Proceedings of the Fifth Asian Regional Maize Workshop - Search ...

for crop improvement programs. It is fair that they are not denied the reward for
their past efforts. Therefore, any legislation which restricts them in saving
their own seed for future plantings should be avoided. The farmer's privilege
should be maintained in any new or amended IPR legislation.
The seed companies in developing countries are typically small family-owned
businesses. unless IPR legislation is kept simple, and its implementation cost
effective and economical, small companies can be driven out of business by MNCs
who have easy access to patent attorneys, a strong tradition of technology
protection, and experience in litigation.
Developing countries need technology and know-how. Development requires appropriate
transfer and absorption of technology. IPR legislation can possibly hinder
the flow of technology, particularly biotechnology, from lARes. some recent
agreements between at least one private sector company and the lARes stipulate
royalty free rights to the lARes for the developing countries where there is no
patent law. The private company has exclusive rights for commercialization in
countries where patent rights exist. This could be a model for future agreements.
The seed business is in varied stages of development in different countries.
Legislative proposals should take into consideration the technology level of the
country, the availability of trained manpower, and the specialized institutions
required to implement IPR laws. Without proper implementation, IPR legislation
only leads to further bureaucracy.
Recovering value
unless certain minimal requirements on costs and revenue are met, the private sector will
have no long term incentive to stay in the seed business. The 1989 survey conducted by the
American Seed Trade Association (ASTA) of the U.S. seed industry shows that if the cost of goods
sold (OJGS) for hybrid corn seed is over 6~, a seed company cannot be profitable or only
marginally profitable. A private.company needs at least 48-52% gross margin to be in business
and show an acceptable return on sales.
The price, cost, and profit structure required by the private sector seed industry can be
seen in Table 8. Payment to seed growers is a major seed production costs, accounting for
approximately 45% of OJGS (Table 9). To undertake seed production, growers must be assured of at
least 25-3~ more revenue than would be earned by producing and selling the crop as a commodity.
If seed yields are low, growers are paid an even higher premium (the row ratio of female to male
parents, and the yield of the male parent are taken into account when compensation to growers is
fixed) .
Table 8.
Hybrid crop profit and loss structure desired by industry.
Net sales
Cost of goods sold
Gross margin
Selling expenses
G&A
R&D
Net operating income
Non-operating income
Total income
Non-operating expenses
Profit before tax
100.00
48.00
52.00
15.00
15.00
7.50
14.50
1.50
16.50
1.50
15.00
234