FREQUENTLY ASKED QUESTIONS

Why would you choose Romania?

Romania is a member of the European Union, and benefits from substantial European Farming subsidies, which are set to continue. The country has some of the most fertile farmlands in Europe. Romanian farming suffers massively from under investment and fragmentation, even though is offering ample opportunities to invest and raise production. Romania also has some of the cheapest labour costs in the EU, around 20% of Germany, France or UK. Agricultural products have global prices, cheap labour costs, impact positively on the end profitability of our projects.

Farming for the 3 million Romanians employed in agriculture is generally on the subsistence level, with many families farming 5 to 10 hectares. Also, in recent years younger Romanians have sought better incomes in the major towns and cities, and elsewhere. As borders opened and Romania became a part of the EU, 4 million Romanians have emigrated to Spain, Italy and other West European countries, seeking better incomes and greater opportunities.

Mechanization is comparatively poor, with one tractor available for every 54 hectares, while the EU average is one tractor for every 13 hectares. Approximately 170,000 tractors exist in Romania, of which about 80% are aging or obsolete. Unlike Western Europe, where tractors are replaced after 3,000-4,000 hours of use, in Romania they sometimes last up to 12,000 hours.

This means that much of the arable land in Romania is under utilised, and inefficiently farmed. Thousands of hectares of land sit fallow, due to the lack of family members available to farm, with small plots of land, or lack of investment, making farming uneconomical for many of the current landowners.

This presents a unique investment opportunity, until recently large scale farming investments were restricted to ultra-high net worth and institutional investors. Our aim is to bring the benefits of directfarming to private and responsible investors.

Are we buying the land?

No! We are not buying the land, we are leasing it from the owners for periods between 5 to 15 years. This is an easy exit investment, because if you buy land, you have to sell it at the end of the investment period. At the end of the investment period the land will be handed back to the original owners. You do not have to worry about selling land in a foreign country.

The investment has a defined exit, with contracts of 15 years, with a break clause allowing you to exit sooner 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.

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.

Romania is looking at its agriculture sector as a source of employment and economic stimulus, especially in the current economic climate. If employment can be generated in the rural areas, that in turn will reduce pressure on urban area's due to internal migration. To this end, debate is in parliament to reduce taxes on agricultural profits from 16% to 5%. With this tax reduction and with EU and local state subsidies, foreign investment into the sector will accelerate. The current impediment, is the fragmentation of land ownership. Hence the reason why we feel leasing the land is a better more expedient option, rather then out right purchase. Also land prices are high, and leasing rates are exceptionally low, currently.

Do we have to invest 15 Years?

The investment structure is very simple:

Land is acquired under 5 year, 10 year and 15 year rolling rental leases. The investor enters a 15-year contract, with Agreco, with the option to end the contract early with notice.

The pre-tax profits are then shared 50-50 between Agreco and you. Agreco will manage and administer the entire project.

The investment has a defined exit, with contracts of 15 years, with a early exit options. 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.

This is a secure investment; we all get offered get rich quick schemes, and we all know they end up ugly. Farming is one of the oldest, most noble professions. Without the large scale production of food using modern farming techniques, we would be living in a completely different world today. Although, in recent years global food production is at record levels, global grain inventories are at record lows, as population growth and increased calorie consumption in economically developing countries such as China and India put added pressure to the global food chain. This means we need to maximise the arable land already available. In Romania millions of hectares of land are being under utilised, due to lack of investment and land ownership fragmentation.

What is Agreco planting?

Agreco will farm 4 main crops – wheat, barley, rapeseed, and sunflower. In addition, other crops, such as peas and potatoes will be added to the roster.

Agreco will conduct one harvest each year of each of the 4 main crops mentioned. This reduces the risks of poor harvests, and places less stress on the land.

Using managed 3-year crop rotation cycle is giving adequate rest and rejuvenation time for the land. If you follow this link you will see photos of current crops:

http://www.agreco.ro/gallery-14-12-2012/

How often do I receive my profits?

Profits are paid annually after each harvest in Autumn, for all investments made prior to Jan 1st the prior year.

