Overview
Coconuts, Teak, and Cattle in the Colombian Tropics
Farmfolio's inaugural project, Pietrasanta is a diversified agricultural asset dedicated to the production of coconuts, teak logs, and cattle. Located 35 kilometers from Montería, Colombia, the property features 230 hectares of Malayan Dwarf Coconut palm trees, a teak plantation of 64 hectares, and an intensive grass-fed cattle operation. Originally one of three ranches that used to make up the region’s iconic farm “La Antioqueña," Pietrasanta is an historic property with a rich agricultural tradition. With plentiful water resources, rich soil, and an ideal proximity to major ports, the Pietrasanta property is an ideal location for agricultural development in Colombia.
Products
Fixed Assets
Valuation by Year
Timeline
After the Pietrasanta project was given the green light, preparations began for the implementation of coconut operations. The land was cleared, farm machinery was brought in, a coconut seedlings were brought in from Tumaco, Colombia.
The addition of organic green coconuts, imported from Costa Rica, into GP was a major milestone for the operation and will drive high returns for years to come.
In order to improve the existing infrastructure on the Pietrasanta property, the team oversaw the installation of additional irrigation resources and housing structures.
As international demand for coconut and coconut products continues to grow, Farmfolio’s introduction of this niche and high value crop could not have come at a better time.
Upon completion of the coconut planting schedule, GP will have 370 hectares of Malayan Dwarf palm trees producing organic green coconuts.
What a quarter. We have been moving so fast last month feels like last year, which is what I like most about writing these updates. They allow us to reflect on our progress and reset the compass for the next leg of the journey to ensure we stay on course.
Making our annual voyage to Fruit Logistica is one of my favorite times of the year. This year was all about the Pine! Shoes shined and hair gelled, I hit the Messe floor with Tom, Oscar, Peter, and Paul.
Our first priority this year was finalizing contracts with our customers as we prepared to hit the market in February. Starting conversations early is an important part of the process of marketing fruit, especially in European markets. This is a business that is highly focused on quality and logistical capability. Luckily, PGP has both, which propelled us to quickly close four new clients, which are projected to purchase over 150,000 cases during the next 12 months.
Another important part of the show was our meeting with Panama’s agriculture minister. Minister Eduardo Enrique Carles really helped us better understand the China market status and when we can expect first shipments to be permitted. He also confirmed the commitments to the government export incentive program. Our experience this year grew exponentially. With product ready to sell and a year of foundation building, we had a new swagger about us. The peak of the event for me was the last day. We had some of our own pineapple brought into the event hall and we were handing out samples to new customers, one of which had a Michelin chef preparing small plates. Without hesitation, I asked the gentlemen to cut up some pineapple and give me his feedback. Well, his reaction told me everything I needed to know…we have the best pineapple on earth!
The property is a massive 230 hectares of nothing but stalls of wholesalers and food storage facilities. 100% of the space is owned by the French government and leased to vendors for 2-year periods. Not open to the public, Tom and I were special invites of new customers from the show in Berlin. We received a full tour of the facility and had the chance to speak with several wholesalers about their requirements and their pricing for pineapple. France’s demand for quality produce makes it a prime target for PGP. We solidified interest from several new buyers, who will be visiting the pineapple farm in late February. Overall, a very successful visit to France; we are really excited to enter the French markets.
We continue harvesting the 2019 crop and are already planting the 2020 crop. The first containers of the 2019 crop left our farm on February 12. These containers have already arrived in Europe, and customer feedback has been very positive.
Harvested areas are transitioning into seed development areas for the 2020 crop and new areas are being planted. Below is a summary of the sales we have accomplished through week 10 of the year (March 10th). These numbers are in line with our forecast export numbers.
Sales Summary: Feb 12- March 7
Monitoring the critical path of the development of our Burroteka sawmill during the last six months has been an enriching experience. By utilizing a set of simple transformation stages, we are building a forestry and timber business that truly develops from a seed to a high-quality product with better margins.
There are five components that we have monitored throughout the course of the project: wood sourcing, infrastructure, equipment, human resources, and partnerships.
