Interview with David H. Smith, General Manager, Paraguay Ag Invest.
Can you briefly introduce yourself?
I am David H. Smith, General Manager, Paraguay Ag Invest, S.A. Born in Dayton, Ohio and have worked overseas for almost 40 years. I worked for Panasonic Company in Europe, Asia and North America for 16 years. In 1996 I decided to explore a different path and moved to Latin America. I have lived in Nicaragua, Costa Rica and currently live in Panama. I first became involved in real estate in Nicaragua and eventually open the first Remax Real Estate Franchise in the country. My company was involved in sales and development of residential properties for 9 years. In 2009 I moved to Panama and became involved in agriculture investments as a private investor and later decided to work only with agriculture assets.
What types of investments are you offering in Paraguay?
In Paraguay, we offer passive investments in oranges and vegetable greenhouses which are secured by hard asset ownership by the investor, (land, trees and greenhouse structure. The investment is comprised of two components: 1.) land ownership, 2.) a farm management agreement between the investor and the farming company.
What are the risks associated with these investments?
The principal risks are bad management and natural disasters. Fortunately, Paraguay does not have hurricanes, tropical storms or severe droughts. Paraguay has one of the largest sources of freshwater in the world due to the number of aquifers and rivers.
How are you mitigating these risks?
Our management and farming staff are very highly trained with many years of experience. We motivate them by offering very attractive bonuses based upon production goals not profits. Higher production of our produce combined with high quality brings higher profits.
We mitigate natural disasters such as pests by providing the best crop care and constant maintenance of all equipment and infrastructure.
We also provide an extra level of security for our investors that is unique in that no other AG companies provide insurance for the investment. The investments are insured against natural disasters and financial irregularities. As Agri Terra KG is a German Company, insurance must be provided to all investors and the contracts are subject to German jurisdiction.
What are the potential ROIs?
The Orange ROI is from 12% to 30% annually starting in year 3. The Greenhouse ROI is from: 16% to 27% starting in year 1
How are profits distributed?
The orange profits are paid out for each individual lot. The greenhouse profits are pooled together due to the types of produce and the market. (red & yellow peppers, cucumbers and tomatoes)
What are the associated costs to maintain these investments?
After the initial investment, there are no additional costs for the investor as the ROI income will pay for the operating costs. Our brochures have a very detailed ROI and operating costs breakdown.
Are there any tax reductions included?
The ROI sheets include the 10% income tax that is paid in Paraguay. The greenhouses do not pay the 10% income tax for the first 4 years due to an investment incentive law by the government. There are no tax benefits in the USA for this type of investment.
Who is the team behind these investments and why are they best suited to carry out this enterprise?
Mr. Carsten Pfau (CEO) and his brother Michael (CFO) are the owners of Agri-Terra KG, with the main office in Munich, Germany. Their father started the business in Paraguay over 30 years ago and Carsten has lived in Paraguay for the last 25 years. AT-KG has been involved in cattle, farming and residential and commercial construction. All assets are owned with personal equity.
Would you like to add further information?
Our farm management staff has over 50 years of experience and education in citrus and vegetable production and disease control. They have worked and studied in Brazil
and Argentina which are world leaders in these fields.
In closing, I suggest that anyone interested in our agriculture programs, please review our website for more information. We post updates about the plantations as well as videos, photos and news about our plantation tours. I can be contacted directly at [email protected] and USA: 239-204-4364
We thank David H. Smith for the interview.
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