What are farm syndicates and how do they operate?
Farm syndicates are a business model that offers investors the possibility of buying shares or part ownership to take part in a rural productive initiative, whether this is an agricultural project or a horticultural one. It consists of several investors, with similar interests, who are seeking to obtain benefits through rural activities, without the need of settling in a rural area or being experts in these types of activities.
This interesting and successful model is widely extended in New Zealand. Myfarm.com is by far the most visual face of this type of investment there. New Zealand has a very high level of high level of foreign investment which finds this form of investment in agriculture attractive as do the locals. Why in New Zealand? Because some of this country’s features are ideal for this type of business: it is a relatively small country, well-organized, agriculturally is very profitable and it is where investors can have an absolute control and profound knowledge of the areas and crops they invest in. The system is based on the motto Together, We Achieve More.
The procedure of these projects is well established. The farm is managed by a skilled professional administration company who oversees the daily operation of the business. Shareholders, who haven’t necessarily been to the land or even live in the same country, invest a certain amount of money in the farm syndicate and receive benefits from the venture in either the form of early dividends or capital repayments when a project is sold.
Farm syndicates in New Zealand sell their produce to large companies and or cooperates. In most cases, these large companies have the ability to process and sell the produce for the final consumer. This is to say the farm not only has the workforce, the manager with the technical knowledge, and equipment required for production, but it also has a consistent and reliable buyer of its final products.
This successful business model allows agricultural experts, farmers, and anyone else interested to take part of these profitable collective ventures. In New Zealand, the minimum investment to participate in a farm syndicate is around $50,000. Profit has the potential to be extraordinary. Also, depending on the macroeconomic situation of the country and the world, the prices of the product can increase considerably. Other advantages offered by this model are the possibility of investing in land, in the real economy, and improving food quality overall.
Both the invested amount and the profit will depend on the location of the farm, how sophisticated the crop or breeding is, and the quality of the produce. For example, investors are advised to consider variables such as the closeness between the farm and a growing city or town and the flexibility and resilience the land may have in the event of severe storms or natural disaster. The quality of the land and the infrastructure available will also influence the price of the share being purchased.
When farm syndicates began, the technology of the communications available, more specifically the Internet, wasn’t as sophisticated as it is today. This means that today, thanks to the endless possibilities that wireless connections offer, shareholders receive regular reports on how the farm in which they are investing is progressing, interact with other investors and communicate with the managers of the project.
Also, thanks to the recent developments, today it is possible to access large amounts of water for irrigation, which until 20 years ago would have been unthinkable. Basically, the technological progress has only improved the system of farm syndicates considerably.
Farm syndicates in South America?
Gateway to South America is currently exploring the possibility of introducing farm syndicates in the Americas, more specifically in the Southern Cone, where the quality of land is excellent, modern technology is available, and the economy is growing. Our co-partners have the needed tools to carry out this ambitious projects such as agricultural experts and connections with investors around the world. Please do not hesitate to contact us if you have any questions.
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 disposal.