Ganaderia Pietrasanta
Overview
Agroforestry and Cattle Production in the South American Tropic
Located in the caribbean coastal region of Colombia, Ganaderia Pietrasanta (GP) is a 1270 acre (514 ha) majestic tropical landscape. Comprised of 164 acres (66 ha) of high quality Teak, 36 acres (15 ha) of Organic Passion fruit production as well as 1070 acres (433 ha) of intensive grass fed cattle grazing. This property is one of three ranches that used to make part of the region’s iconic farm “La Antioqueña”, a ranch that was built and developed in 1910 by Jose Maria Posada, grandfather to Mauricio Posada, current CEO of GP. “El Balsal”, as the ranch was initially named, is located 1 hour outside the city of Montería, Capital of Córdoba. Known for its plentiful water sources, rich soil and short distance to Colombia’s most prominent ports, Cordoba is the ideal location for agriculture development in Colombia.
Summary
| Share Price | Number of Shares | Total Capital to Raise | Avg. 20 Year Yield | 20 Year Total Return | IRR |
|---|---|---|---|---|---|
| $25,000 | 103 | $2,575,000.00 | 21.83% | 436.851% | 14% |
* Farmfolio Holdings (FFH) has negotiated the purchase of 40% stake in Ganaderia Pientrasanta (GP). The acquired shares will be transferred to GP Shareholders LLC. Shares of the LLC will be offered to accredited investors. FFH will act as the fiduciary for this transaction and will provide ongoing reporting, advisory, and ensure shareholders interests are protected. FFH has additionally negotiated an operating agreement that gives management control to FFH on behalf of investors. Including, capital deployments to expansion projects, dividend distributions, and land sales will be controlled exclusively by FFH management team. FFH will also maintain pre-emptive rights any additional shares sold by family holdings remaining 60% share of GP. The operational structure will remain intact and the family will continue the day-to-day management of the farm. In addition, a contingency plan for day-to-day management is in place and in the event that any key member of family is unavailable to perform duties required.
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Financial Projection
- Financial projections assume current exchange rate of 3300 and no increase in the land value. These calculations are purely based off of the production of harvests and cattle sales. It is likely that a rise in commodity prices and/or in Colombian Peso could significantly increase the future payouts of this operation.
Rating
| Scale | AAA | AA | A | BBB | BB | B |
|---|---|---|---|---|---|---|
| Points | 10 | 9 | 8 | 7 | 6 | 5 |
Rating Details
Political Risk — 8
The Colombian political currently stable and is projected to improve with the further economic development of the country.
Currency Risk — 9
The Colombian Peso is currently at an all time high against the USD (3400 to 1). The 10 year average price of the currency is between 2000-2200. The currency is historically tied to the price of certain commodities, primarly oil, due to it’s export levels, however with oil approaching 20 year lows, it could be an opportunistic time to invest in peso denominated assets.
Climate Risk — 9
GP is located in the humid tropical climate of the Northern Carribean coast of Colombia. This area experiences large amounts of rainfall between the months of April-November, however is not subject to traditional tropical risks such as Hurricanes.
Management Risk — 8
The property has been family owned and operated since 1910. Strong background in cattle management and agroforestry implementation.
Financial Risk — 8
The company currently maintains a low Debt to Equity Ratio of 15%, strong track record of financial performance in cattle grazing, and potential for increased performance further modernization of the ranch.
Cattle Operation
From generation to generation, GP has progressed to become one of the region’s most innovative cattle ranchers in the region. Once a traditional grazing ranch, GP has evolved and modernized its cattle operation by implementing the Voisin intensive rotational grazing system. Since implementing the system, GP has become one of the country’s leaders in pastured beef production per hectare. While the national average is 0.5 heads of cattle per hectare, the Voisin system originally developed by the french produces five to six heads of cattle per hectare with daily weight gains of 800-900 grams of grass fed beef which has maximized profitability for the ranch. On average the ranch will rotate 4500 head of cattle between 220-350 kilos. The average time period per head at the ranch is between 3-4 months. During this period it is expected the average weight gain per head will be between 80-100 kilos. Cattle pricing in the region averages 3500-4000 pesos per kilo.
Agroforestry and Crop Production
In an effort to diversify the farm, GP began implementing agroforestry and crop production. In the early 2000’s. The initial 134 acres (54 ha) of teak were planted in 2004 and were followed by another 30 acres (12 ha) in 2010. The rate of growth and the good quality teak from the plantation at GP is largely credited to the type and high quality seeds put in place; resulting in a large teak forest operation. The teak operation at GP uses 3 key management techniques: Stand Dynamics, Thinning and Pruning, as well as Rotation. These techniques are used by the top teak authorities in the world. Production figures per acre in the region are based on a 18-20 year crop rotation. GP estimates gross production to be $48,886 per acre of logs. In an effort maximize profitability GP will be self harvesting and milling logs into boards onsite. We anticipate this will significantly increase sales pricing, but have not factored this into the revenue projections. More recently, GP has implemented crop production of Maracuya (Yellow Passion Fruit) due to high domestic demand, which has exploded in recent years thanks to the high A and C vitamins this delicious sweet and sour fruit contains as well as its powerful antioxidants. Currently, GP is producing 12 acres (5 ha) of organic production with an additional 24 (10 ha) under development. Maracuya (Yellow passionfruit) vines bear throughout the year at GP but peak periods are between August to December and March to May. At the later time, the fruits are somewhat smaller, with less juice. In Monteria, passion fruits mature from June through January, with heaviest crops in July and August and October and November. Ripe fruits fall to the ground and will roll in between mounded rows. In order to not attract flies or ants, fruits are collected daily to avoid spoilage from soil organisms. Fruits are collected in lugs or boxes, not in bags to prevent “sweating”. If not sent immediately to processing plants, the fruits should be spread out on wire racks where there will be good air circulation. Many factors influence the yield of passionfruit vines. In general, yields of commercial plantations range from 20,000 to 35,000 lbs per acre. At GP, with hand pollination, 36 acres (15 ha) will yield 6.6 tons of fruit. On the average, a bushel of passion fruits at GP weighs 36 lbs (16 kg); yields 13 1/3 lbs (6 kg) of pulp from which is obtained 1 gal (3.785 liters)–that is 10.7 lbs (4.5 kg) of juice, and 2.6 lbs (1.18 kg) of seeds. With some strains, the juice yield is much higher; helping returns to be higher.
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Capital uses and Expansion
The capital injections for this project will be used to scale up the agro-foresty and tree crop operation. With plans to scale down the cattle operation to 100-200 hectares, GP will make room for 250 additional hectares of organic Tree Crop and Agro-Foresty Production. By implementing new plantings, GP projects to increase revenue of total farm revenue by 400% within the first 5 years of implementation.