This project was completed by Intensity. Intensity joined Secretariat on February 1, 2023.

Background

Technology has become indispensable part of the farming business. Technology provides farmers with tools to optimize decisions on inputs such as nitrogen and irrigation and focus on agronomic aspects of the farm to derive yield improvements.

Intensity was engaged on behalf of an innovation company that had entered into an agreement with a global agricultural company to develop technology that helps farmers improve profitability and increase efficiency. The innovation company alleged that the global agricultural company breached its contractual obligations by refusing to make any funding or royalty payments.

Our Analysis

Intensity provided an economic analysis of damages for contract claims involving farming software and services, including claims for breach of contract, breach of fiduciary duty, and breach of the implied covenant of good faith and fair dealing. Intensity’s analysis included a determination of the value of past and future payments specified in the agreement as of the time of the alleged breach.

Intensity calculated unpaid funding payments, unpaid past royalties for use of the technology, and estimated future royalties for continuing use of the technology. To estimate future royalties, Intensity analyzed various financial forecasts created by the global agricultural company and extrapolated the forecasts using a growth rate analysis. Intensity determined the value of future royalties at the time of the alleged breach using a discounted cash flow analysis, which included an evaluation of an appropriate discount rate that accounts for the risks and uncertainties of the future cash flows.

Intensity provided expert reports and a witness statement. Intensity’s client secured a settlement the evening before Intensity was expected to provide testimony at the arbitration.