At Global Green Cherry, via our website www.ggcherry.com www.globalgreencherry.com, offer potential investors like yourself a wealth of information regarding cherry farming and the exciting opportunities on offer to you.
There are plans underway to exploit agricultural land to be acquired in Bulgaria.
Land Options have been secured over a substantial area of Farming Land with the stated aim of creating shareholder value by growing cherries on a professional scale.
2. INTRODUCTION
Making investment decisions has never been
an easy feat. This is true now more than
ever with the complex, fascinating, and often
confusing dynamic of the current global
economic environment.
Increased market volatility has led to reduced
investor interest in more traditional equities in
favour of alternative investment options. And
what could be more productive than farmland?
We all need food to survive, and virtually all
food originates from a farm.
3. THE PRACTICALITY OF AGRICULTURE INVESTMENT
Emerging Markets and Overall Population Growth
Emerging markets are developing at an extraordinary pace. More and
more countries are offering their citizens the chance to live a middle-
class lifestyle. This is clearly a positive step in terms of well-being, but
does not come without consequences. There is suddenly an increase in
not only demand for quantity of food, but also for its higher quality. As
income increases more citizens are able to enjoy a more balanced diet,
and the demand for fruit and proteins will continue to grow.
Further complicating food supply is overall world population growth,
which estimates that the world population will rise from around 6.9 billion
people currently to between 9 and 10 billion people by the year 2050. World Population
10
This becomes even more startling when we consider that this increase
8
amounts to approximately 200,000 more people on our planet everyday.
Billions
6
The Food Predicament – Prices and Production 4
In order to sustain this elevated population, it will become necessary to 2
produce nearly twice as much fruit and grain as is currently being grown, 0
1950 1970 1990 2010 2030 2050
clearly a difficult challenge to be faced in the near future. Even assuming
optimal agricultural production at or above average levels, it will clearly Less developed regions
be difficult to maintain a sufficient supply of fruit and grain for future More developed regions
Source: United Nations
population levels. In fact, over the last 30 years, production has not been
able to keep up with population as the ratio of kg of fruit and grain per
FAO Food Price Index
year per person has begun to decrease. 250
210
Unfortunately, these are not the only factors that are complicating and 170
Nominal
will continue to complicate the world food supply. Food prices have 130
Real*
been increasing at an exponential rate in recent years. By mid-2008, 90
50
international food prices had skyrocketed to their highest levels in 30 1990 1995 2000 2005 2010
years. In December 2010, the FAO food price index rose above its 2008 *
The real price index is the nominal price index
deflated by the World Bank Manufactures Unit
peak. Not only commodity traders are affected by this trend, but also Value Index (MUV)
each and every one of us when paying our daily shopping. Source: Food and Agriculture Organisation
3 www.globalgreencherry.com
4. Urban Drift The Urban and Rural Population of
the World – 1950 to 2030
9
In 1900, worldwide, there were 6.7 rural dwellers to each urban dweller;
Billions
8
now there is less than one and projections suggest there will be nearly 7
6
three urban dwellers to two rural dwellers by 2025. Cities of the world 5
4
have continued to grow until urbanisation has begun threatening the 3
2
very food supply that enabled their existence in the first place. This
1
has been underpinned by the rapid growth in the world economy and 0
1950 1970 1990 2010 2030
in the proportion of gross world product and of the economically active
World rural population
population working in industry and services. Currently, not only the World urban population
World total population
highly valuable resource that is land, but also water, is being irreversibly
Source: UN Population Division
destroyed by urbanisation and pollution.
Loss of Arable Land
Arable Land per Capita
Land that is especially suitable for growing crops, or arable land, with 5
Metres 2
its fragile top 15cm of fertile soil, determines the productivity of our
food system. Most land is either too dry, wet, steep, or cold for crop 4
production, and urbanisation is further complicating this situation. Not
3
only does population expansion reduce available cropland per capita, but
also on-going soil erosion and expanding urbanisation continually result 2
in the slow but continuous loss of cropland. Annually, millions of acres of
1
prime cropland are lost to erosion, salinisation, and waterlogging. Millions
more are lost as arable land as urbanisation, transportation networks and 0
1960 2005 2030
industries take over croplands. The Food and Agriculture Organisation
Source: FAO
of the United Nations (FAO) reports that already close to 200,000 km2 of
fertile soil have been destroyed by urbanisation. This will cause further
increases in food prices, and farmland will become more valuable.
Climate Change
Food commodity prices are extremely sensitive to even modest climate
change impacts on world agriculture. In a recent study, researchers
found that climate change is expected to dramatically alter global fruit
and nut production, as tree crops like pistachios and cherries struggle
in the rising temperatures. The study, published in the scientific journal
PLoS ONE, predicted that the fruit and nut industries in California,
the southeastern U.S., China’s Yunnan province and southern and
southwestern Australia would be highly affected by global climate
changes in the coming years. The study added that the areas that have
already been affected include Israel, Morocco, Tunisia and the Cape
region of South Africa. The results would of course cause commodity
prices to rise drastically.
ANNUALLY, MILLIONS OF ACRES OF
PRIME CROPLAND ARE LOST TO EROSION,
SALINISATION, AND WATERLOGGING.
5. AGRICULTURE AS A LUCRATIVE INVESTMENT
Land Appreciation and Cash Flow
When investing in agriculture, there is solid potential for healthy returns
from various sources. Increases in the price of farmland have been
steady over recent years. Europe has seen prices double, triple, and
even quadruple per acre of farmland since 2004. Productive agricultural
land, with water rights and everything else, wherever in the world you
look, has, over time, outperformed CPI inflation. Cash flow that stems
from leased farmland or from the commodities themselves can also
provide a substantial return. Investors can reduce risk by renting land to
local farmers who manage the land and make monthly lease payments
to owners/investors. Alternatively, cash flow can be augmented by
contracting land managers or investing in funds that manage farms
themselves. This latter option increases risk, but the benefit of higher
returns in cash flow makes this a lucrative option.
A Haven Against Inflation
It’s no secret that in recent years, lavish lending practices and over Inflation vs. Farmland Price
leveraging has led the global economy into crisis. Part of the solution to
this crisis has been for governments around the world to increase the Rate of inflation
supply of money. Additionally, interest rates have been brought near zero. Farmland prices
The near future will most likely, hence, bring higher inflation. Farmland
pricing has performed extraordinarily well during high inflationary
periods. In the 1970s, fruit prices reached astounding levels during high
inflation. Considering the fact that food inflation leads overall inflation in
many countries reflects the elevated demand for soft commodities. So
agricultural investment not only offers protection from inflation, but also
even pays you for it.
...AGRICULTURAL
Diversification INVESTMENT NOT ONLY
OFFERS PROTECTION FROM
Agricultural land also affords investors the chance to diversify away from
INFLATION, BUT ALSO EVEN
stocks and bonds, as farmland is not highly correlated with these more
PAYS YOU FOR IT.
volatile asset classes. This provides portfolio stability during volatile
markets while enhancing a portfolio’s risk adjusted return.
5 Let’s talk +44 (0)203 137 6920
6. FACTORS FOR INVESTMENT ASSESSMENT
Political Situation
In weighing out where and how to invest in agriculture, one must take into
consideration the political situation in any given country and how specific
property laws may restrict investment. Some countries may not permit
direct foreign ownership of farmland whatsoever.
Strength and stability of a country’s government should also be analysed
especially when considering investment in emerging markets. Factors
for evaluation include political risk, economic performance, structural
assessment, debt indicators, credit ratings, and access to bank finance
and capital markets.
Local Human Factors
Local public sentiment toward foreign investment, as well as cultural
differences and matters of language are all crucial issues that need
careful consideration.
To make sure foreign investments run smoothly, local residents must see
these ventures in a positive light. If there were any feeling of being taken
advantage of or of intrusion on their territory, the success of any foreign
investment would be fighting an uphill battle from the very beginning.
The consequences of not carefully managing local sentiment could
include the reduction or even the total abandonment of the investment. It
is crucial, therefore, that locals fully comprehend that the combination of
their region-specific understanding and expertise along with the influx of
foreign funds can clearly improve their livelihood.
From construction companies to hair salons, law firms to restaurants,
no matter how much ingenuity, funding, and ability provided by
owners, finding responsible and productive employees is always vital
for successful business operations. Finding, communicating with, and
comprehending the perspective and inclinations of workers in a foreign
country is a challenge that confronted with patience and sensibility, can
and must be overcome.
STRENGTH AND STABILITY
OF A COUNTRY’S
GOVERNMENT SHOULD
ALSO BE ANALYSED...
7. Transport of Crops
Once crops have been successfully harvested, the quality of regional
infrastructure comes directly into play. Caring for the land and its crops
is a crucial part of any farm’s operations, but up to the point of reaping
the harvest from any season, on a financial level, only expenses have
been incurred. The potential for profit making begins when grains, fruits,
vegetables, or livestock leave a farm. Therefore, quality roads will be
necessary for transportation of goods. Larger farms use hefty equipment
that will also need to be brought to and from the farm.
Once it is clear that the local network of roads and highways is THE POTENTIAL FOR PROFIT
sufficiently effective, the issue of who will be transporting the harvest MAKING BEGINS WHEN
comes to the foreground. Sufficient options are necessary for a farm GRAINS, FRUITS, VEGETABLES,
to ensure adequate quality and correct prices at this stage of the profit OR LIVESTOCK LEAVE A FARM.
making process.
The Essential Element - Water
Around 97% of the Earth’s water is salt water from oceans and seas, and
unfortunately desalinisation is a very expensive process. Close to 2% of
the earth’s water is frozen in polar ice sheets and glaciers. This leaves
only a miniscule amount for drinking, irrigation, and industrial use. This
already small amount of freshwater is being dangerously depleted. All
over the globe, water is being pumped out of the ground faster than it
can be replenished. China’s Yellow River, which is siphoned off by farmers
and cities, has failed to reach the sea most years during the past decade.
The green revolution in India was only possible by the installation of 20
million irrigation wells. Additionally, India must now dig wells 150 meters
into the earth, compared to just 30 meters 4 decades ago.
...WATER IS BEING
PUMPED OUT OF
THE GROUND
FASTER THAN
IT CAN BE
REPLENISHED.
7 Let’s talk +44 (0)203 137 6920
8. THE NEW BREADBASKET OF EUROPE
Located in Southeastern Europe, Bulgaria is bordered by Romania to the
north, Serbia and the Republic of Macedonia to the west, Greece and Turkey
to the south and the Black Sea to the East. With a territory of 110,994
square kilometres, Bulgaria ranks as Europe’s 15th-largest country. It has
huge agricultural potential thanks to its fertile soil, temperate climate and its
key geographical position, with crucial access to the Black Sea and the key
markets in the European Union, Commonwealth of Independent States (former
Soviet Republics), the Middle East and Asia. The rural regions in Bulgaria
occupy 84% of the nation’s total land area while the 2.7 million people living in
rural areas account for 32.3% of its total population.
Bulgaria joined NATO in 2004 and the European Union in 2007, after the
country moved from central planning to a more market-driven system with free
movement of capital and the liberalisation of agricultural markets. Bulgaria
enjoys both political and economic stability, and the decentralised government
is very accommodating to overseas investors. In 2007, the Bulgarian
government launched a five-year, €3.2 billion modernisation and development
program, aimed at strengthening the agricultural sector.
The country is blessed with rich farming and forestry resources. The extremely
fertile soil (containing a moderate PH) and temperate climate, particularly
around the Black Sea, provide exceptional, high yielding, top quality crops,
and make Bulgaria an ideal producer of the most in-demand and lucrative
fruit: sweet cherries. The hot season arrives at just the right time for cherry
production and the humidity also makes for perfect growing conditions. BULGARIA
The season very rarely suffers from frost or other major weather hazards. If
properly handled, crops will suffer a very low production loss of 5 to 10%. €3.2
Cherries are a fruit that travels well, and once refrigerated, taste and flavour do
not deteriorate easily.
BILLION
MODERNISATION
Although it is one of the newest sources of land for cherry production, AND DEVELOPMENT
neighbouring Turkey is already one of the world’s leading producers. Bulgaria PROGRAM
is widely recognised as the country with the highest potential for growth as a
cherry producer.
The price for farmland and labour costs in Bulgaria are also considerably lower BULGARIA
than the rest of Europe, with farmers of the same skill set earning an average
of €200 in Bulgaria, compared with €1,000 in Western European countries. RURAL REGIONS
The operating expenses are also considerably lower than orchards based in
other European countries. As a result, the return on investment is much higher
in a Bulgarian-run orchard.
OCCUPY 84%
OF THE NATION’S
Farmland average price per acre
TOTAL LAND AREA
National average 2004 to 2007
BULGARIA
$1,263
$1,966
$2,696
$4,871
$5,061
$6,053
$6,923
$14,076
$14,866
$19,119
$23,684
RICH FARMING
AND FORESTRY
RESOURCES,
EXTREMELY
s
land
ny
ania
FERTILE SOIL AND
ia
gium
land
ark
and
and
ma
her
nce
gar
in
Dem
Rom
Spa
Eng
Ger
Net
Bul
Bel
Fra
Irel
Pol
Source: blackseaagriculture.com
TEMPERATE CLIMATE
9. Bulgaria also boasts an exceptional corporate environment. Historically,
Bulgarian farmland investment has achieved returns that outperform most
traditional investment assets.
