Agriculture Investments: Part One
Teakwood and Cacao: Agriculture in Ecuador
If the word megadiversity existed in the dictionary, it would be used to describe Ecuador. This pint-sized country is one of the most bio-diverse regions in the world. In fact, the country boasts more biodiversity per square kilometer than any other country. One hectare of lowland rainforest could contain as many frog species in all of North America; an individual tree could contain more ant species than the entire British Isles. Ecuador is not only an amazing place to invest in personal property, or property for commercial development; it also holds incredible potential for agricultural investment. Whether you want to live on your property in Ecuador or simply develop the land to export crops, there are huge benefits to investing in agriculture in Ecuador. Working with an experienced real estate agent who knows the land and understands agricultural markets here makes this investment opportunity even more stable.
Background: The Land
To understand Ecuador is to understand the land. Ecuadorians have toiled their fertile lands for centuries; they take advantage of the abundance of internal and coastal terrain. Moderate and cooler temperatures in the sierra, or highland, are ideal for growing corn, maize, potatoes and beans. The lush coastal environment is better suited for mango trees, cacao, palm oil, bananas, rice and sugar. Ecuadorians separate the country into four regions: the sierra (highland), the jungle (Orient), the coast, and the Galapagos. The leading agriculture exports from Ecuador are wheat, cotton, rice, corn and soybean meal. Cattle production is common throughout the country, but raising cattle tends to require more time, resources and energy. Researching existing markets, emerging markets, and government reimbursement shows that many ideal crops to grow in Ecuador, but this article will focus on the long-term investments of cacao and teakwood.
Long-Term Investment: Cacao
Although Ecuador is such a small country, it is the 7th largest producer of cacao in the world. Farming cacao requires tropical land, ideally 15-20 degrees from the equator, and diligent protection from sun and wind. Cacao is a sensitive but lucrative crop; most trees start yielding pods ready for peak production by the fifth year. Another good thing about cacao beans is that they have a continuous growth cycle; they can be harvested year round. Unlike other industrialized crops, 80-90% of cacao is grown on family-run farms, making it significantly easier to manage and maintain a steady output. Ecuador’s cacao production has only continued to rise. In 2014, production rose 13% from the previous year. In comparison, Brazil’s output fell by 15%. The United States and Europe are still the major importers of cacao, although China has been steadily rising in its importation of cacao as well. Many believe that Ecuador’s production is top in terms of quality. Nestle Corporation notes, “Ecuador exports about 65% of the fine cacao produced in the world. The main feature of Ecuadorian cacao is an unmatched, unique floral flavor.” If you are interested in a long-term agricultural investment, cacao continues to be a reliable option.
Long-Term Investment: Teakwood
Another booming agricultural investment opportunity in Ecuador is the teakwood market. Teakwood is an asset that tends to grow in value each year. It’s an incredibly durable wood, often used for building boats, outdoor furniture, and patios/decks. Due to its resilience, it can grow extremely well without as requiring the same amount energy expended on other crops. From a conservational perspective, it’s also beneficial for the Ecuadorian environment to grow teakwood trees. They have one of the highest carbon sequestration rates, storing a large percentage of carbon from the atmosphere in their bark. Investing in land to grow teakwood does require more patience and energy; it takes 15-25 years for the trees to reach maturity. But, if you are interested in a long-term, likely lucrative investment, teak proves to be an enticing opportunity right now, particularly because of the government’s sponsorships.
Reimbursement for Reforestation
The Ecuadorian government wants farmers to plant more trees. President Correa has worked on many environmental initiatives; one of which is the government’s reimbursement of costs for reforestation efforts. Currently, there is a program that reimburses up to 75% of your production costs for the first four years of reforesting. To qualify for this “grant,” you need to fill out the application form through MAGAP (Ministerio de Agricultural, Ganaderia, Acuacultural y Pesca). After an inspection of the crop, you will receive approval to begin harvesting. The MAGAP will inspect your property again at the end of the year and will refund up to 75% of the money you spent on maintenance depending on what percentage of original trees are still alive. This process then is repeated for the following three years. Because of this assistance, growing teakwood is a very promising investment opportunity at the moment.
These agricultural investments require time, energy and devotion. John Vollmecke understands the opportunities and challenges in dealing with agriculture. He has been targeting more properties with the idea of growing crops like cacao or teakwood in mind. He is also putting together teams of locals in his regions to assist in growing and harvesting. Whether you’re on the ground in Ecuador or abroad, he can locate property with fertile land and connect with you experts who will manage your property, tend to the crops, and harvest the produce to be sold.
All of these agricultural investment opportunities were researched using the following sources: