We now have more information on the S&W Seed Co. (SANW) Stevia agreement with PureCircle.

S&W does not have enough acreage currently under cultivation to provide significant amounts of dried leaf to PureCircle. Also, the actual varietal has yet to be decided. Consequently, the first year of delivery under the contract would be the 2011 calendar year. In conjunction with work done at Michigan State University, the best varietal for other glycosides (beyond Reb A) will probably be selected later in the contract.

The Stevia will probably be planted in September/October 2010. The plant will be dormant during the winter period, sprouting in March/April of 2011. Stevia responds to the hours of daylight, so bright days in the spring would be beneficial. Harvesting starts in September/October and up to four crops can be harvested in one season. However, it is possible limit the harvesting to two crops a year depending on the Reb A concentration (which has to exceed 6%).

Yields in China run about 4,000 pounds of dry leaf per acre with minimal cultivation and irrigation. We would expect a better yield in Southern California. With two crops a year, leaf production would be 800,000 pounds per 100 acres per year. This would be 1.6 million pounds over two years. To meet the required 2.2 million pounds over two years would take about 135 acres or less. This is well within the capability of the farmers currently growing crops for S&W.

The price paid to farmers in China and South America varies, but we believe most prices are between $0.60 and $0.70 a pound of dried leaf. The lower price is based on PureCircle providing the plant and the lowest Reb A concentration.

In our opinion, S&W would receive a price at the higher end, and possibly in excess, of the range. We would expect revenue in the order of $1 million in fiscal 2012 from Stevia and about $1.5 million in fiscal 2013. Although current accounting rules allow agricultural companies to amortize start-up expenses over the probable life of the plant, we are assuming that such costs are expensed as incurred.
 
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