Agri-tech Case Analysis
I. EXECUTIVE SUMMARY On October 12, 1989, Dr. Renato Melgar of the Institute of Biotechnology of an Agricultural College located in Northern Luzon approached the Agri-tech Products Company for the production and marketing of Rapidgrow. Agri-tech is a firm that specializes in the production and marketing of Rapidgrow. Rapidgrow is a biotechnology product developed by the faculty institute. It is a soil treatment in pellet form (1/4 of an inch long) which increases the growth rates of two trees species commonly used in reforestation in Asian Countries by 30-70% in a span of six to eighteen months. Survival rates of the trees are expected to double from the usual 40% to 80-83%. A simple treatment for seedlings with this can substitute for the 50-70% fertilizer requirements for these species.
Agri-tech normally enters into royalty agreements with inventors and scientists for new product developed by them. They were paid based on gross sales (2%) or net profit (10%). Dr. Melgar asking for 340,000 pesos payable upon signing of the contract and royalties based on given sales.
But unfortunately, Rapidgrow will require a new machine for pellet production costing $35,000, no tariffs and taxes will be paid related to the importation of the machine.
This Rapidgrow is really needed by now by most of the agri-businesses not only on our local market but also domestic market where they can get more income and profits. They have those potential buyers like Timber Licenses which will plant trees for approximately 3,326 hectares annually. Also, the Department of Environment and Natural Resources (DENR) which will plant trees with approximate area of 4,677 hectares per year. Other Private Institutes will also probably acquire their products; they will plant in approximate area of 18,710 hectares per year. The foreign Assisted Project is also their expected customer. They have also the foreign market which has 1.5 million hectares per year, Indonesia, Thailand, and Malaysia.
Agri-tech normally enters into royalty agreements with inventors and scientists for new product developed by them. They were paid based on gross sales (2%) or net profit (10%). Dr. Melgar asking for 340,000 pesos payable upon signing of the contract and royalties based on given sales.
But unfortunately, Rapidgrow will require a new machine for pellet production costing $35,000, no tariffs and taxes will be paid related to the importation of the machine.
This Rapidgrow is really needed by now by most of the agri-businesses not only on our local market but also domestic market where they can get more income and profits. They have those potential buyers like Timber Licenses which will plant trees for approximately 3,326 hectares annually. Also, the Department of Environment and Natural Resources (DENR) which will plant trees with approximate area of 4,677 hectares per year. Other Private Institutes will also probably acquire their products; they will plant in approximate area of 18,710 hectares per year. The foreign Assisted Project is also their expected customer. They have also the foreign market which has 1.5 million hectares per year, Indonesia, Thailand, and Malaysia.