Annual yield from Bulgarian cherry investments vs. traditional investments
30%
25%
20%
15%
10%
30.42% 6.50% 3.52% 2.82% 2.59% 1.23% 0.00%
5%
0%
Bulgarian Farmland 10 year S&P 500 5 Year Money Gold
Cherry* Treasury Index CD Market
Source: blackseaagriculture.com
* Estimate of the Directors
THE ADVANTAGES OF PRODUCING CHERRIES
Cherries are one of the most succulent and sought after fruits on the
market. Due to the premium price they command – with revenues more than
doubling those of most other fruits – cherries have also quickly become one
of the most exciting and lucrative green investment opportunities available
today. From early May to late June, average retail prices for cherries are in
excess of €10 per kilo. Cherries also attract far higher prices at production
levels – more than double that of grapes and almost quadruple that of
apples. Unlike the volatility that is associated with commodities, which
is subject to a lot of futures trading, cherry prices are set locally by the
producers and supermarkets.
Although global cherry production has been rising in recent years, it has
failed to keep pace with the fruit’s ever-increasing demand. According to
Belrose, Inc., the world’s leading fruit producing analysts, sweet cherries
have become the most popular fruit within the U.S. and European markets. CHERRIES ARE ONE OF THE
Beyond their delicious flavour, cherries have become widely recognised for MOST SUCCULENT AND
their numerous health benefits. They have a high content of antioxidants, SOUGHT AFTER FRUITS ON
making them excellent agents in helping to fight diseases such as cancer THE MARKET
and other cell degradation-related illnesses.
Cherries are also very low in calories and have become an important weight
loss and weight management tool. A serving of cherries only contains 50-70
calories making it an ideal mid-day snack. In addition, the red pigment in
cherries has a tremendous amount of anthocyanins, making the fruit an
outstanding natural anti-inflammatory. Cherries have been proven to offer
natural relief from headaches and joint pain caused from gout, arthritis and
joint inflammation. People suffering from these symptoms are encouraged
to drink cherry juice, eat fresh or dried cherries or consume cherry pills.
Cherries also contain melatonin, which helps against insomnia and slows
down the aging process. They are also a rich source of nutrients, vitamins
and minerals, such as potassium, iron, zinc, and copper.
9 Let’s talk +44 (0)203 137 6920
10. CHERRY PRODUCTION
Over the last ten years there have been major breakthroughs in
cultivation techniques utilising a method known as high-density hydro
orchard production (also known as “high density root stock”). Orchards
using this groundbreaking technique increase plant density by growing
cherries directly on the base of the tree itself and not on the branches.
This results in higher volume crops with greater production efficiency and
larger cherries. Through the utilisation of the aforementioned production
technique coupled with sophisticated handling and transport systems
used to mitigate product perishability, a well-run cherry orchard is
capable of generating a return on investment of over 30% per year!
A WELL-RUN CHERRY
ORCHARD IS CAPABLE OF
GENERATING A RETURN ON
INVESTMENT OF
OVER 30%
PER YEAR!
10 www.globalgreencherry.com
11. LET’S TALK
To find out more and download the Information Memorandum
with Application Form, please visit:
www.globalgreencherry.com
If you have specific enquiries, please e-mail us at:
info@globalgreencherry.com
If you want to talk, call us on:
+44 (0)203 137 6920
Shares in GlobalGreenCherry Plc are unquoted
securities and may be considered to have more
risk than quoted securities and shares. The value of
investments can go down as well as up and you may
not get back the money you originally invested.
The information contained in the document does NOT
form a part of any offer for sale or subscription to
or solicitation to buy or subscribe for any securities
GLOBALGREENCHERRY or investment product(s). The document is not a
prospectus and/or Information Memorandum and
contains no offer to the public for the purposes of the
GLOBALGREENCHERRY PLC Prospectus Regulations 2005. The formal terms of this
Lloyd’s Building offer are set out in the Information Memorandum and
12 Leadenhall Street applications for shares are made solely for that basis.
London EC3V 1LP
Any forward looking statements set out herein involve
United Kingdom
known and unknown risks, uncertainties and other
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important factors that could cause the actual results,
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performance or achievements of the Company to differ
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materially from any future results, performance or
www.globalgreencherry.com achievements implied by such statements.
May 2012