Post on 08-Apr-2016
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WHAT’S INSIDE?About GMO
About sorghumInvention and innovation
Management of IPRDynamics of innovationFinancing of innovation
Business modellingInnovation ecosystem
Future?ConclusionsReferences
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ABOU
T GMO
10.000 years agoHumans begin crop domestication using selective breeding.
1700sFarmers and scientists begin cross-breeding plants within a specie for desired parts of the plant.
1940sFarmers and researchers seek out additional ways to introduce genetic varia-tion into the genetic pool.
8.000 b.C. 1700 1940
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“Genetically modified crops (GMCs, GM crops, or biotech crops) are plants used in agriculture, the DNA of which has been modified using genetic engineering techniques. [...] We can assure that GMOs are now an important business and that millions of farmers are turning in the last few years into GM crops. GMOs can be the example of a new technology that has been developed by universities and scienti-fic institutions for many years and now is spreading in the markets.”
1940-50sDr. Korman Borlaug, father of the “green revolution”, introduces several revo-lutionary innovations into plant breeding and agro-nomics: he wins the Nobel Prize for Peace in 1970.
2012Farmers worldwide grow more than 420 million acres of biotech crops.
1990sThe first GMO crops are introduced into the mar-ket place.
1940-50 1990 2012
Norman BorlaugNobel Prize winner and
inventor of GMO
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ABOU
T SOR
GHUM
LAND USE High yield on marginal land
WATER USE < 85% sugarcane < 50% corn
ENVIRONMENTAL IMPACT Herbicide and pesticide use < 40-80% corn
ENERGY USE Much less than corn - Less irrigation; fewer chemicals
CLIMATE CHANGE Naturally heat and drought tolerant
Sorghum (Sorghum bicolor), also known as milo, has a variety of uses including food for human consumption, feed grain for live-stock and industrial applications such as ethanol production.The sorghum is very used wor-ldwide, in the most developed countries for feeding animals and biofuel, while in some parts of the world as food for people. The new technologies and the development of the sorghum culti-vation creates great changes in the market and in general in the prices of the product.
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CHRO
MATIN
INC.
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BASICRESEARCH
APPLIED RESEARCH
PRODUCT DEVELOPMENT DIFFUSION
INVE
NTIO
N AN
D IN
NOVA
TION
2001 2006 2010 NOW
PROD
UCT P
ERFO
RMAN
CE
TIME OR ENGINEERING EFFORT
The company clearly stays in an intermediate stage between product development and diffusion because they constantly create new kind of seeds depending on the situation but at the same time they have started to sell their products.The company has an evolutionary approach. In the S-curve is situated on the initial part: the performance of its products is supposed to increase.
CHROMATIN AT THE START OF DIFFUSION
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From a SUPPLY SIDESuppliers: worldwideProducers: (small) businesses growing sorghumResearch and education: natural breaking genomics – network of sor-ghum growers; alliance with other companiesComplementary systems: “broad and established community base”Product: sorghum (animal food, biofuels and energy, brewing and glu-ten-free nutrition).
From a SOCIETY SIDESustainability: high yield, efficiency, drought tolerance, cultivated on marginal land (expandable up to 80% of agriculture land), renewable fuelsBeliefs: low-impact energyNeeds: food availability, alternative energiesObjectives: food equality
The company is likely to expand its market (also geographically), like projecting its growth in the field of feedstock for biofuels. Neverthe-less the company has to continue the research to meet the persona-lized needs of its clients.
CURRENT PARADIGM AND FUTURE PERSPECTIVE
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The company starts from an existing technology and tries to improve it with the aim to answer the increasing demand of food in the world facing with different pro-blems such as: limits of arable land, water scarcity and demand for food (demand pull).The product is designed to be more suitable for each region of the world for avoiding some problem of tra-ditional agriculture such as the large amount of water required and the use of pesticides.
TYPES OF INNOVATION
GENE STACK ASSEMBLED MINI-CHROMOSOME IMPROVED CROP
Higher yieldMore nutritiousMore biomassHigher value products
BENEFITS
Accelerates product develop-ment pipelines
Any crop
Faster development, lower costs
Streamlined regulatory process
VALIDATION
Peer-review publications
17 issued patents> 40 applications pending
MINI CHROMOSOMES
Single-step gene stack delivery into plants
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“We have demonstrated that sorghum can be modified to produce significantly elevated quantities of farnesene relative to commercial inbred sorghum lines, a molecule that can be used to create ener-gy-rich biofuel. To achieve this result, we added and expressed up to nine genes, creating an entire biosynthetic pathway in sorghum. Chromatin’s unique expertise in gene stacking has enabled us to combine more genes than previously reported in this crop.”
