by surviveprosper

25 slides


Published May 20, 2013 in Business & Management
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Presentation Slides & Transcript

Presentation Slides & Transcript

Investment in

May 2013

“Would you rather own ALL the gold in the world or ALL the farmland… ?”
(Warren Buffet, CNBC, March 2, 2011)

“Farmland Is Where the Money Is” (Jim Rogers, August 10, 2011)

“You have to buy it in places like Uruguay, where it hasn’t skyrocketed”

(Jim Rogers, Feb 13, 2013, on Business Insider)

Why Farmland?
Increasing global demand for food

Consistent long-term appreciation

Annual cash return

Non-volatile asset

Store of value

Why Uruguay?
It’s a Stable, Investor-Friendly Country:

Foreign and local investors treated equally

No limitations to ownership by foreign buyers

No restrictions or taxes when transferring money into, or out of the country (repatriation of capital)

Latin America’s safest country

Solid legal system

Why Farmland in Uruguay?
Most suitable country

Turnkey, easy investment to operate

Transparent market

A) Uruguay’s Suitability

Non-degraded soil

Even rainfall year-round

World’s largest aquifer beneath region

Temperate climate

Two crops per year (over long run, 1.7-1.8)

Competitive producer, global player

Uruguay: A Global Player

6th exporter of soybeans

5th exporter of dairy products

4th exporter of rice

5% of global beef exports

A country of 3 million feeding 50 million

MAPA DE CHRIS ACA ********** ********

Source: Atlas of the Biosphere
Center for Sustainability and
the Global Environment
University of Wisconsin - Madison

Global soil degradation, and
where Uruguay stands

Global water shortage and
where Uruguay stands

Source: Intergovernmental Panel on Climate Change, 2007

B) Turnkey, Easy Investment
The investor has two choices:

Lease out the land, for a cash rental, paid up front (the rental market is very liquid) or

Hire a local farm management company, who runs, oversees and reports on the operation directly to you

C) Transparent Market for Land
The country is mapped, with soil types classified according to their productivity

Each type of soil is has a productivity index (“CONEAT” index)

The map is available online:

Productivity is verifiable; transparency

The Online CONEAT System: Example
Map of the property, with different soil types
Location of the property
Average CONEAT index for the property
Property number
Water resources

Types of Farmland in Uruguay
Agriculture (soybeans, wheat, rice, etc.)

Cattle/sheep ranches, dairy farms

Forestry: eucalyptus, pine

Vineyards / olives / blueberries

Real Estate: Montevideo

USD 2,500/hect
(USD 1,012/acre)
Coneat 50
The Cost of Land
USD 11,000/hect
(USD 4,453/acre)
Coneat 150-180
USD 6,500/hect
(USD 2,631/acre)
Coneat 130
USD 4,000/hect
(USD 1,619/acre)
Coneat 80

Returns in Agriculture
Two options:

Rent out the land to a tenant: 4 %

Hire farm management firm: 6 - 7 %

Plus appreciation of the land

Taxes in farming
Farming has favorable tax treatment in Uruguay:

Income tax:
Flat 25% income tax rate (effective rate can be 10-20% according to deductions)
For small farms, rate is lower: farms with income below USD 250,000 per year have a capped amount of less than 5% net income tax

Very low property taxes: avg. 0.2%

How to Get Started
Decide how much you wish to invest

Ask broker for options in that range

Tour the shortlist of farms you liked and visit possible farm management firm(s)

Make a decision, buy the farm

Hire a farm management firm to take care of everything, or lease it

What We Can Do For You
Find the right farm

Structure the purchase

Set up an LLC/Corp (optional)

Find a tenant / introduce a farm management firm

Ongoing tax and accounting maintenance

Example: Small agricultural farm, Colonia

54 Hectares (133 Acres)

High productivity index: Coneat 154

Ask price: USD 567,000 (10,500/hect; 4,251/ac)

Rental: 4%

Run by owner: 6 - 7%

Plus land appreciation





Further Information