You will receive your first payment next year, as we have started the process of harvesting this year in August. From next year you will receive your profit each year.

What is the percentage return?

Profits will vary depending on yield per hectare and commodity prices. When over a 15 year investment period returns to investors it could yield from 200% to over 800%. With current increases in food/commodity prices returns could be even higher. Global population growth and economic growth in countries such as China and India, are having huge effects on global supply chains, base commodity pricing and most importantly food prices.

Already 2012 food commodity prices are significantly higher then the figures we used in our return estimates.

Note: The prices are estimated and based upon the price fluctuations of previous years.

Are the profits guaranteed?

No investment is ever truly guaranteed, but we can assure you that this investment is safe and secure. The only thing we can guarantee is that the crops are insured.

http://www.agreco.ro/current-projects/#fragment-11

Are we eligible to apply for EU visa after the investment?

The Romanian government is actively looking at encouraging International investors to invest into Romania, creating permanent jobs and one of their main areas for which they are seeking investment is in the agricultural sector. To obtain investor Romanian/ EU residency visa, normally requires the set up of a company and the investment of at least Euro 100.000, creating 10 Romanian full time jobs. If you are interested in this aspect in particular we can help you arrange this. We can manage your investment and company, and help through lawyers to obtain investor status residency for you and your family.

Romania is looking at it's agriculture sector as a source of employment and economic stimulus, especially in the current economic climate. If employment can be generated in the rural areas, that in turn will reduce pressure on urban area's due to internal migration. To this end, debate is in parliament to reduce taxes on agricultural profits from 16% to 5%. With this tax reduction and with EU and local state subsidies the government is looking to accelerate foreign investment into the sector.

If you invest less than Euro 100,000 you will only be eligible to apply for a visa as a visitor. Your documents will be considered more favourably as you have a invested interest in the country. However, this does not give you a residency Visa.

Are the crops insured?

Yes, the crops are insured for adverse weather conditions, fire and flooding. The land that we are farming is not prone to flooding, but insurance covers worst case scenarios and provides funds to re-start the process for the following year, so the investors will not lose their capital.

http://www.agreco.ro/current-projects/#fragment-11

What is our proven track record in Agriculture?

Our farm management team is conducted by an agronomist that has over a decade of farming, has all the relevant qualifications, and has managed farms of over 10,000 ha.

Viorel Petronil Pricoiu - Head of Agriculture Production, AGRECO SRL.

Mr. Petronil (Pedro) finished his studies in 1999 at the University of Craiova- Faculty of Horticulture. He has more than 10 years of experience in agriculture working with big companies and managing over 12,000 Ha.

Pedro worked as Technical Director for SC Redias SA where he managed more than 12,000 Ha as follow: 4 Field Farms and 1 Livestock Farm. He had a team of 1 land surveyor, 1 economist, 15 mechanised specialist, 1 maintenance mechanic, 4 full time workers and during various operations to maintain the crops, up to 150 seasonal workers.

After this, he worked at SC Slorom SRL as Technical Director were he managed to implement a EU Project for Eur 850,000 on the Measure 112 for more than 3500 Ha cultivating wheat, barley, rapeseeds, sunflower and oats. After completing his studies he has obtained additional diplomas enhancing his skills set and experience: Certificate of Work Safety Inspector, Professional Certificate for services and use in plant protection products classified as very toxic and toxic,Professional certification for the production of seeds and planting material.

How many units can we invest into?

Due to the high number of positive response and purchases, AGRECO have placed a limitation of 10 units (100 hectares) for the initial investment. Futher units can be attained as and when they become available.

How can I make the payment?

It is a very simple and secure process. Before making any payment we ask our investors to sign a contract to familiarize themselves with what they're signing for. The bank details stated on the contract is where you make the transfer. You will receive a receipt from us as a proof of receiving your payment into the company account.

Remember

Food is essentially unaffected by governments, politics, economics, currency fluctuations, inflation and interest rates, the long-term demand on agriculture will continue, and cereal production is a global commodity.