Ken Davenport, Chromatin’s Chief Technology Officer
Chromatin Inc is an entrant because it tries to supply a new glo-bal need with a new technology. Furthermore this company was founded in 2001, entered the market in 2006 and started selling globally in 2012, therefore it’s relatively young, even though the sector itself isn’t an old one.
INCUMBENT OR ENTRANT?
Daphne PreussCEO of Chromatin Inc.
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It is suggested to work on the production to find cheaper and easier way to produce GM sorghum, to make the technique more competitive in the world cereal market. It is also important to focus on the safety of the product as well as predict and analyze the long term effect of feeding animals, and indirectly humans, with this kind of products.
IMPACT ON SOCIETY
There will be an higher amount of food on the global market and then also more cereals for the pro-duction of Bio-fuel. The production of more sorghum will also inflict the price of the meat and, in ge-neral, the global prices of the food mar-ket, in fact we will have more products and, in general, a lower price.
ACTING PROPOSALS
Charles MillerVice President of BD
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MANA
GEME
NT O
F IPR
Feedstock Traits
Molecular Breeding
TransgenicBreeding
Value-added Hybrids
Proprietary TechnologyProductionpartners
FEEDSTOCK PRODUCTS
In the technological domain of Chromatin Inc. the best suited instrument to protect the products is a combination of patents and accurate trade secrets. Chromatin competi-tive advantage is based on proprietary te-chnologies over which the US patent office granted them an exclusive right (Mini-Chro-mosome rights in plants) and it is backed by a portfolio of 17 patents as main applicant and more than 40 as co-applicant. Copyright is not useful in GMOs field while trademarks are only exploited to register and protect the na-mes under which GMOs are commercialized.
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IP PORTFOLIO AND STRATEGY
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Number of patents applicants per year
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In/Out licensing is not used because there is neither the need for establi-shing a standard nor is the sold product linked to precise complements; internal exploitation is what they are currently doing. They are trying to apply their core competences in modifying the genetics of the seeds to several fields (biofuels, animal food, gluten-free food, brewing).
In these info graphics an overview of the competitors of Chromatin in the sorghum market (above on the right) and in the GMO technological field related to sorghum (below on the right) is depicted. On the other hand, the distribution of Chromatin’s patents in the different domains can be seen below.
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Applicant companies for patents related to sorghum
Applicant companies for patents related to sorghum and mini-chromosomes
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DYNA
MICS
OF I
NNOV
ATIO
N
The actual customers of the chromatin inc are the early adopters for the following reasons: the product is quite well known even if there is still a big potential for expansion all over the world since the company started to sell on a large scale just from 2012. Moreover, modifi-cations to the product are performed internally with a continuous collaboration with its customers.Given this, we can say that the Chromatin Inc. is at the first phases of the diffusion of its products. The main type of diffusion is the innovative one focusing its ad-vertisements on the efficiency and potential of its pro-ducts. Especially if we consider that the company uses its product in very different fields that go from food to biofuel industries. By growing the number of customers within the coming years, it will probably occur also an imitative type of diffusion.
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Anyway there is still a certain ratio of uncertainty in the market and primary attention of the company is not on the final product but on the process that it has de-veloped during the years.
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10
20
30
40
50
00 01 02 03 04 05 06 07 08 09
1-2 GENES
3 GENES
% S
TACK
ED T
RAIT
S
MOORE’S SEGMENTATION
Jeff WiderExecutive vice-president
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Gmo sorghum can be cultivated on over 80% of the world’s agricultural land and requires fewer nutrient inputs and far less water than other crops. This results for customers in a larger production with relatively low costs. Moreover adding up to nine genes to sorghum, the company proved
> 25%
10-25%
5-10%
< 5%
WORLD SORGHUM CULTIVATION(% of national arable area)
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that it’s possible to produce a large amount of farnesene , a molecule that can be used to crea-te energy-rich biofuel. In order to convert farne-sene to biofuel, customers will need to strongly update their production workflow.
DIFFUSION
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The Abernathy-Utterback model individuates three stages of the diffusion of a new product. In the case of Chromatin Inc. is in the second of the previously men-tioned three, were performance significantly start to improve, sales are growing but not booming and the gradual emergence of a dominant design produces the number of firms.
Innovation is not primarily focused on the product but rather on the process of production, and this is confir-med by the concentration of the Chromatin Inc. atten-tion on their genomics techniques rather than on parti-cular seeds or the final products.
