What a quarter! USA, Panama, Germany, Spain, Colombia & Peru! The team has been moving at warp speed since we left Berlin and our last update! At the home office, we have been putting the final touches on the AgInvestor Platform, which I am happy to announce is officially live! Additionally, Capital raising this month has been breaking records and we are preparing to close out both Panama Golden Pineapple (PGP) and GP II. The excitement level for alternatives to traditional markets is growing exponentially each month as major indexes start to wobble. We have also wrapped up tax filings for 2017 and all investors should have received their K-1 distributions. This dry season at GP was full of activities, including the completion of our primary reservoir, which as of last week is officially complete, and the activation of our new irrigation system! In Panama, Paul and the team are clicking on all cylinders as we have hit a new record of 6 hectares planted in 1 month…that’s 390,000 plants!
Having finalized this month’s valuations on PGP, GP & GP II, we are proud to announce that all three valuations are up double digits from last year’s projections. GP II is still being offered at a 30% discount to its valuation and PGP is being offered at 18% discount! We only have $750k left of GP II and $500k of PGP. I have to say that as I have been reviewing our projections and comparing them to market indicators around the world, I can’t help but comment on the overvaluation of most traditional market indexes.
Markets are cyclical and if you look at the NASDAQ, it is trading 97% above its 10-year average! On the other hand, the Colombian Peso is trading 32% below its 10-year average price (see chart). With a potential trade war looming, the dollar should continue declining, which means that non-dollar denominated assets should outperform in the near to mid-term.
The AgInvestor module is now live! In the following weeks, we will be making available comprehensive videos on how to successfully trade on the platform.
When a listing is public on the secondary market, any user who has successfully integrated their bank or credit card will be able to make an offer. However, when listing privately, holders will be able to securely share a link with their contacts in order to conduct a private deal. For those buyers who choose to integrate their bank account via ACH, they will go through a micro-deposit verification process where two deposits will take place to their bank accounts. Said deposits will contain unique ids to reference back in their accounts.
Once an agreement is reached, the deal is funded and the purchase agreement is distributed. Once both parties and the sponsor have signed the purchase agreement, then the units are allocated to the new owner who will be able to then issue an updated Farmshare Title Certificate containing the new units. Funds are aggregated to the seller’s account and withdrawals can be requested with ease.
AgInvestor is a marketplace for agriculture sponsors to raise capital and for Farmshare holders participating in the platform to be able to list and sell their units on the secondary market. AgInvestor is the sum of countless of hours of planning and execution on the part of Farmfolio’s team. This release marks a huge milestone for the development team and the crossroads where AgInvestor will continue to provide a superb experience connecting stakeholders in the agriculture supply chain, growing independently from Famfolio. Keep an eye out for updates in the coming months.
AgInvestor can be downloaded from the Apple App Store and Google Play Store by simply searching AgInvestor. If you’d like assistance setting up your account, please drop the team a line at [email protected]
Ganaderia Pietrasanta (GP)
As previously noted, this dry season has been jam packed with activity.
It is quite a feat to have completed it in just 3 months. We will now begin construction on a pump house and are finalizing the 3-line electrical power that will be used to power the pump station. We also received another 8,000 coconut seeds, which have all been prepped and laid in the nursery. We have another 7,500 seeds that have been placed into bags awaiting the wet season planting cycle. Our estimation is that the remaining 100 hectares of planting will be completed by July.
Likewise, the teak team has begun its scheduled thinning for 2018. We will be taking out approximately 200 trees per hectare, which will be sold to the timber mill in late 2018.
Our estimates project approximately $602,000,000 COP ($210,000 USD) to be generated from the sale, depending on the final amount of cubic meters removed.
Tropical Timber Mill
Our team also attended ProColombia’s annual global networking event in Bogota to begin marketing the outputs of the mill. Juan David Gaviria, who will be serving as General Manager of the processing facility, was present meeting with future customers. During the convention, we met with buyers from Germany, Canada, and the United States.
Many of the new regulations in Europe are requiring certification for import, which puts us at a great advantage because all of the wood that we will be processing is certified with origin certificates.
Visits to the Farm
Community project updates
Last year, I had a chance to visit some of the communities surrounding GP, which was an eye-opening experience. Many of the communities have very little resources and it puts a huge strain on families, some of which work at GP. Basic resources, like a supermarket, community centers, and even schools, are non-existent in some of these communities. I am committed to starting the process of supporting and improving the local towns around our farm.
Farmfolio is preparing to launch a community development foundation, which will be separate from our investment offerings and will be designed to support community development around our projects. In order to have long-term success, we have to ensure that the communities in which we depend on for labor are sustainable for generations to come.
Panama Golden Pineapple LP (PGP)
As I arrived at the farm this time, I was greeted with an uncharacteristic downpour of rain, smack in the middle of the dry season. Sometimes I think we’ve been touched by an angel when it comes to the development of projects. The timing of rain is pure luck this time of year and provides enormous benefits to the plants. Even though our irrigation system is working great, the heavy rains are like a shot of adrenaline to the young seeds. Despite the rain, we got in the tractor and reviewed all the progress.
Our expectation is still to pay the first dividend mid-April of 2019. Several new processes have been implemented at the farm to improve efficiency and increase plantings in certain areas, including a new refueling tank located in the fields, which increases tractor efficiency by 100%.
I also had a chance during the visit to meet with our agronomist and personnel director. Both men expressed optimism and positive technical outlook to all aspects of developments, all systems and plant health are as good as can be expected. Investors can rest assured that this project is going to be a homerun! Get it while you can folks, this project is almost gone!
As many of you remember, last year we visited several properties in the northern parts of Peru; however, the floods of early 2017 devastated many of the areas we visited. Meanwhile, southern Peru did not have the same issues with flooding and damage as did the areas to the north. I was pleasantly surprised at the excellent highway access and proximity to Lima. Similarly, during this trip, we focused our visits around the town of Ica, where we saw pomegranates, grapes, and blueberries, plus visited an Individual Quick Freezing (IQF) facility. Our initial thoughts on this project are to combined seedless organic table grapes, blueberries, and Spirulina. Table grapes have a growing period of approximately 18 months, blueberries 14 months, and Spirulina can generate cash flow within 6 months. The development costs on this project, we estimate could range from 5-7 million USD. The good news is that the Peruvian Sol (currency) is still trading at approximately 12% below its 10-year average against most developed currencies. In addition, labor cost, land cost, and quality of production make for a great opportunity here. We will continue analyzing the market with the anticipation of potentially packing an offering for early 2019.