Sourcing
We’ve successfully located over 7,000 ha of high quality timber and we have secured relationships that give us access to over 900 ha of high quality teak in the region. This equates to over five years of raw material for the mill (running at 100% capacity). However, it is important to point out that our projections are based on 40% efficiency during years 1–2 and 60% efficiency from year 3 onward.
Infrastructure
As the project started during early 2018, we located three hectares of land under rural zoning. We developed a plan to make these hectares ground zero for our vertical integration endeavors. We achieved a purchase option agreement (dependent on the successful acquisition of agroindustrial zoning). The zoning came through, allowing transformation facilities 200 m from the main road—“Ruta del Mar”—which is the highway that leads to the main ports in the country of Colombia
During the months of July and August, we worked with the local planning office towards approval of our designs for the mill. We received approval in September 2018 and secured a contractor contract. In addition, we hired an independent audit company to keep an eye on materials used and the daily schedule going forward, ensuring the quality of the structures to be built. The goal was to open our doors by the middle of March.
As we stand, the main road warehouse, perimeter and substation structures are complete. We’re finishing the office building by the end of March and drying kiln structures during the month of April.
Equipment
Our equipment was ordered during the month of October with the expectation to receive equipment during the month of February 2019. We’ve received most of the equipment to date, including drying kilns and the equipment needed to saw blocks and boards.
The local equipment provider Eurosierras is working cohesively with our team as we navigate delays on transfer tables and a sharpening machine for the circular blades in our line. We expect the delayed equipment to arrive at our facility by the end of April. Eurosierras will be offloading some of the existing transfer tables in the country of Colombia, aiding our agenda as we are starting training with the equipment that has already been delivered to the mill.
The sawmill is getting ready to start its duties. Machines were successfully delivered last week, and now the installation process will follow. First, machines need to be positioned and fixed on the ground. Then they need to be wired, and finally, interconnected. After that, the training of the operators will start. We will start at first with the head saw, then continue with the subordinated saws. Intensive training will be fundamental for a proper and efficient use of the machinery and will facilitate a high-grade qualitative output.
The first training will start this week. At first, we will conduct theoretical basics, about both the machines and timber characteristics. We will particularly focus on the machines’ behavior during the milling process. Later on, once we start the training on the operation of the drying chambers, we will focus on the actual properties of wood that matter while the lumber is being dried inside the kiln. Every training will be split into two parts: a first training which enables the operator to start working and a second training which will be realized some weeks after the first. The goal here will be optimizing the use of the machinery.
In this sense, let's get started!
We were very impressed as we conducted a visit to the port with the help of Mr. Ochoa’s team on the ground. There, they thoroughly explained the export process and the documentation required—important information as we are ready to begin exports in the coming weeks. We are happy to report that Burroteka already holds an exporter license and the token documents required to export our products outside the country of Colombia. During our trip to Cartagena, we also met with individuals who will serve as manufacturer representatives and that together hold export business worth more than 30 containers a month in orders. This is enough demand to cover our sales for 2019 in green timber alone. We will continue to increase our finished and dried products during the next quarter as we plan to achieve better margins.
In addition to the partnerships mentioned above, our venture has been well received by the local, private official organizations, specifically the mayor's office in Monteria which has aided our endeavors. The sawmill will provide steady jobs under one of the mayor’s strongest campaigns, which is to make Monteria known as “agropolis”—an endeavor that put agriculture and agroindustry on the top of the official’s agenda. Furthermore, this coalition with Burroteka has yielded fruit in the form of symbiotic partnerships with local industry that will use sawdust produced by the mill to power biomass plants (the oily composition of teak sawdust has proven to provide higher combustion levels than formerly used materials). This is just one example of how subproducts that could be deemed as waste will become income streams for the sawmill.
During the final closure or completion phase, my emphasis as a project manager is on releasing the final deliverables, handing over project documentation to the business, terminating supplier contracts, releasing project resources, and communicating the closure of the project to all stakeholders. From this point forward, the company will be led by Mr. Ludwig as the authority figure. Our future support will be primarily market-related. On that note, we will be touring India and Europe by the end of the month, our goal being to continue nurturing relationships that allow us to gain higher margins. We expect our more finished products to take shape closer to the summer, during which time we will most likely be campaigning the US.