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20,0
40,0
60,0
80,0
100,0
120,0
140,0
160,0
180,0
200,0
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Global area of Biotech corps (milion hectars) GLOBAL AREA OF BIOTECH CROPS (MILLION HECTARS)
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DOMINANT DESIGN
At the present situation Chromatin Inc. does not have a dominant design for different reasons: the product is really customized and changes and also the process can change from one producer to another. For example Monsanto (a big company in agricultural industry) have a brand called DEKALB which has outstanding yield po-tential, DuPont Pioneer (another competitor), a biotech-nology seed company, also has more than 20 sorghum hybrids. In the future it is possible that a dominant desi-gn will appear from the feedback of the customers. For example manufacturer may prefer cubic shaped seeds for lower storage area and better transformation and distribution.Talking about standards the firm does not have stan-dards as common intended but the FAO has a standard for Genetically Modified Organisms providing Chroma-tin a set of assigned steps which they need to follow in the production of sorghum.
The company has started selling its products worldwide so the main part of R&D has been already completed. However for the nature of the market in which it ope-rates there is the need to continue to innovate with the aim to make the product more suitable to each appli-cation. Moreover the cereal global market is not stable and it goes up and down every year so it is really impor-tant to look continuously at it and also to the trend of the different markets in which the company’s products are used (biofuel, food, feed for animal and so on). In addition, to continue to increase their sales is prefe-rable to look for new areas of application of sorghum and find new countries where to sell it.
ROADMAP
5000
10000
15000
20000
25000
30000
1960 1970 1980 1990 2000 2010
1000
MT
Year
USA Sorghum Production
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The entrance of banks in the portfolio of investors of a firm occurs when the early-stage phase is left behind and the enterprise starts being recognized as a reliable business which, however, still has a significant potential for expansion. This shift in the company lifecycle is reinforced by the fact that the VC Physic Ventures recently placed Chro-matin Inc. in its past portfolio, highlighting the move-ment of this company from an early-stage phase to an expansion phase when the company will be an establi-shed player on the market. Chromatin Inc. showed also their stepping from start-up to a serious player on the sorghum market when in July 2014 they acquired the companies Sorghum Production and Supply Company, Production Seeds Plus, Inc. These are the second and third seed companies Chromatin Inc. acquired which allows them to expand their busi-ness, both in the domestic and international markets.
FINAN
CING
OF I
NNOV
ATIO
N
January 2015 July 2014
12.5 million $ lent by The PrivateBank First intervention of a bank
Series F financing round 12 million $ raised completely funded by VCs
January 2015 Series E financing round over 70 million $ raised
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BUSI
NESS
MOD
ELLIN
G
Growers
Distributors
Agricultural Departments
International Organizations
Governments
Academic Institutions
Research
Production
Information Gathering
Consulting and other services
Employees
Satisfied Costumers
Land
Patents
Know-‐How
Machinery
More Resistant and Efficient Seeds
Customized Products
Breeding Quality
Marginal Land Exploitation
Agronomic Support
Environmentally Friendly Products
Online Services
Direct Contact (﴾dedicated phone line)﴿
Consulting
Co-‐Creation
Sales and Marketing Teams
Global Network of Distributors
Dealers, Agents, Growers
Agricultural Industries
Biofuel Production Industries
Biotech Industries
Biochemical Industries
Food Industry
R&D Employees Salary
Machinery Support Services
Land Ownership (﴾Taxes and Maintenance)﴿
Network Development and Maintenance
Direct Seed Sales Paid Services
Grants from State and Public Organizations (﴾Subsidies)﴿
KEY PARTNERS KEY ACTIVITIES VALUE PROPOSITION COSTUMER RELATIONSHIPS COSTUMER SEGMENTS
CHANNELS
REVENUE STREAMESCOST STRUCTURES
KEY RESOURCES
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Growers
Distributors
Agricultural Departments
International Organizations
Governments
Academic Institutions
Research
Production
Information Gathering
Consulting and other services
Employees
Satisfied Costumers
Land
Patents
Know-‐How
Machinery
More Resistant and Efficient Seeds
