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These Farms Could Grow Your Wealth
Posted on June 10, 2013 by Juan Federico Fischer Uruguay has some of the most fertile soil in the world. The case for owning farmland as a strategy to safely grow or preserve your nest egg has never been stronger. Increasing populations and wealth in emerging economies is the primary driver. As people in these economies become richer, they eat more food. Drought (or too much rain) has caused havoc with harvests in major producers like Canada, the Ukraine and parts of Brazil in recent years. The countries producing food are restricting trade, as they fear shortages. Looking to the medium term, we can expect food prices to continue to trend up. And the best place to find productive farmland is Uruguay . With consistent appreciation and an annual cash return Uruguayan farmland is a great store of value in turbulent times. Nestling between Argentina, Brazil and the Atlantic Uruguay is peaceful, stable and has over 2.6 million acres of farmland under cultivation. Lying unused are more than 4 million acres suitable for cultivation. The land is mostly flat—perfect for the machinery needed. And water isn’t a problem. Much of the country sits on the world’s largest aquifer and rainfall is even and year-round. It’s easy to find good land. The country is among the most fertile in the world. Uruguay has non-degraded soil producing two crops a year and healthy grass-fed cattle. The country supplies 5% of global beef exports; it’s the 6th largest producer of soya beans…and the 4th biggest exporter of rice. The case gets stronger when you hear how free you are to sell your crops wherever and whenever you find a willing buyer. There are no export tariffs, or production quotas or other restrictions like there are in other parts of the world. There are also no limitations on what you—as a foreign buyer— can buy…and you are treated as a local under the law. It’s probably the easiest place for the individual farmland investor. It’s a passive, turnkey investment. You don’t need to know anything about farming. You can lease out the land for a cash rental paid up front, or you can hire a local farm management company that reports on operations directly to you. They’ll give you a business plan. Once you agree on that with them they will implement it on your behalf. The cost of land ranges from $900 to $5,000 per acre. If you buy land and lease it to a farmer you can expect a yield of around 4%. Go with a management company and you can expect a higher yield, perhaps around 6% to 8%. Here’s a recent example of what’s on offer: A farm in the western part of Uruguay near the colonial town of Colonia. This is where you’ll find some of the best land in Uruguay. It’s 120 acres and the price is $485,000—$4,041 an acre. Then there’s the appreciation potential farmland offers you. Over the last eight years, farmland has appreciated at an annual rate of above 15%. You can expect the appreciation to continue, at about 10% yearly. Continue reading
Sugar Seen Dropping Before Brazil’s Ethanol Demand Gains
By Chanyaporn Chanjaroen and Isis Almeida May 30, 2013 Sugar may drop to a low in three to four months before rebounding as millers in top producer Brazil direct more cane to ethanol at the sweetener’s expense, according to RCMA Commodities Asia Ltd. The millers will use 45 percent of their crop for making sugar, estimates Kingsman SA, a unit of McGraw-Hill Financial Inc. ( MHFI )’s Platts. That’s down from a previous forecast of 47.5 percent and from 49.5 percent a year earlier. Brazil said last month it will give producers tax breaks to raise ethanol output, making the biofuel more competitive against gasoline and lifting domestic consumption. Rising demand and lower beet planting in Europe may also support sugar’s recovery, RCMA says. “The question is when does the market bottom, when does it form an end to the cycle?” Jonathan Drake, chief operating officer at RCMA, said in an interview in Singapore last week, referring to sugar. “And probably that’s still in three or four months’ time. In 60 to 90 days’ time, we will see an increase in the hydrous ethanol consumption. The only question is that, is it enough?” Sugar prices fell 14 percent in New York this year and reached a 34-month low on May 23 as supplies are set to outpace demand by a record 10 million metric tons in the 2012-13 season that started in October in most countries, the International Sugar Organization in London estimates. Prices also retreated in the past two years and a third annual decline would mean the longest price slump since 1992. Ethanol sales in Brazil’s center south climbed 24 percent to 920.9 million liters (243 million gallons) in the first half of May, Sao Paulo-based industry group Unica said this week. Ethanol demand will continue to rise as the biofuel has now become more attractive to consumers compared with gasoline, Antonio de Padua Rodrigues, Unica’s technical director, said in a statement e-mailed on May 28. Flex-Fuel Cars The price of hydrous ethanol, the 100 percent biofuel used in Brazil’s flex-fuel cars, may need to fall to about 1,100 reais ($530) a cubic meter without taxes to ensure maximum consumption, Drake said. The biofuel is currently trading at about 1,250 reais a cubic meter (35 cubic feet), Drake said. Maximum consumption of hydrous ethanol will happen when the biofuel’s price is 60 percent of gasoline’s, he added. “If the price is right, Brazil can consume all the sugar surplus in eight months,” Drake said, referring to the price of hydrous ethanol. “If the price is not right, then we still have all this surplus. The big, big thing for the sugar market is to see after