50 2,550.00 Tray Pack 1,620 3.85 6,237.00 Bag Carton 180 3.95 711.00 Stickers 1,620 0.25 405.00 Research on Culls 395.1 0.02 7.90 Cull Handling 395.1 0.40 158.05 Apple Inspection 1,800 0.06 111.60 Advertising & Research 1,800 0.44 792.00 Sales Charge 1,800 0.40 720.00 Total Charges: 13,492.55$
Net Sales Forwarded to Statement: 29,882.01$
Sales Based Royalty - Per-box Royalty -
Net to Orchard 29,882.01$
Return Royalty Net Return
Total Bins Received: 100 Net Return Per Bin: $298.82 $0.00 $298.82
•18 packs per bin
•41 lbs per pack
•900 lbs per bin
•18% culls
•65% of packs Grade A
Inflows and Outflows (Base)Inflows and Outflows (Base)
$0
$30
$60
$90
$120
$150
2001 2003 2005 2007 2009 2011 2013 2015 2017 2019
Tho
usan
ds
OutFlowsInflows
Cash Flow (Base Scenario)Cash Flow (Base Scenario)
($150)
($100)
($50)
$0
$50
$100
2001 2003 2005 2007 2009 2011 2013 2015 2017 2019
Tho
usan
ds
Internal Rate of Return: 20.0%
Results: Internal Rate of ReturnResults: 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
Results: Internal Rate of ReturnResults: 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
Results: Internal Rate of ReturnResults: 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
Results: Net Return per BinResults: 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
Required Rate of Return = 15%Required Rate of Return = 15%
Base System System A System B System C
Required Rate of Return = 15%Required Rate of Return = 15%
Base System System A System B System C
Return / bin before any royalty
$251 $262 $280 $303
+$11 +$29 +$52
Required Rate of Return = 15%Required Rate of Return = 15%
Base System System A System B System C
Return / bin before any royalty
$251 $262 $280 $303
+$11 +$29 +$52
Top Grade f.o.b.
$26.66 $27.47 $28.68 $30.32
+0.81 +2.02 +3.66
Required Rate of Return = 20%Required Rate of Return = 20%
Base System System A System B System C
Return / bin before any royalty
$299 $312 $331 $363
+$13 +$32 +$64
Top Grade f.o.b.
$30.00 $30.89 $32.22 $34.46
+0.89 +2.22 +4.46
Contact InformationContact Information
FOR MORE INFO...
Copies of this material are available in the back. This Power Point presentation can be downloaded at:
David Marshall408 North First StreetYakima, WA [email protected]
http://www.agrimgt.com/newsletters.htm