Agreco Collective

Location (DOLJ)


Is a county of Romania, in Oltenia, with the capital city at Craiova

This county has a total area of 7,414 km2.

The entire area is a plain with the Danube on the south forming a wide valley crossed by the Jiu River in the middle.
Other small rivers flow through the county, each one forming a small valley. There are some lakes across the county and many ponds and channels in the Danube valley.

Agriculture is the county's main industry. The county has a land that is ideal for growing cereals, vegetables and wines.
Other industries are mainly located in the city of Craiova, the largest city in southwestern Romania.

The relief consists of the Danube river meadow, plains and hills with mild climate and a mean annual temperature
of 11,5°C.

The Dolj County takes up 3.1 percent of the total surface and 3.9 percent of the country's farmlands. Farming offers the greatest number of jobs, representing a major part in the internal product of the county. The farmlands sum up
590,000 ha, of which 320,000 ha irrigated and 470,000 ha private property. The fact that 40 percent of the farming land is represented by chernozem, the best kind of soil, underlines the possibilities farming can offer in Dolj. For turning to good account the Dolj farming production, numerous factories were set up in the milling-bread industry, milk industry, sugar industry, beer, edible oil, the processing and preservation of fruits and also in the alcohol industry. All these technologies
and productions centers, doubled by a qualified workforce, represent a field of major importance in top quality products, products promoted for the internal and external markets.



The county's forested areas stretch over 81,500 ha, among which 11,500 ha are private property. The forests house a
reach fauna: Withstag, deer, fox, wild boar.

The total surface of waters and pools is of 22,000 ha, among which 5,000 ha private property.

The richness in fish of these waters, especially in the past, led to the use of fish as a symbol on the coat-of-arms of the Dolj county.
Fruits harvested from over 10,000 ha of orchards represent also, the important richness of this county.

There are two small ports on the shore of the Danube river – Bechet and Calafat.

The transport network consists of 221 km of railways, 424 km of national motorways and 1,621 km of county roads plus an airport.


Location (OLT)


Is a county of Romania, in the historical regions of Oltenia and Muntenia (the regions are separated by the Olt river). The capital city is Slatina.

The county is a mainly rural one, with over 60% of the population living in villages

This county has a total area of 5,498 km².

The county lies in a flat area on the Western part of the Romanian Plain. It is crossed byrivers from North to South, the main one - the Olt River giving the county its name. The Danube forms a wide valley in the South, with lots of ponds and small channels.

Agriculture is the main occupation in the county - over 58% of the population having agriculture astheir main occupation. Both extensive agriculture, and small-scale, vegetables and fruits are practiced. The area is well suited for irrigations.



The climate of Olt County is temperate-continental, a little wetter in the north and drier in the south.

From a hydrographical point of view, by size, the Danube river is the longest. The second is the Olt river, crossing the county from north to south on 100 km (of its total length of 670 km from spring to influence).

The soil quality considerably varies between the plains and the forests. The cultivated landrepresents 80.5% of the county's area, ranking 5th in Romania, while forests and other vegetation lands represent 10.6%, on the last position in the South-West Region.

With vast fertile lands, Olt County is among the most important farming areas of the country. The vastest areas are covered by chernozem in the Caracal, Boianului and Burnasului Plains.

Because the farming area (440 016 ha) represents 80% of the county's total area, agriculture is one of the main activity. Arable land (385 190 ha) represents 87.6% of the county's farming land, pastures account for 7.9% and vineyards and orchards are 4.4% of the county's farming land.

The main touristic destinations are:

  • The city of Slatina.
  • Fishing on the Danube and on the Olt River.
  • City of Corabia with an ancient roman citadel, large orthodox cathedral, Danube sunbathes, sailing and fishing.
  • The town of Scorniceşti - the birthplace of Nicolae Ceauşescu.


Location (VALCEA)


Valcea County lays in the central southern part of Romania; it stretches alongside the middle basin of river Olt, surrounded by the Cozia Mountains in the east and Culmea Capatinii in the west.

