Last Mangos In Paradise
May 15, 2015
Over the last 15 months, I’ve been telling you about a mango plantation opportunity in Panama. That opportunity goes away in a few weeks.
The plantation developers have reached the limit of trees they intend to plant for their Lady Victoria varietal of mangos. This varietal was created to combine the best qualities of various mangos—the best pulp for a better taste, a smaller seed to maximize the volume of pulp, and a thicker skin to help reduce damage by pests. The end result is a quality specialty mango that can command a premium price in the global produce market.
To maintain that premium pricing, the developer is capping production by limiting the number of hectares planted… and this limit has been reached. This leaves a short window for investors to take advantage of this opportunity.
In fact, the Lady Victoria mango hectares available to individual investors were sold out a few weeks ago. However, at the time the planting limit was reached, the developers were in active discussions with many Live and Invest Overseas readers interested in investing and carrying out their due diligence to that end. When I heard from the developers that they were going to have to discontinue sales, I asked if they could somehow make an exception for my readers who’d already gotten in touch and, as well, for any new readers who might get in touch once given the last-chance notice.
These developers appreciate the relationship they have formed with me and so have agreed to sell some of the hectares that they had set aside for their own account. I was able to convince them to make this additional inventory available to Live and Invest Overseas readers but only through June 1. After that date, no more Lady Victoria mango hectares will be available.
If you’ve missed the information I’ve reported about this mango plantation over the last year or so, the concept is straightforward and developed organically (pun intended). The developers had success with a turnkey mango plantation they put together for an individual client a few years ago. Based on that success and research into the opportunity to export the fruit to get a better return, they put together a project for a larger plantation, big enough to get the attention of importers from the United States.
To reach that volume, they organized the plantation to be able to invite individual investors to participate. Each investor owns his (or her) own piece of land and is issued title to however many hectares he buys. The developers clear the land and plant the trees.
Of course, it takes more than planting trees to have a viable and profitable orchard. The developers in this case have invested substantially to create a full-fledged plantation with roads, fencing, ponds for storing water (although the property sits on a river that runs year-round), a workshop area where the organic fertilizer to feed the trees is produced, other outbuildings for storage, and an office.
The organic fertilizer is required as the plantation has received organic certification. The developers decided to go organic when they realized the premium that designation would add to the value of their fruit. Organic produce is a fast-growing industry, and consumers are happy to pay more for produce that hasn’t been tainted by chemicals in the growing or transportation process. This translates into added value for investors, too.
I’ve liked this investment since I discovered it nearly two years ago for many reasons, including the fact that it’s 100% hands off for the investor. You own your land, but the developer provides the management through a separate management company that oversees the plantation. If you wanted to go pick your mangos during harvest time, you could (it’s your land… your mangos), but I’d recommend letting the professionals do it for you.
The projected returns to the investor are based on local mango prices in Panama, where the developers sell the fruit to juice factories. The premiums for exporting to the United States and for being certified organic haven’t been taken into account when making these initial projections. In other words, the numbers are conservative.
Those numbers work out to a 17% IRR (annualized return) over 20 years. Of course, the trees have to grow for a few years before they start producing. Cash flow from the mango trees starts in year four. However, the developer has worked out a plan with the management company for intercropping between the trees. The harvests from this will create cash flow to the investor starting in year two, and that intercropping revenue will continue even after the mango trees start producing.
Year five is when the mango trees reach full production and cash flow to the investor really takes off. While the IRR calculation is based on a 20-year projection, the trees will produce for as many as 60 to 80 years. Estimating prices for mangos beyond 20 years is impossible. In fact, when putting together their projections, the developers stopped increasing the projected price per pound for the mangos after year 15; it’s just too hard to say what prices might be at that point… though the expectation is that they should continue to go up.
Remember, the reason this opportunity is going away is because the developers want to control the amount of total production of this varietal of mango. They don’t want to saturate the market but rather to control production to achieve a premium price in the marketplace.
To that end, the deadline for sales of this mango plantation is June 1. No reservations will be taken after June 1, and all outstanding reservations must be funded and closed by June 15.
After that date, you’ll only be able to get Lady Victoria mangos from a grocer’s shelf.
This is last call. Get in touch here for more information.