October 25th, 2018

Monthly Update 8/25/18: Kicking Into High Gear

Dax Cooke
Dax Cooke, Farmfolio founder
These last two months have been jam-packed with activity and we have a lot to cover in this edition of the monthly update, so grab a cold glass of coconut water, some pineapple chunks, and enjoy the highlights!
Dax Cooke, Founder
 

PROJECT UPDATES

 

The fall season started off in full sprint for the end of year projects. Our team at Pietrasanta has had its hands full the last two months. We planted over 8,000 trees, bagged an additional 5,000 trees for April plantings, laid 75 hectares of irrigation lines, established 30 hectares of new drainage canals, constructed 3 pump houses, rotated 275 head of cattle, and collected over 200,000 cubic meters of water… Whewwww!

The farm at La Dona
Preparing farm operations at La Dona

In addition to the development of related projects, we have also been honing our phytosanitary and nutrition programs to ensure that our trees are happy and healthy in their new permanent homes. We’ve added a new member to our plant management team, Miguel Hernandez, who has 12 years of direct plantation management experience over 2000 hectares of palm oil plantation.

Miguel Hernandez
Miguel Hernandez, a new addition to our team
Miguel has brought a welcome energy boost and approach to our phytosanitary/nutrition management systems and his bi-weekly visits include regular soil testing and foliage analysis to ensure trees are remaining at optimal growth levels. The organic process requires an increased level of attention and creativity to mitigate disease risks and maximize plant nutrition. After just 2 months, we have seen tremendous growth in tree size and obvious increases to plant health.
We are also happy to report that the coconut plantation has been officially registered with ICA (Colombian Department of Agriculture). This is an important step to getting our USDA Organic Certification as well as our Global GAP certifications. This will mark the first export capable coconut farm in the entire country!

The fall rain season started off a little slow, but it’s kicked into high gear the last several weeks with over 200mm of rainfall during the month of October. The reservoirs are filling up nicely and holding water levels. During the month of September, we created a new water bypass system that captures additional water from the mountainous terrain above the reservoirs.

Our reservoir
Our dedicated reservoir will aid conservation efforts.
 

We hope to receive 200-250mm by the end of November to hopefully get us to a total of 400,000 cubic meters of water by the dry season. The four large electric pumps are being installed in November and will be fully operational in time for this year’s dry season. This will mark the first fully technified coconut farm in Colombia.

Pietrasanta October Site Visit

Cattle weight gains have been strong this fall with the lighter rainfall. The heavy rainfall usually causes grass regeneration cycles to be longer due to flooding. The added sunlight in between rainy days has boosted our average kilo growth rate from approximately 900 grams to 1100 grams per animal per day. More grass equals more gains!

COCONUT REGISTRATIONS & CERTIFICATIONS

by Oscar Baracaldo, Operations Manager

The team at Pietrasanta and the Farmfolio executive team have collaborated hand in hand to deploy all the requirements by ICA (Colombian Department of Agriculture) on our nursery and plantation. As previously reported, Pietrasanta has successfully secured registration of the organic coconut nursery, which in fact is the first certified coconut nursery in the country. Thus overcoming a major reason why Colombian coconuts have not been exported out of the country in the past. Interestingly enough this registration makes the Pietrasanta nursery the epicenter for coconut genetics and export in the country. This registration was the first step towards preparing the agenda for coconut exports from Pietrasanta. We now have the pleasure of announcing that our team has secured official registration of the plantation; this is the document that will be required for our fruit to pass customs in foreign markets. It is also the precursor to Certified Organic registrations and Global GAP, which we will be initiated during the first quarter of 2019. Securing certifications will be a process that will take approximately 3-4 months.

Colombian coconuts are admissible into all European countries as well as the United States. In fact, we had the opportunity to talk to senior staff from APHIS (Animal & Plant Health Inspection Service) during our time at the PMA (Produce Marketing Association) conference in Orlando in order to align our processes for smooth imports into the US. The Colombian Coconut CIR(Commodity Import Report) is identical to Thailand’s, a country that imports coconuts in all forms. This being said, our collaboration with APHIS will focus on specifics related to packing and storage coming from our geographical region.

BURROTEKA – SUSTAINABLE SAWMILL

Written by Oscar Baracaldo, Operations Manager

 

After 4 months of red tape, we finally acquired our construction permits and have signed a contract with the local contractor GPI CONSTRUCTORES in Monteria. Construction commenced on October 5th.