It’s not all Rock n’ Roll you know...
It’s Friday afternoon in Madrid and my 3:50 back to London has been delayed—take a seat people and await further instructions. I do a lot of traveling on behalf of Farmfolio, so I’m used to the odd knock here or there.
Since the turn of the year, I’ve been in Rotterdam, Berlin, Paris, Barcelona, and Madrid. If you’re waiting to hear about the La Sagrada Família, Reichstag Building, or the Eiffel Tower, this is not a travel blog. In fact, I did not see any of those landmarks during my time abroad. I’m here for one reason and one reason only: to sell La Dona Pineapple of Panama.
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Things kicked off in early February, with Paul Vergara from Panama and myself going to Rotterdam. It was cold. Not being used to the sub-zero temperatures, Paul was in shock, but still managed to crack a smile.[/caption]
I was really excited to see things from the perspective of the distributors. What happens to the fruit when it leaves our farm in Panama? Where and how is it stored? Who buys it? How does it all work?
We had four meetings lined up with existing customers. These are large-scale distributors, and the operations are impressive. Huge warehouses, fleets of trucks to transport fruit (not just in Holland, but throughout Europe), and large sales teams, with a Rolodex of wholesalers, retailers, and caterers to call on to breakdown everything from the large containers of fruit we send to smaller orders. It was a real insight into the workings of the supply chain.
Orders had already been agreed upon, and it was a big week for us as it coincided with our very first harvest from the farm. The fruit we were sending was high in coloration, with lower acidity and higher sugar content. This is a very specialized form of farming, and we have an advantage over large-scale pineapple producers as we can spend the time needed in the field in order to deliver a superior product
When shipping fruit via sea container, it’s a 14-day trip from Panama to Rotterdam. A container holds 20 pallets of fruit. Each pallet has 80 boxes, with a box weighing approximately 12.5 kg (27 lb). Everything is logged and samples are taken prior to shipping.
Similarly, when the fruit is received, samples are taken on that end as well.
As you can see from the images, the fruit arrived in exactly the same form it left the farm, and our customers are very happy with the quality of our product. These are ongoing relationships. Containers of fruit are shipped weekly from now till the end of the year.
From Rotterdam, we were off to Berlin to attend Fruit Logistica. This 3-day event is the largest of the year for the fresh fruit and vegetable industry, with over 75,000 attendees passing through Messe Hall, Berlin each day.
We were joined by the rest of the team from Farmfolio and some special guests—Peter and Karen, investors who had visited the farm in December and made the short trip from their home in France to see the goings-on at the show in Germany. For us, it’s an opportunity to showcase La Dona pineapple and forge new relationships with buyers throughout Europe.
From Germany, I hightailed it over to the two main wholesale markets of Spain: MercaBarna in Barcelona and Merca Madrid. Although Holland is probably the single most important market for fruit distribution in Europe, countries in the Mediterranean have a stronger connection with food and markets are more prevalent there than in Northern Europe.
I was amazed to see the number of vendors in these markets offering air-shipped pineapple. This is not a cheap product—it sells at wholesale markets for anywhere between €2.70–€3.20 per kilo. You would think such a premium product and price would limit the market to a small number of vendors shifting small volumes of fruit. However, I came across 30-40 vendors, many of whom were moving 20-40 pallets per week. During peak seasons, such as Christmas, they are moving between 60-80 pallets per week or more.
Work performed during the first quarter of 2019
In the nursery, work includes daily irrigation, weed control in bagging plants, and periodic applications to control mites. We are also moving forward with the propagation plan of nectariferous (nectar producing) plants and neem trees that will be transplanted in the rainy season.
The nectariferous plants attract a great deal of beneficial insects because they provide shelter and energy. Maintaining these plants around our main coconut crop enhances the biodiversity of the crop and helps regulate insect pests, as many of the varied insects attracted to these plants are predators or parasitoids of the main pests that attack the crop.
