Development of a Technology Valuation Model for Commercial Licensing: An Empirical Case of PB 1718 Basmati Rice Variety

Crop varieties are being disseminated to the farmers through public private partnership models. These models along with non-exclusive licensing policy allow faster and wider dissemination followed by adoption. Appropriate valuation technique for valuation of crop varieties is seminal in facilitating technology transfer deals for Public Research Institutions. In this article, we seek to identify appropriate valuation technique for crop varieties from the licensing perspective and tested the technique on Pusa Basmati 1718 rice variety in India. Black Scholes method of real options valuation was identified and adapted from the perspective of crop variety valuation. The value of the variety was estimated at ₹ 11.65 Crores to ₹ 33.24 Crores at a technology contribution ratio of 30–70%, respectively. To avoid undervaluation, cost of development of the variety was also calculated and was found ₹ 1.33 Crores. Seed industry in India, is governed by Small and Medium Enterprises (SMEs) and the above figures provide the potential of the technology to generate returns for the licensees which, if licensed to more SMEs, enhances regional and economic development apart from enhancing food security. At the same time, the licensing fee and royalty rates shall be derived in such a manner that by non-exclusive licensing, the developmental costs shall be covered.