If you are looking for an investment with high returns, agriculture is for you. Just a little bit of TLC can turn your investment into big money regardless of inflation or deflation. Deflation, in particular, is a global concern right now which is why the Federal Reserve decided to maintain the present 0% interest rate for now. In times of deflation, the value of cash rises. That means you either want to have your life savings in your mattress or invested in an asset that produces cash such as productive farmland.
When it comes to a time of inflation, the opposite is true. You want assets that will be able to maintain a steady value despite what happens with centralized banks. Agriculture once again fits the bill. This makes agricultural investments a strong ally in times of economic uncertainty. You get the best of both worlds. An asset that produces cash in times of deflation, and one that holds its value against rising interest rates in times of inflation.
Other investments just can’t provide those same benefits. The stock market is heavily influenced by central banks, politics, and general global stability. One scare (Brexit as a recent example) can send the market plummeting in a day. Many banks lack capital right now making banking investments risky. In the US, 1-year CDs reap about 1% in interest. That’s barely worth going down to the bank for. But that doesn’t mean you should go with the “cash in the mattress” idea. You just need to step outside the boundaries of what many think of when they hear investment.
It’s not every day you can find an international investment that doesn’t require a massive buy-in. That’s another thing that makes agriculture a unique investment opportunity.
Take an Organic Aloe Vera plantation project for example. Just such a project exists right now in the country of Colombia. The minimum investment is a mere 38,000 USD. Forecasts put revenue at 29% per year or more.
How does the investment work? The structure is as follows:
• The investor actually owns the land and is the title holder. Or the investor can choose to have the title be placed in the name of an IRA or some other structure of the investor’s choosing.
• The Aloe Vera crop is started and managed by a professional farm management company.
• An annual crop care fee is paid, and then the rest of the revenues are split 70/30 with the owner/investor receiving the 70%.
How do annual dispensations occur?
• During the first two years, nothing is returned to the investor.
• During the 3rd year (the first full production year) an investment of $38,000 returns $11,000.
• From the 4th year forward, the return should increase by approximately 3% annually based on forecasted market price increases and project harvests.
This is actually a conservative projection for returns on the investment. Only 3 harvests per year are calculated instead of 4, which is what is actually expected. Plus, a 20% security buffer is in place. What sets this particular project apart from others like it is that a processing plant already exists on-site, and the plant is contractually obligated to pay a fair wholesale market price for all harvested leaves.
The developer then processes the harvested aloe to produce high-quality organic gel and powder which is sold to pharmaceutical companies, cosmetics companies, nutritional food companies, and the like. Everyone wins.
Future Market Insights (FMI) has reported that Aloe Vera is becoming more and more essential to pharmaceuticals, cosmetics, and food. Globally the 2016 market volume is set to be greater than 60,720.4 tons, which holds a value of $1.6 billion in US currency. That trend is expecting to continue from year to year over the next decade resulting in a $3.3 billion market in 2026. The largest aloe sector is cosmetics which is projected to account for 45% of the global market in 2016, a 6% increase over last year.
Aloe Vera contains over 75 nutrients that make it a high performing natural ingredient for beauty products. The plant produces a clear gel which serves as a salve for infections, wounds, and burns. More and more, it is being incorporated into products that help relieve skin conditions such as eczema, psoriasis, and dandruff. It also has anti-inflammatory properties which make it useful in acne products.
Aloe contains various antioxidants including vitamins C and E. It is hydrating for the skin, and is thought to improve the elasticity of the skin and firm it up with repeated application. This also makes Aloe Vera useful in beauty products. It acts as a natural moisturizer, oxygenates the skin, and strengthens the skin from the inside out. Other applications of Aloe Vera include arthritis, rheumatism, and digestive remedies.
As any investor knows, all investments carry a degree of risk. However, every effort has been put forth to mitigate those risks in this project.
Development risk is low due to the experience of the company involved. We’re talking about 3 decades of engineering experience along with the proper training such as ISO 9001 quality certification. The farm consists of 23 staff members and 40 hectares of plantation are already in place including infrastructure like roads, reservoirs, irrigation, construction equipment, and an onsite lab and nursery.
Sales risk is also low because, as mentioned earlier, the management and developer are in contract to repurchase all of the plantation’s produce for use at the Aloe Vera processing plant.
Weather risk is minimal in Colombia because the country is not known for natural disasters. Hurricanes and tornados have no bearing on the area, and the occasional earthquake will not affect the crop.
The primary risk for any agricultural investment is drought. The Bogota area is known for getting plenty of rain. However, global weather patterns are changing and so an extra precautionary step has been taken to have an alternative water source. The developers have reservoirs in place to withstand drought and anti-flooding paths to distribute excess water properly. Aloe Vera actually requires surprisingly little water when cared for properly due to being in the succulent family of plants.
So not only is agriculture a good investment for a fluctuating economy, but it also is one of the best risk-adjusted investments. And because the investor owns the land, it is also a hard asset.
This project also gives an investor the opportunity to create financial benefits for children and grandchildren. While financial projections are calculated over a period of 12 years, only a few months are needed to clear the land and replant it for the next production cycle. This means the investor’s land can generate financial benefits for generations of future heirs, thereby producing a legacy of revenue.
Since the plantation is already functioning under the control of this group, there is little fulfillment risk. The land is already in their possession and waiting for an investor, a team is already in place to manage the land, and there are enough baby plants in the nursery for the next round of planting to begin.
Again, finding a buyer is also not a risk. While this is usually a major concern in agricultural endeavors, the purchase of the final products is guaranteed. The developer will buy all of the produce for use in a processing plant that is already in place and functioning on the site.
Therefore, the only remaining risks are crop risks. This too is mitigated, though, by the fact that the developer will replant any trees that do not survive for an entire decade. Also, Aloe Vera is considered a succulent. This type of plant has a shallow root system that absorbs water quickly. The water is then stored in the plant, making it a robust and easy to maintain crop. Succulents are hardy and have a unique ability to repair themselves. An internal gel seals off any woundse or cuts the plant suffers. The leaf then continues to grow regardless of the damage.
Agriculture offers investors a tremendous cash yield. The usual downside is the need to invest in a farm and set up one’s own plantation. This is your opportunity to invest in a situation where you take over ownership of land, plants, and infrastructure that are already in place, and you have experienced management caring for the crop for you.
For more information about the Organic Aloe Vera Investment Program, please visit www.latprime.com
Company Name: LatAm Prime Farmland Investments
Contact Person: John Louis O´Connor
Phone: (+1) 806-686-4690