A timetable of our progress
A timetable of the progress we’ve made at Ganaderia Pietrasanta

Our construction encompasses 1000 m2 of Sawmill covered space where the processing line will reside. Adjacent to the covered area will be the kilns, which will be accessible through the dock area for timber to be dispatched. Additionally, the construction includes 120mts of inner road that will sustain cargo of up to 50 tons. We will also be constructing 300 m2 of additional space for offices and a guard post near the entrance of the property. We expect the construction to be completed by the end of February.

While the Burroteka Sawmill is under construction, the team is full steam ahead developing buyer channels and marketing collateral.

A fundamental piece to our strategy is the Burroteka website, which our development team has completed. During the next couple of weeks, the team will be completing content to finalize and launch the Burroteka website, including our signature content strategy that will be present throughout the site.
A central piece to the Burroteka website will be the Quoting tool, which runs an algorithm taking into account details such as unit of measure, amount, shipping container size, dimensions, quality, and humidity levels. We seek to provide buyers with a transparent and immediate quote to their timber requirement regardless of where they are located!

A key component of the Burroteka website is also the distributor’s section, during the next 3-4 months we will continue to build our distribution network. We are having conversations with distribution channels from the United States, Germany, and Holland.

PANAMA GOLDEN PINEAPPLE

Written by Dax Cooke, Founder

 

Paul and the team at PGP have been kicking it into high gear since our last update. Over 975,000 pineapple seeds have been planted this fall and we only have 10 more hectares to go to achieve our goal of 50 hectares by year end. In addition to new plantings, the existing plants are maturing. The induction process was kicked off in early September with lot 8. The flowering has already begun and all signs point to an on-time harvest in late February from this section of the farm. The harvest and revenue projections for 2019 have been published and we are happy to report that the additional 4 hectares of plantings have boosted projected revenues by 7.7%. Although we still have uncontrollable variables at play, including price and, of course, mother nature, we anticipate that our projections of $6.25 per box should be achieved, if not exceeded. Moreover, weather conditions have been ideal thus far.

2019 PGP Harvest & Revenue Projections

As the harvest seasons approach, fruit marketing comes into focus. The keys to successful fruit marketing include diversification of buyers and product type. When entering the market, growers have a choice to make related to the harvesting of fruit. Either harvesting early when the fruit is green, which is primarily marketed as bulk container fruit, or harvesting later and focusing on premium sales. Most of the larger Costa Rican farms focus on the green fruit market because of their volume and their type of customers, which are usually large retailers needing more time to distribute the fruit throughout vast locations. The margin in this market is razor thin and depends entirely on the scale.

PGP October Site Visit

On the other hand, the premium market focuses on customization and providing a unique product. This usually means allowing the fruit to mature longer on the plant before picking and customizing color and translucency. This creates a higher sugar content and less acidic flavor. Entering this market requires more attention to detail and usually, only small to mid-sized farms can make it work due to the logistics and smaller custom orders. Given PGP’s size and its highly experienced team, this has been the path chosen by the Vergara family.

The breakdown of the fruit production will be as follows:

 

The PMA in Orlando, FL 

 

Every October, 25,000 growers, importers, distributors, retailers from all over the world descend onto a conference floor located somewhere in the United States to discuss what will be on supermarket shelves and how it will get there. This year the Producers Marketing Association’s annual gathering was held in Orlando at the Orange County Convention Center. It’s two full days of deal-making and handshaking!

The Producers Marketing Association
Making waves at the Producers Marketing Association
Several members of the Farmfolio team were on hand to launch Panama Golden Pineapple’s product into the market for 2019. In addition, the team was laying the foundation for GP’s 2020 coconut harvest.

The team was led by PMA veterans Paul and Francis Vergara of PGP, who have successfully marketed fruit throughout the US, Europe, and Asian markets over the past 10 years. The group arrived a day early to attend a training session with Paul and Francis. In the pineapple business, you have to speak the language to successfully market the fruit. There are several key terms that you need to know, not only related to the fruit itself but also related to logistics and pricing.

Well versed in industry jargon, the team started the day by hearing an inspiring message from All Pro Quarterback Peyton Manning. The NFL legend’s talk had our group ready to tackle the conference with full steam and confidence.

Thomas Connell
Thomas Connell
I love attending fruit shows, it gives me such a burst of energy and validates the hard work being done in the field. The highlight for me was day 1. Listening to Peyton Manning share his experience about his time in the game. He said he was never the fastest, couldn’t throw it as far as other guys but he would always try and be the most prepared.

