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SOVEREIGN MAN

I can’t think of a better investment than this

ChileSovereignMan

December 7, 2012
7th Region, Chile

It seems these days I spend at least 50% of my time looking at farms for sale in Chile. And with good reason.

I’ve written before at length why agriculture seems like the no-brainer investment of the decade: given the fundamentals of supply and demand, the absolute best-case scenario is rising food prices. The worst-case scenario is shortages.

Owning farmland is comparable to owning physical gold. And I’m buying as much of it as I can, specifically in Chile.

Farmland in Chile is incredibly rich. It’s like Iowa meets California, but at a fraction of the cost. Highly productive farmland here runs anywhere between $2,000 per acre and $6,500 per acre. By comparison, farmland in Iowa and California can cost $10,000 to $12,000 per acre for similar quality.

What’s more, the production yields are typically as strong… and in some cases, even stronger. The UN Food and Agriculture Organization estimates that Chile’s corn production per acre is 20.13% higher than in the US, and 33.57% higher than in Canada, and the numbers are similar for wheat.

My own experiences match these statistics. For example, Michigan is the production leader in the US for ‘highbrush’ blueberry cultivars that we grow here in Chile. Yet, according to the USDA’s National Agricultural Statistics Service, Michigan yielded 3,850 pounds per acre last season. In the same period, my production yield in Chile was 60% greater… and rising.

What’s more, because Chile is in the southern hemisphere, our harvests are counterseasonal to those in the northern hemisphere. Supply is tighter when we harvest, which means the price we fetch is higher.

In 2010, for example, Michigan blueberry farmers were paid $1.23 per pound for their July-August harvest. In Chile, the price paid to farmers for export quality blueberries is around $1.75 per pound… 42% higher.

In addition to better revenue potential, labor costs in Chile are much lower. Laborers in the area near my farm command wages of just 2-3 dollars per hour, and even a seasoned manager with decades of experience will barely register more than $1,000 per month.

In the US, Canada, and UK by comparison, a veteran farm manager can command $60,000 to $80,000 annually.

So in addition to achieving optimal revenues, the operating costs in Chile are much lower. Higher revenues. Lower costs. More profit.

And the tax breaks for agriculture here are spectacular. The government allows what’s called ‘deemed income reporting’ for farmers, which reduces not only the tax liability, but also the time and costs of compliance. It’s incredibly simple.

Plus there’s no insane government regulator breathing down your neck, or big multinational like Monsanto mopping up the entire market.

Even if you don’t want to take any operational risks, you can simply buy property and lease it out to another farmer, achieving yields of between 6% and 11%. Residents of Chile can also obtain low-interest financing, so you can mitigate your risk while generating a superior cash on cash return for doing absolutely nothing.

And for foreigners, it’s incredibly easy to become a resident in order to obtain financing on agricultural property. I’m currently working on a way to borrow in dollars to buy farmland down here… so that I can simultaneously go long agriculture and short the dollar. I can’t think of a better investment.

Bottom line, if you believe that out of control money printing and world population demographics will contribute to significant food price inflation in the coming years, owning farmland is one of the smartest investments you can make.

And, taking into account all the factors– price, production, operating risks, etc., conditions here in Chile are ideal.

Our goal is simple: To help you achieve personal liberty and financial prosperity no matter what happens.

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About the author: Simon Black is an international investor, entrepreneur, permanent traveler, free man, and founder of Sovereign Man. His free daily e-letter and crash course is about using the experiences from his life and travels to help you achieve more freedom.

Comments on this entry are closed.

  • Ty Brown

    Is there any chance you’re putting together any sort of co-op? For example, say someone wanted to invest $2000, you’d take that, put it in the co-op, buy the land, and then pay out dividends depending on the harvest? I love the idea of owning farmland in Chile but don’t see it feasible right now to do the due diligence to purchase farmland myself.

    • http://AskJohnChatman.com/ AskJohnChatman.com

      That’s an excellent idea Ty.

      • Ty Brown

        Thanks John. I just checked out your profile and saw you’re from Stockton. I’m from Tracy. I know why you want to leave the country now :) We escaped America this year and are not sure if we’re going back.

    • http://www.facebook.com/diabolicalmastermind M Yitzhak Samuel

      I would also be interested in the co-op idea.

    • Hank

      I would be in on that too and would even be interested in moving down there at some point to work on the farm, but I would need assurances that I wouldn’t be getting scammed.

  • Rob

    I’d also be interested in knowing more about this

  • Glyn Griffiths

    I have never in my life tasted blueberries as good as Chilean ones. Shortly before returning to the UK in March after 16 months out there I was getting through a carton a day. They just do not taste the same after airfreight.

  • http://AskJohnChatman.com/ AskJohnChatman.com

    Hey Simon,
    I just want to thank you for the valuable service you provide your readers. Do you have a resource to point us to as to what would be the best steps in moving down there to Chile?

    In 2013 I am looking to move my family out of the USA now into a suitable climate.

  • TheCogitator

    Is the corn in Chile genetically modified (GMO)? If it is not, it would be even more valuable.

  • http://www.facebook.com/dinonath Dinonath Malick

    Hi, i am interested to know more details and can possibly an investment. You can email me dinonath_malick@yahoo.co.uk

    Thank you in advance.

  • Alan Charles

    Hi Simon, I am interested in hearing more on any Chile farm deals and possible financing options. Please email me alanc777@gmail.com.

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