The climate is temperate-continental, with slight Mediterranean influences.

The county covers 5,765 sq. km - 2.4% of the total area of the country and has a population of 413,570 inhabitants.

The capital of the county is Ramnicu Valcea Municipium, which lays at the confluence of Olt and Olanesti Rivers, at the bottom of Capela, Petrisor and Cetatuia hills.

The County enjoys a varied geography, ranging from hills and mountains to valleys and plains, making it, in many respects a microcosm of the country as a whole.

Almost half of its territory is covered by woods of oak, beech, coniferous trees or other forest vegetation.

In the northern part, the mountains makeup the dominant landscape, with heights of more than 2,200 meters. Valcea County boasts rich mineral resources, including crude oil, natural gas, salt, as well as mineral waters renowned for their healing properties.



Ramnicu Valcea has a humid (> 0.65 p/pet) climate. The climate is classified as a tempe- rate continental (humid with severe winter, no dry season with a cool temperate moist forest biozone). The soil in the area is high in luvisols, cambisols (lv), soil with clay-enriched lower horizon, high cec, and high saturation of bases. Average temperatures of 10 to 11°C. The multi-annual average of rainfall is around 700 to 800 l/mp, and there are about 90 to 100 days of hard frost annually.

Rainfall is above the average for the country as a whole, with the Romanian average around 600 to 650 l/mp, and levels of natural rainfall mean that intensive irrigation is not required. The Valcea county area does not suffer from droughts, or drought conditions. The warmest areas of Romania are in the South. The annual rainfall in the mountains about 1000mm and the Black Sea coast 400mm.


Investment Structure


The investment structure is very simple:
Land is leased from owners under 5 year, 10 year and 15 year rolling leases.

The land is then parceled into units of multiples of 10 ha's, the inve­stor is beneficial owner of all the product of the land by contract. The investor does not own the land, but purely rents it for the period of contract, paying land rents in agricultural product, after each harvest as per Romanian Law.

After each harvest a price is fixed allowing the harvest to be divided.

As the land needs to be managed in an efficient and proper manner, allowing periodical rest periods, Agreco will manage all the units, and each unit holder will receive an aggregate return, per unit, over all the units farmed. Agreco will calculate how much of the farming production needs to be sold and held to fund the following years farming, the balance of the farming production, is the gross profit.  The profit is in the form of agricultural produce, from this all bonuses and fees are paid, in the form of agricultural produce. 

The investor enter a 15-year contract, with Agreco, with the option to end the contract at the 5 year or 10 year point. If a 5 year or 10 year beneficiary contract is required, this can be easily accommodated.

All farming costs are contracted on an annual basis, with a 10% performance bonus based on gross profits, this is paid in agricultural produce.

The pre-tax profits are then shared 50-50 between Agreco and the investors.

Agreco will take its share of the profits in agricultural produce, as will the investors, for no additional fees, Agreco can manage the sale and then transfer the profits for investors, to nominated bank accounts.

Agreco will manage and administer the entire project.

Taxes to the Romanian government will need to be paid, currently standing at 16%, although there is the possibility that the rate of tax on Agriculture related profits may be reduced to 5%. All calculations have been made assuming a 16% payment of Romanian taxes on profits.

The returns will be paid annually.

In our calculations certain assumptions regarding inflation and food price inflation has been made. Currently, Romanian inflation rate stands below 5%, and is predicted to remain so, over the coming years. The United Nations Food Price Index shows cereal prices have increased globally by around 11% average gain per annum over the last 10 years, 2008 saw a particularly large jump in prices, but 2009 saw a correction back down to the long-term average. We have assumed a 5% inflation rate across costs, and 5% inflation across cereal prices per annum. This gives us a neutral gain over a 15-year investment term. If current interest rates and United Nations Price Index inflation rate is used, it would lead to significant appreciation of returns over and above the predictions.