I had researched all the groups I wanted to speak with in advance, so that had me bursting through the door for my 1st meeting at 10 am. I didn’t plan on running into an industry veteran out of New York first up, which was like being sacked on my opening play! I got up, carried on and finished the day better than I started.
Thank, Peyton!!  

Thomas Connell, head of Business Development

Dean, Dax, Francis, Paul, Oscar, and Tom hit the ground running with pre-scheduled meetings with some of the La Dona’s former buyers. The reception of the Vergara family returning to the pineapple market was greeted with great excitement. Paul and Francis report that many former customers are ready to start the process of re-engaging purchases from the farm. The first step in the process is usually a farm visit, followed by receiving samples of the product. Many buyers already familiar with the farm might skip one of those steps or both and go straight to an order. As previously mentioned, the focus of PGP’s efforts are on premium relationships, specifically in the air freight and premium container market.

One of the highlights of the event was a meeting with Oppy, a division of Total Produce, which went very well and included a conversation about becoming the premium brand for their customers Harry and David. Additionally, we worked on developing premium shipments to Pacific markets, including the northwestern US and the Vancouver area of Canada. Oppy was a long-time customer of the Vergara family and is very excited to hear the farm is back in business. The conversation is expected to continue in the coming weeks and will likely begin with test shipments in February.

Paul and Dax had an interesting meeting with Melissa’s, which is a Los Angeles based national fruit distributor. During the meeting, the head of purchasing indicated they were looking for Pineapple diversification on points of origin. He also liked the idea of adding an ultra-premium brand with their customers to differentiate and has requested case samples to evaluate larger orders of premium colors.

Another interesting meeting with a large Canadian importer revealed that air cargo shipments from Panama no longer have to clear US customs when passing through US airports, which greatly reduces the risks of shipping to Canada. Price conversations during the event exposed that the East coast has been flooded with the product over the last year and prices in these markets are lower. This is primarily a result of Costa Rica shipping most of its product from the Caribbean port of Limon. West coast pricing is significantly higher due to fewer volumes from Costa Rica. With PGP’s close proximity to the Balboa port in Panama, it has significant advantages of shipping time and cost to hit these higher priced markets. Thus, for US distribution, West Coast will be the focus. European and Asian markets are still paying higher prices because of their desire for quality. Paul and Francis’ upcoming trips to Amsterdam and Shanghai will give us a better idea of how much better the prices are expected to be in 2019.

The PMAs was the first time I attended a produce fair or a fair of this magnitude for that matter. At the opening, we had the honor of listening to the legendary Peyton Manning give a speech about winning.

Overall, it really was an eye-opening experience. We’re used having food readily available at grocery stores and are oblivious to the work that goes into the entire process. The number of people involved, the sheer size of the industry are all factors I was unaware of before working for Farmfolio and attending this fair. Overall, it was a positive learning experience that taught me that that are many aspects to farming. Farming is not limited to growing food. You have to build the right relationships with the right people in order to be able to deliver your product to market. That is what this event was really about for us. I am looking forward to coming back next year.

Dean Chenna, Investor Relations Executive

Dax and Oscar were focused on coconut conversation during this year’s event. The objective was to gauge the state of the market and to plant seeds with buyers for purchasing in 2020. Meeting with Melissa’s, Genuine Coconut, and Obrigado revealed that the market is very strong and coconut water consumption continues to increase. Dwindling supply and the high barriers to entry continue to drive prices higher in both fresh and processed products. Melissa’s produce distributor based in Los Angeles has increased it’s coconut shipments by 30% over the last year.

A conversation was held with Genuine Coconut, a company that has revolutionized the market for fresh coconut water consumption with a unique coconut access tap. After recently entering the US market, The Genuine team has had rapid success and is planning to continue growing its distribution across the US.

Dax Cooke and David Amoros
Chatting with David Amoros of Global Coconut
Our conversation was with Global CEO, David Amorós, related to the sourcing of coconut supply. Currently, the Genuine Group purchases 100% of its supply in Thailand, ships it to their processing facility in Spain, and then ships to the US. Dax and Oscar discussed the possibility of taking Genuine’s unique packaging and processing technology to Colombia. This would shorten Genuine’s shipping time to US markets by 22 days, creating longer shelf life.