Customized Products
Breeding Quality
Marginal Land Exploitation
Agronomic Support
Environmentally Friendly Products
Online Services
Direct Contact (﴾dedicated phone line)﴿
Consulting
Co-‐Creation
Sales and Marketing Teams
Global Network of Distributors
Dealers, Agents, Growers
Agricultural Industries
Biofuel Production Industries
Biotech Industries
Biochemical Industries
Food Industry
R&D Employees Salary
Machinery Support Services
Land Ownership (﴾Taxes and Maintenance)﴿
Network Development and Maintenance
Direct Seed Sales Paid Services
Grants from State and Public Organizations (﴾Subsidies)﴿
KEY PARTNERS KEY ACTIVITIES VALUE PROPOSITION COSTUMER RELATIONSHIPS COSTUMER SEGMENTS
CHANNELS
REVENUE STREAMESCOST STRUCTURES
KEY RESOURCES
CANVAS “AS-IS”
Troy RandolphCFO
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Growers
Distributors
Agricultural Departments
International Organizations
Governments
Academic Institutions
Research
Production
Information Gathering and Sharing
Consulting and other services
Education
Branding
Employees Satisfied Costumers
Land
Patents
Know-‐How
Machinery
More Facilities
Long Term Safety
Cost-‐Efficiency for Farmers
More Resistant, Efficient, Higher Nutritional Value of Seeds
Customized Products
Breeding Quality
Marginal Land Exploitation
Agronomic Support
Sustainability (﴾less pesticides and water)﴿
User-‐friendly Website
Consulting
Co-‐Creation
Customers Community
Sales and Marketing Teams
Web Advertising and Selling
Global Network of Distributors
Dealers, Agents, Growers
Magazines, Articles
Sponsorship
Small and Medium Size Farmers in Hard Climate Conditions and
Marginal Land
Agricultural Industries
Biofuel Production Industries
Biotech Industries
Biochemical Industries
Food Industry (﴾Gluten-‐Free)﴿
R&D Employees Salary
Machinery Support Services
Land Ownership (﴾Taxes and Maintenance)﴿ Education
Network Development and Maintenance Advertising
Direct Seed Sales Paid Services
Grants from State and Public Organizations (﴾Subsidies)﴿
KEY PARTNERS KEY ACTIVITIES VALUE PROPOSITION COSTUMER RELATIONSHIPS COSTUMER SEGMENTS
CHANNELS
REVENUE STREAMESCOST STRUCTURES
KEY RESOURCES
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CANVAS HAS “TO-BE”
Growers
Distributors
Agricultural Departments
International Organizations
Governments
Academic Institutions
Research
Production
Information Gathering and Sharing
Consulting and other services
Education
Branding
Employees Satisfied Costumers
Land
Patents
Know-‐How
Machinery
More Facilities
Long Term Safety
Cost-‐Efficiency for Farmers
More Resistant, Efficient, Higher Nutritional Value of Seeds
Customized Products
Breeding Quality
Marginal Land Exploitation
Agronomic Support
Sustainability (﴾less pesticides and water)﴿
User-‐friendly Website
Consulting
Co-‐Creation
Customers Community
Sales and Marketing Teams
Web Advertising and Selling
Global Network of Distributors
Dealers, Agents, Growers
Magazines, Articles
Sponsorship
Small and Medium Size Farmers in Hard Climate Conditions and
Marginal Land
Agricultural Industries
Biofuel Production Industries
Biotech Industries
Biochemical Industries
Food Industry (﴾Gluten-‐Free)﴿
R&D Employees Salary
Machinery Support Services
Land Ownership (﴾Taxes and Maintenance)﴿ Education
Network Development and Maintenance Advertising
Direct Seed Sales Paid Services
Grants from State and Public Organizations (﴾Subsidies)﴿
KEY PARTNERS KEY ACTIVITIES VALUE PROPOSITION COSTUMER RELATIONSHIPS COSTUMER SEGMENTS
CHANNELS
REVENUE STREAMESCOST STRUCTURES
KEY RESOURCES
Private funds
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In order to assess the consistency of the business model the starting point is the analysis of the value proposition characte-rizing Chromatin Inc. It can be considered a Business to Busi-ness and the main customers, as they are depicted in customer segments, are well acquainted with the GMO techniques so that we can define our sector as specialized and value driven. Accor-dingly, customer relationships and channels are selective and concentrated towards a narrow group of customers. These customers are the primary source of revenues alongside public and private organizations, which provide financial support. In order to be able to sustain this offer the company needs support from both public external actors and members of its network, which are listed in the key partners section. To enable the key activities of the company, such as research, and pro-duction of goods and services, required resources ranging from employees to patents with the other listed in the canvas must be taken into account. Each of these resources has obviously some cost.