We have made an assumption for the minimum and maximum returns based upon:
Minimum expected yield/ minimum prices achieved in the local market 2010/2011
Maximum expected yield/ maximum prices achieved in the local market 2010/2011
Normally due to supply and demand, when yields fall in the local market prices strengthen and vice versa, the median yield and prices is the best case scenario to follow.
All investors will receive:

  • A Booking Contract to be completed and signed along with a copy of their passport.
  • Upon payment a Contract as Beneficial owner per unit, is prepared.
  • The maximum value of the initial investment for 1000 ha leased is Euro 900,000.
Split into units of 10 ha each – giving each investor in each unit the beneficial rights to the pro rata profit of 10 ha of the total land leased and farmed, all profits are in the form of produce.

The table below shows the use of funds:
Initial Setup costs and first year farming costs 1000ha Farm

   1st Yr. Farming Costs € 660,000
   Legal & Consultancy Fees € 35,000
   Land Accumulation € 25,000
   Land Preparation € 60,000
   Commissions and Marketing Costs € 84,000
   Contingency € 36,000
€ 900,000

Each unit has an initial investment of € 9,000.
Agreco will administer the operations of the farming operations, but all such operations will be outsourced through various contractors, which we will refer to as our partners.
Where possible contracts will be signed upon a performance basis, offering the best return on investment.
The company is currently in the process of constructing a client facing website that will update and allow investors to see all progress on the farming projects.
Although the management endevours to keep all investors updated on a regular basis, this may not be possible in all situations, therefore the company does believe an effective tool would be to post regular updates on a central website that can be viewed by all.


Annual Return to Investor




Annual ROI





Accumulated Return





Defined Exit Strategy


Leasing land and farming using modern professional methods provides a sustainable agriculture opportunity, representing the easiest way to take advantage of farming returns with only a small capital investment. Why buy land if it is cheaper to lease.

This investment opportunity offers sound eco credentials and a secondary return, through the conversion of waste into biomass pellets and subsequent sale to a biomass power plant. This gives the investment an additional revenue stream, and eco responsible slant. This is not organic far- ming, but socially responsible sustainable farming, benefiting the local community, and economy. Direct farming investment can provide investors with the most effective route to the boom in agricultural commodity prices, delivering high returns with low levels of risk.

The investment has a defined exit, with contracts of 15 years, with a break clause at 5 years and 10 years. This allows the investor to exit the investment without penalties. Giving unprecedented flexibility. The best returns are seen over 15 years, as the initial set up costs (legal fees, sales & marketing fees, land aggregation and preparation) are spread over the term of 15 years, also the performance of harvests is spread over a longer period of time.




Costings




Maps and Photos


  • The land is located 250 km from Bucharest, 55 km from Craiova, 65 km from Ramnicu Valcea, is located in the South of Valcea county, in an area that was considered the grainer of the south. Before 1990 they use to have some of the best harvests in the country.
  • The plots are divided in platforms located in-between the forest, this creates like a natural greenhouse, that keep humidity and protects the crops from strong wind and in very dry seasons.
  • The quality of the soil is premium red clay soil. The land was not worked for the last 7 years that gives a very good quality of the soil that rested and keep all necessary proteins.




Overview:


  • We have divided the land in 3 zones.
  • The zones where divided from South to North.
  • The works and land development will start from zone 1 to 3 and it will be done in stages.
  • The land preparation and seeding will start from May-June 2012 until Oct.-Nov. 2012

Area Overview :




Zone 1= 1 platform with 450 hectares in one plot:




Zone 2= divided in to 3 platforms with total surface of 380 hectares:




Zone 3 = 1 platform with a surface of 325 hectares:




Photo zone 1:




Photo zone 1, from helicopter last summer:




Photo zone 2:




Photo zone 3:





ASIGURAREA CULTURILOR AGRICOLE

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Agreco Collective Booking Contract



Click here to download the Contract

Soils Map