Investment Potential -ROI
In addition to being a wonderful place to live and enjoy life, the farm has great of up-side profit potential.
The Coffee - farm currently has approximately 30,000 coffee plants producing 15,000 pounds of coffee for 2014-15. As all of these plants are either being rehabilitated or are new plants, we would expect that number to increase year over year if we did no more planting. The farm is capable of supporting, in good growing areas, an additional 80,000 plants. This could be done for a cost of about $150,000 for the first two years and $100,000 thereafter (picking is never included in these costs). Although like other commodities, the price and profits are mostly controlled by the market. Initially, we saw the coffee from the farm as primarily just supporting the cost of the farm and agriculture as we saw the profits coming from the development of the community and the sale of the lots. – see ROI figures below for coffee only.
The lots The farm has 20 titled lots ranging in size from 1/4 acre to 1 1/4 acres. Although some of the lots are in the coffee area - the lots in total comprise less than 1/4 of the farm area. Areas such as the streams, agriculture area, tilapia pond, clubhouse area are not included in the titled lots but are all still in the larger farm area. From property prices in Costa Rica, we priced these lots between $30,000 and $100,000 depending on the size and location. We calculated that the lot sales, using an average of $50,000 per lot, would bring in $1,000,000 with an infrastructure cost of $150,000 for roads and utilities. These prices seem in-line with other similar projects in Costa Rica and ForestCascades has the added features of ocean views, large common areas and no homeowner fees. Obviously these ROI numbers would more than double with the addition of houses.
Although ForestCascades it somewhat rustic, some would say, “natural beauty”, the location is within 30 minutes of all services and one hour from the International airport, US style hospitals, Malls and beaches.
Not to mention that it is perpetual spring and summer with fresh fruits and vegetable available from your own property every day of the year and that people can actually afford to live there.
In addition, Costa Rica has excellent healthcare and educational systems and for years has been identified as the home of the “Happiest People in the World” http://www.happyplanetindex.org/
Definitely a little slice of paradise, why would anyone live anywhere else?
ROI – ForestCascades – coffee only (no lots sold and no second crop)
The majority of the current coffee plants, 22,000+,of the approximate 30,000 planted are old plants with low production. Approximately 8,000 are new plants that have not reached their mature level of production.
The current harvest yields 16,000 – 18,000 pounds of green beans per year. ForestCascades received between $1.80 and $2.40 for its coffee over the past 5 years. So, the factors going into ROI are basically; harvest numbers and coffee prices.
The budget for managing the farm, worker pay, cleaning, fertilizing, spraying the coffee plus equipment costs for this year is $30,000 including picking the coffee. Therefore if you harvest 15,000 pounds and sell the coffee for $2 a pound you would break even $2 x 15,000 = $30,000)
Thus if you wanted to make $30,000 net profit per year you would need a harvest, on average of 30,00 –pounds selling at $2 per pound. (one can hedge their bet on prices by harvesting more coffee)
Now, how would you get there. Two variable;
Frist, the 8,000 new coffee plants that we have planted will maximize their production across the next three years and should increase the yield to a reliable 10,000 pounds per year.
Second, add new plants to yield the desired level of production. For this, there is a new coffee plant variety (Oata, Marcilleza) available in Costa Rica that provides a full harvest in its 3rd year, maintains excellent favor and is disease resistant. The numbers provided from Icafe agro-economist and our farm manager, Everesto, are as follows.
Number of plants per hectare = 3,500
Cost per hectare to purchase plants, clear land, plant and maintain for 2 years = $9,000
Projected yield from new plants, per hectare, in 3 years = 9,500 pounds of green beans.
Thus planting just 5 hectares of this plant variety would cost $45,000 ($9,000 x 5) and have a conservative yield = 45,000 pounds of green beans (9,000 x 5) in the 3rd year. Some farmers are getting 12,000 pounds. Adding the harvest from the existing plants would bring the harvest to 55,000 pounds(45,000+10,000) for a gross profit of $110,000 using the market price of $2 per pound. After subtracting farm expenses and picking costs of $70,000 ($45,000 + $25,000), a net profit of $45,000 would be realized by year three resulting in a recovery of new plant investment in the 3rd year.