Every business starts as an idea. When we started Farmfolio, our idea was to change the way people invest in agriculture. Likewise, every business needs vision to succeed. A vision is simply an idea with a plan, but a vision cannot be realized without execution. Over the last 3 years, we have taken our idea through vision and execution into a reality. For all of our investors, advisors, team members, and partners let me say thank you for believing.
As we cross the 1-year mark of our first project, Ganaderia Pietrasanta, our team at Farmfolio is happy to report that our vision has been executed with only the slightest adjustments along the way. The implementation at GP has been smooth, without major issues. We have learned of many new opportunities in tax, legal, and operational structures that will only make future offerings more attractive. Additionally, we are constantly making adjustments to increase shareholder value. In order to take full advantage of these benefits, we have made some modifications to the flow of funds and established new legal structures, which will give existing investors the maximum benefits available.
Tax and Entity Updates
In Colombia, there are very strong benefits related to foreign direct investment, especially in the agriculture sector. To take full advantage of the benefits, our Colombian legal team has established a more tax efficient corporate setup for the development of coconut operations at GP. A new entity has been formed under the name of GP Agro SAS, which will hold all of the invested capital at the Colombian level. It will also be the beneficiary of all coconut activities on behalf of GP1 LLC, GP2 LLC, and FFH LLC. The addition of GP Agro SAS creates a very clear, transparent distinction between coconut operations and all other revenue streams. Some of the benefits to the entity will be a reduction in IVA taxes and potential subsidies for the planting of tree crops (coconuts) to the investor base. This new entity will be wholly owned by GP1 LLC, GP2 LLC, and FFH LLC. We have also formalized a contract between GP SAS (Farm Company) and GP Agro SAS, which gives GP Agro indefinite rights over the use of 250 hectares for the cultivation of coconuts and 80% ownership in all coconut profit. This will give the investment group roughly 89% of all coconut profit. Given that these changes will be made at the Colombian level, there will be no additional K-1’s issued for the new entity. A balance sheet will be available at year-end to reflect the new asset within the US investment entities.
Our farm operations team is undergoing some changes at the administrative level. Farm General Manager, Maurcio Posada, has retired as of August 1st and second-in-command, Hernan Ricardo, has taken over as the new GM at Pietrasanta. This was an anticipated change. During our initial agreement with the Posada family, Mauricio committed to a 1-year contract to implement the new systems and management. Although he is retiring, Mauricio is still a partner/owner in the farm, so he will still be very much involved in ensuring the success of the farm. Hernan Ricardo is a very talented individual. Hernan has a Master’s degree in agronomy from the University of Cordoba and has served as the farm’s number 2 for the last 18 months. Hernan comes from an agricultural family, as his father has managed one of the largest farms in Cordoba for almost 25 years, so it’s in his blood. You have to love what you to do to be good at it and I can tell you from watching Hernan work for the last year, Hernan loves what he does! Hernan resides at the farm full-time with his wife Olga and their 3 dogs.
Accounting systems are also undergoing some changes this year. As previously mentioned, we will be implementing SAP, which will allow us to run one global accounting software system to coordinate movements in Colombia and the US. On August 1st, we welcomed a new team member in Jenny Fosenca. Jenny will be handling all of the SAP integration. She is a certified accountant in Colombia and comes to us from Edwards Life Sciences. Having a full-time accountant on staff will give investors information in real time on the Ag-investor app. We hope to roll this new real time reporting out in January of next year.
The much anticipated trading platform is still in development. Wire frames were complete in late May and development is still in process.
We have been getting many inquiries regarding our next project, as we have several irons in the fire at the moment. We have decided to let the anticipation build a bit longer while we finalize the trading platform and our European market establishment. Our disappointment in Peru gave us some time to reflect on strategy and project design, which we needed. The key to our success is quality and it is our top priority to bring only the highest quality offerings to market. It is my goal that Farmfolio projects become a symbol of reliability, transparency, and security.
As we look for new projects, we are interested in gaining a better understanding of future investment amounts from our current customers. Given that we have committed to offering our current investors first dibs on future projects, we would like to better understand our short term fundraising ability before we pull the trigger on the next project. Below is an evaluation that we kindly request all investors complete.