Paraguay Farm Developer’s Profile
Paraguay Farm Developer in Paraguay
GTSA – Paraguay has for some years been locating suitable farmland for large and small investors. Larger investors tend to be more independent and want to control their own projects directly but those unfamiliar with the region or are investing in South America for the first time are usually advised by us to use a development company such as Latam Agro to lower their risk.
Here is a short profile of Latam Agro which is one of the more experienced developers:
Latam Agro was established in 2009 by Juan Manuel Sánchez Cordova and Fernando Garcia Koch. Their aim was clear; to become a company specialized in structuring, funding and operating successful agri-business projects for theri investors within South America.
They started their business in Argentina in 2009 and then expanded to Uruguay and Paraguay in 2011 where the investment climate was more favorable at that time.
They felt that due to the global demand for agricultural commodities, food and biofuel being strong they could expect it to increase globally over the next few years. However, the quality and supply of prime land very limited by finite resources that are priced competitively. Many of the places in the world that have been popular in the past like Africa or Eastern Europe have become an investor’s nightmare. ie South Africa , Romania Ukraine etc.
There are now few places in the world with land suitable for sustainable agriculture at low prices, secure tenure and Paraguay is one of them. Paraguay is a small country located in the heart of South America where farmland represents a small fraction of the value of the farms in more developed countries. For many Latin American experts, Paraguay is rated as one of the top three counties with the best investment climate in Latin America in 2016 for multiple reasons.
Among those we should mention:
-A stable economy with controlled levels of inflation. In 2015 the inflation level was 3,1%.
-There are no restrictions to foreign ownership of local companies/assets, remittance of profits and capital flows.
-It has the lowest taxation in South America. Corporate tax and VAT are 10%
-Paraguay has the highest growth rates in the region. In the past decade, Paraguay achieved an annual average economic growth of 5%.
-The world’s 8th beef exporter and the world’s 4th soybean producer.
Latam Agro business model is based on land improvement, which is considered among the most solid and highest returning of agricultural investments.
GTSA adds value by looking for underpriced farms from both a local and an international perspective in the region. These farms must have a high potential for appreciation. Our client Latam Agro then structures each of the farmland investments in different vehicles, specially designed for a project. This particular investment in Paraguay has been structured as a Limited Partnership in Canada ( LLC ), which holds the farms Title and that of any intermediary companies.
We have identified for them four separate farms of 2,000 hectares or 5,000 acre each, so as to have a total area of 8,000 hectares or 20,000 acres. These farms are in the Chaco Paraguayo Region, they are completely undeveloped and they have the option to buy them at a very competitive price around $300 Dollars per hectare or $120 dollars per acre.
Their goal is to transform these by upgrading the current undeveloped land into cattle ranches by clearing the existing vegetation, fencing, building water supplies and planting suitable tropical pastures. They will operate the newly upgraded land for 3 or 4 cattle production cycles, to demonstrate the potential productivity levels and then onsell the land at the then market prices consistent with the new levels of productivity they will be achieved, giving a high return for their investors.
It’s very important to take into account that for sustainability reasons only 50% of the land can be developed, while the other 50% must remain in virgin conditions.
The total investment is of US$ 7MM, the expected Internal Rate of Return is 15% or put another way a doubling of investors capital.
The first of the farms is under contract and they are now preparing to developing it.
If you are interested in receiving more information regarding this projects, contact us here
Contact the Gateway to South America team to learn about the best investment opportunities in the region. The company is a benchmark for foreign investors wishing to invest in Argentina, Brazil, Chile, Paraguay, Peru and Uruguay, providing expert advice on property acquisition and investment tours.