Panama Golden Pineapple II

  La Chorrera, Panama - Farmfolio’s Panama Golden Pineapple project proudly received its first visit from Panamanian president Laurentino Cortizo at our La Chorrera pineapple farm in Panama on Friday, August 14th, marking a major milestone for the project and for Panama as an origin for premium pineapples. “It was a huge honour and opportunity to meet President Cortizo,” explains Paul Vergara, Project Manager at PGP. “I had the chance to speak directly with him for a short time about our farm, how it works, how our pineapples are produced, and our Air Pineapple business.”

President Cortizo Meets With Paul Vergara

“Although President Cortizo already knew that we’re Panama’s biggest exporter of pineapples by air, he was impressed with our operations and our business model. He loved the farm and what we’re doing here,” Paul continued. “President Cortizo thought our Air Pineapple business is a great avenue to promote a very high quality product, and to promote Panamanian pineapples overseas. Some other agricultural products have gone a similar route, such as Panamanian coffee, and the President encouraged us to continue on this journey, and to keep putting Panama on the map," added Paul. President Cortizo toured pineapple fields and packing facilities, observing soil preparation, pineapple washing, and other activities on the farm. The president also presented agricultural subsidies to small, local businesses affected by the pandemic, as well as academic scholarships to some fortunate students.

Paul Vergara and President Cortizo Deliver Remarks

“In my speech I was very truthful about the conditions faced by Panama’s pineapple industry,” Paul explained. “The industry, which was once a success story, has been decimated over the last decade, and it’s crucial that we go back to what we were doing 10 years ago when Panama was exporting a lot more pineapples.” The total planted area for pineapples has fallen a dramatic 80% since 2009, while Costa Rica has emerged as the world’s largest producer. But an oversupply of low-color fruit in 2015 has put downward pressure on prices, creating an opportunity for premium, air-freighted fruit. “Panama’s competitive edge is our logistical advantage, our weather and our soils. In Costa Rica the cost of pineapple production is 30-40 per cent cheaper. This forced us to reinvent ourselves, and that is when the La Dona Air Pineapple business was born,” Paul stated.

Paul Vergara and President Cortizo Tour the Packing Facility

“On top of that, there was a slow down in the distribution of the export incentives that have been paid out by the government for the last 20 years,up to two years in some cases. It affected a lot of pineapple growers who relied on the export incentives to sustain their businesses,” he continued. “This is exactly why Farmfolio created CANs (Collateralized Agribusiness Notes). Agricultural exporters like us need to receive capital from their tax credits within a shorter time horizon, because quicker access to inputs and infrastructure leads to larger sales in the future. We know that this model is going to be as attractive to other producers as it is for us, and will be able to generate returns for investors through the future sale of issued tax credits,” added Paul. The initial series of Farmfolio’s CANs has already been fully reserved, however, a second series was launched this week (August 20) and is expected to sell out quickly. The opportunity will provide trade financing for the many time-intensive transactions at the downstream phases of the agribusiness supply chain, not only tax credit issuance, but accounts receivables, warehouse receipts, etc. CANs will be administered through Finca Funds SAS, a Panamanian entity that will handle the due diligence, management, and underwriting processes for CANs. With close ties to the government and the Panamanian agriculture sector through Paul Vergara, the president of the Exporter's Association of Panama, Finca Funds SAS is an ideal administrator and issuer of the notes. "As agricultural exporters ourselves, we really understand the value of the CANs project," said Dax Cooke, founder and CEO of Farmfolio. "Being able to receive advance funding for our tax credits will provide us with capital to expand our business, and we want to extend that opportunity to other exporters," he stated. "CANs are Farmfolio's first foray into the debt space. These notes are going to be able to provide investors with a high-yield, short duration debt instrument that is collateralized and ideal for diversification. These instruments are designed with ESG benefits in mind, and will also have a significant social impact for regional exporters," Cooke continued. To learn more about CANs, please visit farmfolio.net/cans/

Panama Golden Pineapple Update with Dax Cooke and Paul Vergara on youtube

Paul Vergara, Project Manager at Panama Golden Pineapple, gives us an update on the pineapple farm with Farmfolio founder Dax Cooke. Lots of good news in this update, and much more to come, so stay tuned!

Overview

by Farmfolio team

GIA Q4 2019 Panama Golden Pineapple Investor Update on youtube.

Karen and I spent a full day with Paul, Edna and the team in Panama in mid-December. We wanted this update to be both educational and detailed enough so you can understand what the Farming team is doing to produce the best product possible. by Farmfolio team.

Pineapple is a dynamic and rapidly evolving sector, and the global market has faced changing conditions and production challenges over the course of the year. 2019 was more favorable for some players than for others, as low prices and inconsistent production levels created concerns across the sector. Nonetheless, value-added processing and rising demand in emerging markets present significant opportunities. In May 2019, it was reported that producers in the US had limited production due and cut back on imports due to low prices. In the EU, demand was also reported to be down. Prices for Central American pineapples on the US market in July were reported to be 9% down on the average for the previous three years. Despite this there are a number of reasons for producers to remain optimistic about the future of the sector and that prices may continue to recover during 2020. Firstly, there are expanding export opportunities, particularly in Asia. Costa Rica has been in talks with China since 2010 over proposals to export pineapples to China and the first shipments have took place in 2019 after overcoming significant challenges in terms of logistics and pest issues. Panama is also about to start exporting pineapples to China and expect to export up to 25 containers per week in 2020, rising to 50 in 2021. China is a key growth market and Chinese pineapple imports have been growing at an average annual rate of approximately 35%. In the long term, the market shows strong opportunities for niche and value added products. Convenience products such as chilled fresh-cut pineapple packed as spears or chunks in sealed plastic bags for retail sale are relatively new products and crownless pineapples are particularly well suited for these uses. Fruit can be processed on-site and transported at low temperatures or shipped whole without the crown to large metropolitan centres and processed just before retail sale. There is also growing demand for products such as organic pineapple juice, which was valued at US$ 3.5 billion in 2018 and is expected to reach US$ 5.6 billion by 2026 growing at a rate of 6.05 % p.a. This is being driven by increased interest in healthy consumption choices by consumers. There is also growing demand for other products such as dried pineapple and pineapple powder for use in food products and as a natural flavour which is expected to grow at a rate of 7.1% p.a. There are growing opportunities presented by the increased rates of consumption in Latin America as well. Brazil is the world’s largest consumer of pineapples, accounting for 11% of global consumption, a trend which is likely to continue growing. Consumption is also growing in countries such as the Dominican Republic and Costa Rica. Supply issues have also impacted the market in recent months. Drought has affected production in Mexico with over 3.000 ha impacted. Pineapple prices in Mexico have increased, and it has been reported that a single pineapple fruit can be sold for up to 25 pesos in some places. Supply in Costa Rica, which accounts for 94% of Central American production, is also down due to the El Niño effect leading to unusually hot temperatures. The country currently supplies the US and European markets and the supply of larger pineapples favoured by US consumers have been particularly affected. Despite supply issues and falling consumption for pineapple in some markets, the future for the sector remains bright with demand for niche, value-added products and new export markets driving the market.