CHECK FOR COHERENCEMODEL “AS-IS”
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Since Chromatin CEO stated that the company aims to become a global leader in the sorghum market, we believe that the future strategy of this company should be focused on its core business of genetically modified sorghum seeds, enhancing production and sales worldwide. In order to do this R&D is a basic tool and also marketing should find a suitable way to communicate to potential interested users the advantages of the firm’s offer. In addition to this approach, consumers awareness should be ari-sen through a targeted education obtainable through partner-ships with universities and several governments. Governments would also be significant in the role of financial supporters and providers of legal approval of the specific techniques applied by Chromatin. This endorsement implies that the methods are not hazardous to human health which, would not result, should be guaranteed by careful research and even, certified by universi-ty’s publications and food institutions (like FAO). More opera-tionally speaking, Chromatin should expand the number of pro-duction facilities all over the world so that its distribution cost are not prohibitive even for small and medium farmers, which could represent a novel customer segment. Local production can facilitate marketing and approval by local customers.
STRATEGYMODEL HAS “TO-BE”
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THE I
NNOV
ATIO
N EC
OSYS
TEM The institutional actors
should operate by mo-difying and enlarging the ecosystem to other sta-tes and governments. As far as the food market is concerned, only the cre-ation, where not present, of GMO regulations by international institutions (such as FAO) in going to enable additional invest-ments and so innovation. The above consideration will become actual only by assuring the long term sa-fety of GMOs, task which need to be accomplished by universities and resear-ch centres.Therefore this will guaran-tee an easier diffusion and so a faster evolution of this technology.
CHROMATIN INC.
US GOVERNMENTAND STATES
UNIVERSITIES &RESEARCH CENTERS
FAO INTERNATIONAL ORG
FINANCIAL INSTITUTIONS
KNOW
HOW
WITH
TECH
.
PEOP
LE
STAN
DARD
S
S: Challenging the problem, biofuelW: World rules regulations
S: R&DW: Not already able to prove long term safety
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CHROMATIN INC.
AGRICULTURAL DEPARTMENT
US GOVERNMENTAND STATES
FINANCIAL INSTITUTIONS
COMPETITORS
CUSTOMERS AND NETWORK
SALES
FEEDBACK
REGU
LATIO
NS
GRAN
TS
FINAN
CING
FOR
R&D
S: PartnershipW: Money effort linked to results
S: Demand pullW: Lack of trust in GMOs
S: Technology competitionW: Smaller “slice of the cake”
S: Money effortsW: Strict regulations
INNOVATION
FUNDS
S: Money injection at each stageW: Money effort linked to results
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FUTU
RE? GREEN MOOD ON
SORGHUM BIO-FOOD
SORGHUM THE DIET
OF FUTURE
SORGHUM
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Innovation at any time is correlated with the level of techno-logy at that moment.Nowadays, innovation is often associated with ICT sector because of media, but we experimented that it could be even more decisive in the agricultural market, due to the large social and economic impact on the world life.In our case, the application of new methods, such as intro-ducing GMOs, opens a new window towards new market environments which directs companies to more innovati-ve methods in order to sell their products. In parallel, agri-culture related companies should seek for more optimized processes with the aim to produce newer efficient products to more satisfy existing customers and absorb new markets worldwide. Furthermore, through innovative methods they should continuously keep an eye over future to strengthen their roots in the market land.We can expect a challenging business for CHROMATIN INC. within few years since the technology it uses is opening its space not only in agricultural industry but also in the biote-ch and biofuel industry.Despite this possible trend of growth, the company will also face with rising controversies about ethical implications, especially concerning the possibility to sell GM sorghum for feeding people all over the planet. Who knows what the role of innovation will be in this regard?
CONC
LUSI
ONS
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agmrc.org
indexmundi.com
ncsu.edu
“Chromatin, Inc. Closes New Financing Round, Adds Private Equity Investors”
reuters.com
published: January 09 2014; accessed: March 10 2015
“Chromatin adds another $12m in Series F”
agfundernews.com
published: January 20 2015; accessed: March 10 2015
“Chromatin, Inc. Secures $12.5 Million Credit Facility with The PrivateBank”
viralnewschart.com
published: July 09 2014; accessed: March 10 2015
“Chromatin, Inc. Acquires Sorghum Production and Supply Company”
finance.yahoo.com
published: July 23 2014, accessed: March 10 2015
REFE
RENC
ES
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Mirco AlberiniFilippo Bacilieri
Matteo Botto PoalaMassimo Buratto
Claudio Giuseppe CarnabuciAndrea GoviMehdi Hadi
Pasquale ManganoAndrea Marchini
Olushola Tomilayo OlapadeFrancesco Regazzoni
Srna Tulić
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