How much do I have to pay in order to invest in this project?
This is dependant on how many hectares our clients choose to purchase. All clients are required to pay the below costs at entry-level:
- Land: $1250 per hectare
- Legal fees: US$140 per hectare.
- Cultivation fee: US$750 per hectare.
Why do I need to pay a cultivation fee?
The cultivation fee forms a very important part of this investment as it is used to harvest the crops. The fee is used by Eurofarms LLC, a farm management company, to purchase equipment, seeds, fertilisers etc., and recruit labour in order to carry out the harvest and generate returns for investors. This is a one-off fee that you are required to pay.
What happens if I do not pay the cultivation fee?
If you do not pay the cultivation fee, you will not receive any returns on the harvest, although this will not affect your ownership.
What are the tax implications for this investment?
Clients will be subject to tax in the UK as they would for any form of income. Clients do not pay tax in Ukraine. Responsibility for paying tax lies solely with the client and is not deducted by Aston Lloyd.
How many hectares can I purchase?
Clients can purchase as many hectares as they wish. However, they must purchase in set portions of land known as a “pai”. Available “pais” can be anywhere between 2 and 10 hectares and are priced by hectare as above.
What is a “pai”?
A “pai” refers to the Ukrainian practise of dividing areas of land into individual portions, consisting of a varying number of hectares.
Why are all of the “pais” available in different sizes?
The sizes of each “pai” are based solely on the lease hold of the respective Ukrainian lessor, and they come in varying sizes of land that can be harvested.
How is it that a “pai” can be spread over more than one field?
Some Ukrainian lessors have land that is not contained to just one field but spread over two or more fields. This is still classed as a “pai” and must be purchased in its entirety i.e. clients cannot buy a portion of the “pai” in just one field.
How do you know what crops my “pai” will produce?
Returns will vary between clients because each “pai” will produce a different number of tonnes per hectare i.e. some parts of land will perform better than others. Given that it is not practical to weigh the produce manually by “pai”, we are relying on a sophisticated and industry-recognised agricultural technique known as precision farming. GPS receivers, coupled with yield monitors, use satellite imagery to collect and feed back the relevant information so that payable profits can be calculated for each individual investor based on the output of their respective “pai”.
How and when will the crops be sold?
Crops are sold by farm management company Eurofarms LLC, who will formulate a marketing plan before selling the produce for clients at the best possible price. The goal is always to sell the crops in the upper one-third of the market. It will usually be sold at different times and marketed during different periods of time i.e. pre-sell at harvest and in the winter months.
What ownership do I have over the land?
In January 2002, a new land code was introduced in Ukraine regarding ownership rights over Ukrainian land. The code prohibits foreign citizens, legal entities and governments from acquiring agro-industrial land. Therefore, lease arrangements are the only way foreign investors can take advantage of agricultural land in Ukraine. A lease may be short-term (2-5 years), medium-term (5-25 years) or long-term (up to 49 years). Clients in Aston Lloyd’s project will enjoy a contractually binding right to receive income from a lease term of 10 years.
Who is Eurofarms LLC?
Eurofarms LLC is a Ukraine-based farm management company who will oversee the operations and cultivation of the land. They are highly experienced and dedicated to achieving the best crop price and the most efficient farming techniques. You can find out more about them at www.eurofarms.com.ua.
What crops are being produced and how is this determined?
The following five crops will be produced on a rotational basis and will be determined based on market prices for seeds, fertilisers etc., as well as the global commodities price for that crop:
– Maize (corn).
What kind of return can I expect on the first harvest?
We have made a number of projections based on credible market research. Given the increasing price of wheat and the basic principal of the investment it is fair to assume an increasing cycle of returns. Our commitment to clients dictates that they will receive 30% of the net return from their land. Projecting this as a monetary figure is currently difficult given that we can only work from futures prices and prospective yields.
How is the return on my “pai” calculated?
Clients are paid 30% of the net profit from the harvest, and crop yield for each “pai” will be calculated accurately by an industry-recognised agricultural technique, precision farming.
What is the exit strategy for my investment?
The projected exit for this investment is within five years i.e. June 2015. This is predicted to occur within the time period based on expressed interest from institutional funds.
What if I don’t want to sell my investment?
Clients will not be forced to sell their respective investment “pais”. However, cultivation is a key part of making this investment work for our clients and without it, the land value is diminished – after all, it is what the land produces that makes the lease so valuable!
What if I want to sell my investment before five years?
Clients may be able to transfer the contractural right to a third party by means of assignment: this third party assumes all contractual terms, including the payment of the one-off cultivation fee if this has not already been paid.