Argentine Farmland
Investment background
This is a great opportunity to purchase productive Argentinian farmland with a 5 or 10 year re-purchase contract.
With increasing global pressure on food supplies, an investment in farmland is a compelling opportunity. Farmland in the UK might seem to meet these requirements, but it remains overpriced, so the net returns are proportionately low. Farmland in northern Argentina - traditionally the granary of the world - is a fraction of the price of UK land, with crops traded on the same world markets giving investors far higher returns.
Argentine farmland is highly fertile, producing two crops per year and it is only around 30% of the price of UK farmland. Although crop prices are subject to short-run fluctuations, the long-term trend is to move steadily upwards, slightly ahead of inflation. This reflects the growing global population, and the rising demand in Asia for meat that requires a high input of cereal based feed. Therefore, we believe clients will see a good return, with land ownership giving increased security.
This investment is offered by an Argentine public company with very large land holdings in the northern part of the country. It is raising funds to bring marginal land under cultivation, and to finance farm machinery - increasing food production and providing employment in one of Argentina's less developed regions.
This deal is structured to enable investors to purchase the land at a one third discount of its current value. The farm simultaneously offers you a contract to re-purchase the land by making Annual Payments and a large Final Payment.
This structure gives you the security of proven contractual returns and land ownership rights making it a very attractive package.
The Investment
Purchase and re-purchase
Each investor purchases a defined area of land within a large freehold estate. The price is at a discount of one third of its current value - the value is determined by a very conservative method of land valuation that is entirely transparent.
You are essentially agreeing to buy the land and immediately signing a contract to sell it at a higher price. You are offered to choose a re-purchase within either 5 years or 10 years by means of an Annual Payment, followed by a large Final Payment.
Dollars and Pounds
Crops in Argentina are traded in US dollars, not in the local currency. You have the option to invest in either US dollars or GB pounds sterling. Farmland in Argentina is priced in US dollars: the amount of land acquired will depend on the exchange rate at the time of purchase. However, the Annual Payments and the Final Payment will be calculated according to the currency in which you invest. This eliminates any currency exchange risk for you/your pension pot.
Insurance
The crops on the farm are insured. In the event of a crop failure the insurance will pay the farm allowing the farm to still then honour your payments.
The location
The farmland is situated in Santiago del Estero province, approximately 1000 km North-East of Buenos Aires. It is an area of strong agricultural land, comparable with the Midwestern United States. Although the region is not the most developed in Argentina, it has good infrastructure and reliable local services. Agricultural investment in the region has the advantage of boosting the local economy and creating local jobs.
Since 2007 all the previous investors in the other phases of this project have been paid on time for the agreed amounts.
Financial breakdown
If you decide to invest for 5 years you will receive an Annual Payment as a percentage of your Contribution as follows:
Illustration based on minimum investment of £12,000
| Year 1 | 9% | £1,080 |
| Year 2 | 9% | £1,080 |
| Year 3 | 10% | £1,200 |
| Year 4 | 11% | £1,320 |
| Year 5 | 12% | £1,440 |
| Final/Exit Payment | 115% | £13,800 |
Profit £7,920
ROI (Return of investment) 66%
Total Returns £19,920
If you decide to invest for 10 years you will receive an Annual Payment as a percentage of your Contribution as follows:
Illustration based on minimum investment of £12,000
| Year 1 | 10% | £1,200 |
| Year 2 | 10% | £1,200 |
| Year 3 | 11% | £1,320 |
| Year 4 | 11% | £1,320 |
| Year 5 | 12% | £1,440 |
| Year 6 | 12% | £1,440 |
| Year 7 | 13% | £1,560 |
| Year 8 | 13% | £1,560 |
| Year 9 | 14% | £1,680 |
| Year 10 | 14% | £1,680 |
| Final/Exit Payment | 140% | £16,800 |
Profit £19,200
ROI (Return of investment) 160%
Total Returns £31,200
Farming Argentina
- $11.2 billion of unprocessed goods, mainly soybeans, wheat & maize were exported by Argentina in 2009
- Exports of Argentinian processed goods totalled $18.6 Billion i.e. animal feed, flour & vegetable oils
- In 2007 16 million hectares of Soya was planted, producing 47 million tons of crop
- In 2007 Argentina was one of the three largest Soya bean exporters in the world
- 6 million hectares of wheat produced 16 million tons, of which 14 million tons was exported
- In 2007 4 million hectares of maize produced 20 million tons, 1/2 of which was exported
- In 2008 15 million tons of maize was exported, the 2nd largest exporter globally
- Argentina is the world's largest export of lemons, sunflower oil, pears and honey
Within Argentina interest rates are extremely high; and, as elsewhere, loan capital has all but dried up. Thus the sale of land to international investors in this fashion is - despite the high payments - the best form of finance.
Argentina is not a small country trying to be an agricultural producer and exporter: it is already a big player in the field. It has the infrastructure to do it, and has been doing it successfully for many years. Argentina is in fact one of the world's leading exporters, with many countries relying on Argentine produce. Therefore, with their crops the farm can easily meet the repayments using investment returned from the land under cultivation.