INTERNATIONAL COFFEE FARMS
THE SCOOP – SPECIALTY COFFEE IN PANAMA
JANUARY – JUNE 2015, VOLUME 3 (of 4)
TO ALL OF ICFC’S
MERRY BAND OF PANAMANIAN COFFEE FARMERS…
AND ALL THOSE OF YOU STILL WAITING AND WATCHING US
So, let’s carry on from where we left off at the end of Volume 2 of The Scoop – Specialty Coffee in Panama, which you should have received August 28.
MORE “BOOTS ON THE GROUND” ABOUT FARM BUYING….
We are firm on the price we will pay and the terms and conditions we require and are fully prepared to walk away when we have to.
But, we also have learned how to “go along to get along” as well. We have “trained” our own Realtor, Rene Acosta, to understand some of the more entrepreneurial methods of acquiring properties and he has, in turn, trained us in the vagaries of negotiating with the local coffee farmers and how they think. Which is largely “pay my price, all in cash, now, Señor” !
Here’s some of our other acquisition criteria…
1. Reasonable terms and conditions for the purchase including a full new survey of the entire farm.
We offer a small down-payment to tie up the farm and we prefer this payment to go into an account held by a Notary Public in “escrow” on behalf of us, until we remove the conditions of the purchase agreement and fully fund the acquisition. Just simple risk management of our capital, just in case….!
Other risk management practices include us funding our own surveyor to survey the entire farm in advance of the formal contract being signed, to be sure we know what we are buying and where it actually is!
It is not surprising to find out sellers sometimes have the wrong idea about what they are selling. As examples, the first farm we acquired, Cuatro Caminos, was not as large as the seller represented, so doing that survey saved us $7500 off the purchase price, for a survey cost of $300. Good ROI!
The second farm, Damarli, needed to be divided in half so we could buy one half and the seller retain the other. Our surveyor positioned the half we wanted so as to minimize the amount of unproductive primary forest on the property, thereby getting us more coffee acreage and more parcels to offer, for the same amount of money we originally agreed to pay.
The last farm acquired, Horqueta, turned out to not even have a registered plot plan and the latest paperwork was dated 1916! Took a bit of work to resolve all that but it got done, to our advantage as we acquired 1.6 hectares (4 acres) more land for the same price as originally agreed upon. Another good return on a $700 survey!
2. Immediate possession and management of the farm once the deposit is paid.
We do this to get a jump on improving the farm as soon as possible. Even if we haven’t formally closed on the purchase we will invest labor in the farm to start the turn-around process quickly. The labor is a sunk cost, as we have the farmhands in our employ, and can allocate their time to each of the farms without increasing the labor costs. This will change as we grow but is a principle that can generally be applied no matter what total size we are. We also add a minor amount of capital for materials to aid in advancing the turn-around process.
3. Smaller farms are more desirable right now than large farms.
Smaller farms are easier to manage and improve quickly while we are building our management team, training our farmhands and building our processing facility. We started with 3.3 hectares in early January, then acquired 7.3 hectares more in late February, both in Palmira Arriba, and finally added another 7.7 hectare farm in nearby Horqueta in May. 3 farms in 5 months, 18.3 hectares (46 acres) and about 92 ½ acre investor parcels. Incremental growth that can be managed!
Given the difficulty in sourcing appropriate farms that meet all these criteria in total, when we do agree to acquire a farm, the ½ acre investor parcels are usually snapped up quickly by current parcel Owners adding to their positions or by readers that are ready to move.
LIKE WE SAID – “YOU OWN THE LAND”
THE DEED PROCESS AND OUR PROGRESS TO-DATE
In a few words, deeds for the parcels already owned by our investors are almost ready! They will be issued in the next 30-60 days in the order of funding of the coffee farm parcel purchases.It is important for you to understand what is involved in preparing these complicated deed packages.
After the acquisition is closed the deeding process can begin. It takes another survey to segregate the individual parcels on each farm and to identify the GPS and other co-ordinates of each parcel. Then a new plot plan must be created by the surveyor that contains all this information. Combined, this is a painstaking process involving lots of detail on the part of the surveyor.
We use the same surveyor as we do for the purchase verification survey, Gonzalo Candanedo, and we pay him well (and quickly) for his work. He is developing into a loyal and reliable member of our team of consultants and we trust him to do an accurate job of defining exactly which parcel is yours and where it is.
Once Ganzalo has submitted his work to us and it is approved, the legal process can begin. Juan Aguilera, our lawyer, can then prepare each individual deed, in accordance with the real estate laws of Panama, with all your pertinent personal or corporate information including identifying for you the overall farm and the location of your parcel(s) in it. He will also outline for you all the rights and privileges you enjoy as a deeded landowner in Panama.
He will then have your deed presented to a Notary Public for verification of all this information and authentication of the actual deed itself. Then the translator steps in to provide a certified true translation of the deed document in English for you, as it is required by law to be prepared in Spanish here in Panama. Once the Notary and the translator have certified everything the deed can then be packaged up with all the other relevant documentation to be sent to you by courier for your signature.
Just so you know, a Notary here (and in most Latin American countries) is far more qualified than a basic rubber-stamp notary that most of us are used to back home. Here they are very powerful and have major responsibilities and are equally as necessary as a lawyer in any real estate transaction.
ICFC is pleased to cover all the out-of-pocket expenses for the Notary, translator and courier and the significant legal costs for the preparation and submission of this deed to you. All we ask is you provide us the information we request and sign the original deed when received and return it to us in a priority manner.
So, fellow or potential Panamanian coffee farmers, this ends volume 3 of The Scoop – Specialty Coffee in Panama. Volume 4 will follow shortly.
Stay tuned…..!
David Sewell B.Sc., MBA
Managing Director
International Coffee Farms Corporation
Developing “The Art of Coffee Science”
You can contact Darren at:
darrend@internationalcoffeefarms.com
or me at:
davids@internationalcoffeefarms.com
Toll Free from The US & Canada
877 – 208 – 7988
Or Direct at + 520 – 226 – 9119