Obrigado, a Brazilian company shed light on the growing consumption in Latin American markets. Obrigado is a completely vertical coconut water brand with over 2500 hectares of production in the Bahia region of Brazil. They also have a sister company, Frisk Industries that processes coconut waste after dehusking. This company serves as a model for what Pietrasanta’s operation could become over the next 3-4 years. Farmfolio Founder Dax Cooke established connections with the executive team in Brazil and plans to take a visit in 2019 to explore the possibilities of joint venture processing facilities in Colombia.

During the show, our team was able to broadcast live and documented the experience with numerous YouTube video recordings. Check out the links below to view the action and activity during last week’s show.

Another interesting conversation was that of Tom Connell with a distributor based in Las Vegas, who is supplying many of the casinos and hotels with freshly shaved coconuts. This well-known distributor revealed he is paying $1.20-$1.40 for Thai coconuts. These are conventional, which means the organic prices would be fetching an even higher price. The distributor has expressed interest in 3-4 containers monthly and plans to visit the farm in early 2019.

Paul and Dax had an interesting meeting with Melissa’s, which is a Los Angeles based national fruit distributor. During the meeting, the head of purchasing indicated they were looking for Pineapple diversification on points of origin. He also liked the idea of adding an ultra-premium brand with their customers to differentiate and has requested case samples to evaluate larger orders of premium colors.

Another interesting meeting with a large Canadian importer revealed that air cargo shipments from Panama no longer have to clear US customs when passing through US airports, which greatly reduces the risks of shipping to Canada. Plus Canada pays a premium for golden fruit. Price conversations during the event exposed that the East coast has been flooded with the product over the last year and prices in these markets are lower. This is primarily a result of Costa Rica shipping most of its product from the Caribbean port of Limon. West coast pricing is significantly higher due to fewer volumes from Costa Rica. With PGP’s close proximity to the Balboa port in Panama, it has significant advantages of shipping time and cost to hit these higher priced markets. Thus, for US distribution, West Coast will be the focus. However European and Asian markets are still paying higher prices because of their desire for quality. Paul and Francis’ upcoming trips to Amsterdam and Shanghai will give us a better idea of how much better the prices are expected to be in 2019.

THE TIMBER SHOW 2018 – BIRMINGHAM, UK

Written by Thomas Connell Head of Business Development

 
October was a busy month for the entire team at Farmfolio and I kicked off proceedings by attending the annual Timber Expo which took place at the NEC, Birmingham, UK. We had established key relationships in the European market earlier in the year in Berlin and wanted to explore the UK market and potential opportunities.
This is the most important event on the UK construction calendar dedicated to timber. It’s a three-day event, with a broad range across the timber sector and a large contingent from international markets. These included groups involved in flooring, decking, cladding, frames, garden furniture, merchants, and sawmill operators.

A major talking point throughout the event was Brexit and what the implications would be for both importers and exporters. I spoke with many exhibitors, trade groups and industry experts and with the UK only months away from a deadline in March 2019, there is still huge uncertainty as to who the winners and losers will be. The general consensus was that merchants would look to go straight to source, which could provide some exciting opportunities for Burroteka’s sawmill.

Another major talking point was Burma (Myanmar) teak and implications of restrictions in the European market. Historically sourced from virgin forests, not commercial plantations, Burmese timber is used predominantly in marine decking and a very valuable product. Recent bans and restrictions due to excessive logging have led to merchants seeking alternatives and quality grade plantation teak such as that found in the Cordoba region of Colombia.

In summary, it was a fantastic event and credit to all the team at Timber Expo. We will be back next year!  

THE FARMFOLIO FOUNDATION

Written by Glenn Ojeda, Editor & of CSR

 

After months of strategic development, conversation with our new advisor, and planning, the Farmfolio Foundation is finalizing its legal filings to acquire 501c3 status.

The Farmfolio Foundation imagines a world where children in rural households and agricultural epicenters have the same opportunities as those in the city.

Glenn Ojeda, Editor & Head of CSR

Therefore, our Foundation is committed to advancing water access, health care, food security, and schooling in and around rural communities, whose economy is dependent on agriculture and fieldwork. The Foundation was created in 2018 and is dedicated to charitable social initiatives in and around the impact investment projects managed by Farmfolio Holdings LLC.

During the coming weeks, we will be sending out the Foundation’s informational brochure and we will kick-start the fundraising campaign for social initiatives.

Please stay tuned and reach out to us if you have any questions or ideas!

Sincerely the Farmfolio Team,

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