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GLOBALGREENCHERRY PLC

INVESTING IN
AGRICULTURE




 GLOBALGREENCHERRY
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.
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
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.
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
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...
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
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
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
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
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
T 	 +44 (0)203 137 6920
                                                          important factors that could cause the actual results,
F 	 +44 (0)203 137 6921
                                                          performance or achievements of the Company to differ
E	 info@globalgreencherry.com
                                                          materially from any future results, performance or
www.globalgreencherry.com                                 achievements implied by such statements.

May 2012

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Global Green Cherry - investing in agriculture

  • 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 T +44 (0)203 137 6920 important factors that could cause the actual results, F +44 (0)203 137 6921 performance or achievements of the Company to differ E info@globalgreencherry.com materially from any future results, performance or www.globalgreencherry.com achievements implied by such statements. May 2012