How to invest in avocados?

Hass Avocado Investment

Avocado investment

Why invest in Avocados?

Jim Rogers, a famous investor has frequently claimed that agricultural Investments will be the best performing investments for the next decade. This is because; the average age of farmers in the western world is over 55 and the rising population is dependent on industrial farms,  artificial seeds,  pesticides and fertilisers. It seems we are at peak yield and the world needs more food. Recently he said, “I am bullish on agriculture everywhere, especially in China, as it has been depressed for 30 years globally.”

The Avocado tree has many health benefits, a whole array of vitamins, minerals and healthy fats.

How to invest in Avocado trees?

There are two ways in which you can become an avocado investor either by buying stocks in a firm which trades or grows avocados such as Fresh Del Monte (NYSE:FDP)  or Calavo Growers (Nasdaq: CVGW) the other option is to invest through a private investment scheme such as Simply Natural Investments.

Simply Natural Investments Review

Simply Natural Investments offer managed Hass avocado by the hectare. An investor buys one hectare of land, SNI plant it with avocados and do all the work including marketing and selling the produce. All the investor needs to do is pay the yearly maintenance fees and then share the profits on a 70:30 ratio with SNI.

Strengths

  • The Hass avocado is one of the most popular avocados in the world.
  • The simply natural Avocado trees have been a acclimatised to higher altitude Panama climate.
  • The management company has already sold 100s of Acres of mango, trees, guava and lime. Some investors are showing interest in this investment product.

Weaknesses

  • The profits from the Avocado hectares will be split 70% to the investor and 30% to the farm management company. This is both a disadvantage and an advantage. The advantage is that the management company has significant skin in the game, they have an incentive to cultivate the trees and take care of the soil for the long term.
  • The first (small) payment of fewer than 1,000 USD will come in after two years, with a significantly larger of more than 10,000 USD after four.

Opportunities

  • Population around the world is increasing and food demand will mirror that.
  • Global demand for this superfood is increasing.
  • There are possibilities to intercrop the avocado trees with coffee and plantains.
  • Investors own the title of the land directly, if SNI fails some money will be returned through the sale of the land.
  • Organic sellers on the east and west coast have established relationships with this SNI.
  • In Panama the first 300,000 USD in profit from agriculture are tax-free.
  • Direct investing opportunities in International Agricultural are rather Limited.

Threats

  • Leaf cutter ants love young seedlings.
  • Panama is a stable country, a significant part of this stability comes from the revenue of the Panama Canal. The income from the  canal has two important challenges. First global shipping is experiencing a downturn at the end of 2016 and secondly a competing canal is being built in Nicaragua. These two phenomena could strangle government receipts, potentially resulting in Panama increasing taxes.
  • Petty and Organised crime exists everywhere, it is a threat to any business. For example: In Mexico, According to El Informador, an independent Mexican newspaper, “The Knights Templar demand 1.50 pesos for each foot of planted avocado; 1,500 pesos per hectare for those producers who don’t export avocados and up to 3,000 pesos to those who had shipped their product outside the country in the past no matter what season they produce in.” It seems that this is not the case in Panama. Read more on Panama Crime.
  • Potentially the trees can be damaged although Panama is outside of hurricane territory.
  • The Panama papers did not help the reputation of Panama internationally.
  • Although the currency risk is low because Panama uses the US Dollar, Inflation in Panama is higher than mainland USA, the higher the inflation, the higher the maintenance costs of the avocado plantations.
  • The entry price is significant; many investors would consider investing such an amount in one Enterprise as the concentration of risk Industrially and geographically.
  • Would a Trump win increase Avocado tariffs being exported to the USA?

Calavo Growers brief notes



Calavo Growers is an alternative way to answer the question : “How to invest in Avocados?”. Calavo has been embroiled in a storm because it has to resubmit financial statements from 2012, 2013 and 2014. Shareholders are filing lawsuits. Some of the Avocado plantations are facing drought. Calavo has a patented system which allows the AVocdas to ripen within a few days rather than a week.

Conclusion:

There is a difference between investing in a company listed on the stock market and in an organised Investments scheme. A company listed on the stock exchange has certain reporting obligations while a private investment scheme which is not listed doesn’t have these reporting requirements.

Public company reports form the basis on which investors decide to sell or buy stocks. Without this information, it is rather difficult to decide on the stability of the company. For example how much debt it has and what are the interest payments on that debt can be sustained. Without such information being made public it is difficult to determine anything with any factuality.

Make a good investment decision is not easy. When doing your research on “How to invest in Avocados?” You need information and knowledge of  both the future of the produce and the manufacturing process behind it. The investor needs to take into account all aspects of investment before going ahead. Any claims on an investment future performance should be evaluated against facts and expert advice and compared to the current portfolio and risk tolerance. Consult your financial advisor before making any final decision.

This post is not an endorsement or otherwise for Simply Natural Investments.

Further Research on Simply Natural Investments

Blog posts on the topic.

Barefoot Panama SNI tour

Simply natural investment Links:

Management :

President & Director of Farm Operations

If you have further comments, photos or any other information on investing in Avocados and the Simply Natural investment  scheme I would be glad if you can add it in the comments below.