Low-Risk Agriculture Investment In Panama With An 18% Annual Return

mango plantation

Plus: Ecuador’s Strict Residency Requirements For Foreigners

July 14, 2015
Panama City, Panama

Dear Overseas Property Alert Reader,

Agricultural investments have been a focus for me for the past half-dozen years. Unfortunately, as I’ve been reporting, it’s not easy to find agricultural projects geared toward the small investor.

However, early 2014, I began working with a group in Panama with an idea for a mango plantation investment intended specifically for the individual investor.

Their plan was to open up their plantation to small investors in an effort to grow more quickly and to achieve some economies of scale. I introduced readers to this opportunity to own their own piece of this mango farm while the development group took care of all of the work—planting, irrigation infrastructure, fertilization, and eventually caring for the trees and harvesting the crop.

Response was overwhelming. The mango plantation sold out in June.

The New Opportunity

Now, this same group has put together a small plantation of a different fruit tree at the behest of one of their biggest U.S. buying groups. This developer sold more than 500 hectares of the mango plantation but intends to sell only 100 hectares of the new crop—limes.

Specifically, organic limes.

Greening (that is, a fungus attacking citrus crops) is causing shortages of limes in the United States. Meantime, demand continues to grow, especially for organic limes. Lime consumption in the United States has increased tenfold since 1980, according to the USDA, and lime prices have doubled since 2014, thanks to the reduced supply and the growing demand.

Demand is so great and supply so limited that, as I said, one wholesaler has contacted the group I’ve been working with in Panama to ask them to target this market. In other words, the developer I’m talking about already has a limes buyer… they just need to grow limes.

That’s Where Investors Come In

While this group could complete the lime plantation on its own, these developers want to continue to grow their company. They’ve decided, therefore, to offer 50% of the 200 hectares they intend to plant to individual investors. That will allow them to maintain working capital to launch next projects.

As with the mango plantation, investors in this new organic limes plantation own the land and the trees. The developer prepares the land and plants the trees, then the plantation is handed over to the management company, which cares for the trees. Also, as with the mango plantation, intercropping is part of the plan.

The Returns

Small cash flows are created from the intercropping starting in year 2. The lime trees start producing in year 4, with production jumping in year 5 and increasing slightly each year until year 10.

The IRR projection over the first 20 years of the plantation is just about 18%. That’s a phenomenal annualized return. For that level of return, you would expect great risk. However, this group has already implemented a 650-hectare mango plantation (in the last 18 months).

The Risk

In other words, this group has a proven track record; fulfillment risk is minimal. Furthermore, they own the land, they have their team on the ground, and they even have lime trees in the nursery for the first round of planting.

The risk of finding a buyer for the produce is, likewise, minimal. Typically, in fact, this is one of the big risks. However, in this case, the project team has a letter of intent from a major U.S. distributor to buy all the organic limes the plantation can produce. The distribution chain is already in place.

That leaves you with crop risks. However, the developer will replant any trees that die in the first 10 years. In addition, the limes being planted are a variety of a Persian lime that is resistant to disease and pests thanks to its thicker rind.

This variety is large, larger than a key lime, and is also seedless, making it more attractive to the consumer market.

Investing in agriculture can provide a great cash yield. The very big downside is that, typically, historically, you have to invest in and farm your own plantation. This is your chance to invest in a turnkey opportunity where you own the land and the trees… and someone else manages the farm for you.

The full launch price for 1 hectare of lime trees is US$44,000, but, because the developer wants to kick-start this project, he is offering the first hectares at a US$5,000 discount… or just US$39,000. This is an exclusive offer, for Live and Invest Overseas readers only.

More than five times the numbers of hectares were available for the mango plantation and that sold out in just 15 months. The expectation is that the lime parcels will sell out within three months or less. The initial discounted offering could go within a few weeks.

For more information, contact the InvestGPS team here. Identify yourself as a Live and Invest Overseas reader when you get in touch to be sure you’re eligible for the launch discount.

Lief Simon
For Overseas Property Alert


Letters To The Editor


Thanks for your June 30 article about getting residency in five top countries. You mention that Ecuador only allows you to be out of Ecuador for a total of 90 days per year during each of your first two years as a resident.

Is there a similar special requirement about being out of the country for Colombia, Panama, and Malta?

Virtually every country has some in-country requirement to maintain a visa. In Uruguay, I must be in the country at least once every three years. My Colombian visa requires that I be in the country once every two years (although other Colombian visas differ). Certain Panama visas require you be in the country at least two weeks per year.

So no, there is no long-stay requirement for Colombia, Panama, or Malta that is similar to Ecuador’s. But they do have some in-country requirements of their own. (Ecuador is the strictest that I know of, with respect to remaining in the country.) Whatever country you choose, check the requirements for your specific visa.

Have a question? You can write to Lee here.