a couple of months whether motorists in Brazil have increased the consumption of hydrous ethanol significantly.” Ethanol Prices Hydrous ethanol prices in sugar equivalent are about 17.5 cents a pound, Patricia Luis-Manso, head of agriculture research at Kingsman, said in a separate interview in Singapore on May 27. That represents a premium of 4.5 percent over the raw sugar futures traded on ICE Futures U.S. in New York. “If the premium persists through October, which is the majority of the current season, that would be enough incentive to decrease the sugar mix in favor of hydrous ethanol production,” Luis-Manso said, adding that the company’s current forecast for the amount of cane directed to sugar production could still fall to 42 percent from 45 percent now. Sugar prices will also recover as demand increases by about 3.5 million to 4 million tons a year and production in some sugar-beet producing countries drops, Drake said. In Europe, cold weather delayed plantings, causing output to fall 600,000 tons from a previous forecast to 16.9 million tons, Kingsman estimated on May 24. Production in Russia will be five percent smaller at 4.35 million tons in 2013-14, the researcher said. European Plantings “In Europe, the plantings will be down, production will be a little bit down, partly because of the weather,” Drake said. “North America is the same issue. Even in places like Russia and the Ukraine, plantings will be lower. So beet sugar in general next year will have, it’s too early to know, but maybe several million tons less sugar.” Weather in cane-producing countries may not be as favorable for crop development, according to Drake. Production in India, the world’s second-biggest grower, will fall to 22.2 million tons in 2013-14 on dry weather, Kingsman estimated. That is down from 24.8 million tons now. To contact the reporter on this story: Isis Almeida in London at Ialmeida3@bloomberg.net To contact the editor responsible for this story: Claudia Carpenter at Ccarpenter2@bloomberg.net. Continue reading
‘Romania, The New Eldorado For Buying Agricultural Land"
Author: Istvan Deak May 7, 2013 – 2:21 p.m. View Gallery Pledge of land, a solution for supporting small fermentation, influenced by the Ministry of Agriculture Soil quality, good price and can get help attract investors to a new Eldorado: Romania, through his fields, notes journaldujura.ch of Switzerland. phenomenon of media attention in the West, who are wondering how to get here, not without a finding that there is the reverse: Romanian peasants denounced by multinationals seizing the growing areas of our country. “Romanian peasants complain that Austrian investors in possession of agricultural land in Romania at ruinous prices, which then turns them into monocultures with funds. 40% of Romania’s agricultural territories are cultivated.Conflicts around land start growing, “writes Austrian daily Der Standard in an article entitled” Stealing land in Romania “.Austrian journalists story revolves around a Romanian farmer, Dan Cismas. The same character who is the interlocutor French journalists from Le Figaro, which they take to record in an article “Romanian peasants, united against land hoarding” that the land grabbing and Europe, especially Romania, which is the fifth country to agricultural area of the continent. “state has two faces. He makes laws to prevent the sale of land to foreign investors, but at the same time as a prostitute, ‘sleeps’ with their money, “says Cismas, owning 35 acres of land near a village in Transylvania. He runs a dairy farm, goats and pigs. Thus he was able to convince people of the region to focus on the production of bio roses, using manure from farm animals. Agricultural Association Small farmers in the area have joined an association called Ecoruralis and have elected Vice-President. “No other issue affects them more than the Romanian farmers territorial losses for speculators. Hundreds of thousands of hectares have been converted into agricultural lands and were intended for export, taking advantage of cheap labor and soil fertility. 2,000 euro you buy a hectare of land in Romania. In Austria would cost four times more. Romanian monthly salary of a worker in agriculture is 160 euros, “says Cismas the source. Since 2014 land purchase by foreign investors will become legal. But until then, a company registered in Romania for 150 euros can solve the problem. Role speculators Roman speculators bought land plot with plot pressured the population who many times did not last.Puzzle was completed at a time, and the land was eventually sold at a price 10 times higher by an international firm. They already have 6% of the Romanian territory. “Our countrymen are not nationalists. I call on the European non-profit organizations to pay attention to their initiatives. Hungry for maximum profit, they fail to seize million subsidies from Brussels. Amounts you drop the small farmers, most often due to bureaucratic barriers “, said Cismas. Imports 70% Products are no longer competitive regional farmers. “Importing food amounts to almost 70%. All this happens in a country that was considered the breadbasket of Europe. An unimaginable situation. In politics there is no interest Romanian regional structures. Agricultural markets are chaotic and unregulated.Consequently, many young people trying to escape the poverty spiral cheap working in gathering crops in Western Europe, “wrote the Austrians. They noted that Austrian investors are strongly represented in Romania. But there are exceptions. “Gerald Scheighofer Industrial Group faces the most powerful local resistance. He is accused of large areas grubbed and eliminates small producers in the area. The same group experiencing and Esterhazy, processing timber on 10,000 acres in Romania and try to export at a price three times higher. ” Open to investors Honorary Consul in Romania, Austrian Count Andreas Bardal, president of a holding company that owns 21,000 hectares Romanian, it supports Austrian investors who buy land in our country. “Romania is one of the few countries that are open to investors. 40% of agricultural land is cultivated. We may not be put in the same pot with speculators. We created 200 jobs and I did not land anyone. Profit is always reinvested, “says Bård that receives 3 million in grants. “This amount is needed to cover losses from poor harvest and high costs. Addiction blame for wearing the Romanian import. The fact that many agricultural projects is not made due to lack of funding. The problem is the banks “concluded Bardi. A practice originating in Africa and Asia Situation in Romania is symptomatic of the whole of Europe, a phenomenon already called “Land Grabbing”. “When there are big ones, small ones trying to hide in agriculture. Potent investors against financial networks, small farmers have no chance. Lose their land even when he does not want to give up. Large corporations controlling local agriculture. The practice is called Land-Grabbing and come mainly from Africa and Asia, “says Wiener Zeitung. According to a report released in late April by the Alliance “Hands off the Land” and the European association of small farmers “Via Campesina”, 3% of large corporations own more than 50% of all agricultural land in Europe. “Firms investor buys Austrian Andreas Barn massive earth in Arad and Timis, already exceeding 27,000 hectares. BARD is in the top four foreign investors in Romania. Many owners had lost his business, so there are some complaints against him. BARD Holding Romania has 16 companies that are specialized in animal husbandry. Small farmers have no chance against “claims for WZ, Attila Szöcs from Ecoruralis. “To avoid legal barriers in official documents appears the original owner, but the land is controlled by the big players. In other cases, national holdings are set to enter into possession of the lands, but there are cases where land is bought illegally. If any farmer who is neighbor plot with great concern, refuse to sell their land simply is sown in the land of plenty with the rest. Small farmers are not helped. Whether we are talking about Romania, Ukraine and France, the money goes to large corporations, “notes Christina Plank Professor at the University of Vienna. Grants European Union accuses the authors of the report noted that finances and encourages this by awarding grants. “In 2009, in Spain 16% of agricultural producers have received 75% of all subsidies. In Hungary, nearly 93% of local farmers are excluded from the subsidy scheme. Basically, to survive, they have to sell their land, “concludes Wiener Zeitung. Paradox French site atlantico.fr asked a specialist who is the explanation of this new “Eldorado” and the answer came quickly: “First, it clear that land prices are lower than in Western Europe. Suddenly it attracts a number of future owners. The second important argument: agricultural prices have an upward trend. That gives the impression that prospective investors can make money.Report quality land / purchase price is interesting. Thirdly, there is some disruption in these countries (Romania, Bulgaria, Poland etc) that make land available there. In these countries, a proportion of land not subject to individual peasant important properties. When collectivization of land, a large number of farmers has been removed from the policy. Therefore, the return is more difficult. “However, something is paradoxical. “More than half the farms in the Europe of 27 states are in these three countries. In other words, the 12 million agricultural holdings in Europe, 6 million are in these countries. The problem is that they are below 10% of total production, “notes atlantico.fr.__________________________________ Land sales to foreigners may be restricted At the end of 2012, the Minister of Agriculture, Daniel Constantin announce that this year the state will take measures to limit purchases agricultural land by foreigners, after market liberalization on 1 January 2014 as stipulated in the Treaty of Accession to the EU. official said in a recent interview for business24.ro that this topic is very sensitive and there is debate ample on the subject. “Many say we should extend the prohibition to sell land to foreigners. I must say that now foreigners, whether they are a company in Romania, can buy land and can work. Already pretty much bought and paid taxes here in Romania. From Legally, the Accession Treaty, it may extend the ban. To change it, would be a ratification in all Member States and Croatia this year. Which seems impossible and will be in a time beyond January 2014, the impossible at the moment, “said Constantin. Facilities for farmers Minister explained that he wanted to come up with a range of facilities for farmers, carrying the discussions with the banks in this regard. “We discussed with the banks to put farmland pledge that we want to buy it as it was before the real estate loan. So far, this allowed banks did not accept land as collateral, but now they accept it. Pledge of agricultural land would be an very beneficial for Romanian farmers, “said Constantine. Romania We have 11 million hectares of arable land of which 10 million were required to be paid this year, so 10 million of them were grown according to Agerpres.According to official data, the total area of arable land in Romania, about 10% is held by foreign firms through Romanian. ( Elena Stan ) Continue reading
