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I am currently
living in Moscow and have launched a fund to invest in Russian Black Earth
farmland.
The idea behind the fund is simple: there is a lack of safe investments in
agriculture, especially in Russia. Regia Fund aims to channel as much money
as possible directly into some of the most undervalued agricultural land on
Earth.
Please email me or Charles Bausman if
you’re interested.
-------------
Below is a quick Q&A about setting up this fund.
Why Agriculture?
While gold and silver are great investment right now, they are short term
investment (something to hold over the next one or two years while the
dollar's collapse plays out). In contrast, farm land is an income producing
asset, which makes it a great long term investment.
1) Right now the world is underinvested in commodities and overinvested in
debt, especially US debt. Once the dollar and the quadrillion derivative market collapse, the pendulum
will swing the other way. Arable land will benefit from the desperate
stampede into hard assets spurred by hyperinflation.
2) Global food inventories are critically low. Right now, the world has
enough food in storage to feed the planet for about 55 days, which is the lowest food stores in 37 years.
3) When China is forced to revalue the yuan, 1.3 billion people
(approximately one-fifth of the world's population) are suddenly going to
enjoy much greater purchasing power. When this happens, they will use their
new wealth to start eating more food and switch to a diet consisting of more
meat. This is going to create a tremendous demand for all food products. I
want to set up an investment in agriculture before this surge in demand.
4) The world is running out of fresh water. There are three main reasons
behind this:
A) As the world’s population grows, increasing demand for water is
creating strains on reservoirs around the globe.
B) The levels of aquifers
(underground pools of water (like oil)) are dropping across the Earth because
of overuse. For example, farmers in India have to pump water from over two hundred feet below the ground to
continue growing their crops. This is not sustainable.
C) Glaciers are drying up, and major rivers are becoming seasonal. For
example, the Himalayas are predicted to have
melted by 2035.
5) Fisheries are collapsing
throughout the world, which increases the importance of land-based farming.
6) The world’s population continues to grow, which of course increases
demand for food commodities. Global demand for food is expected to
rise 110 percent over the next 40 years.
Why Russia?
Russia arguably is the best place in the world to invest in agriculture right
now because of a combination of large quantity of cheap assets, ample water
supply, political stability, rapidly improving infrastructure, and extremely
productive black-earth farmland (the richest soil in the world). Other reasons
making Russia an attractive place to buy agricultural land:
1) Russia doesn’t have the vulnerabilities of present in most developed
nations. Russia doesn’t have an overdeveloped financial sector like the
US, the UK, Japan, and most of Europe. The Ruble isn’t a major reserve
currency. Russia isn’t faced with financing the retirement of a large,
rapidly-growing elderly population (ie: baby boomers) like most industrial
nations, especially Japan.
Russian farmers don’t use the futures market (and won’t be hurt
by its collapse). Etc…
2) Russia, along with China, stands to come out of this crisis as one of the
"winners”, as it is going to benefit tremendously from the worldwide
portfolio shift away from US debt and towards commodities. Russia has, by a
good margin, the most untapped sources commodities of any country on Earth:
A) large areas of undeveloped agricultural land, with huge amounts of fresh
water (no irrigation needs or water shortages).
B) Large forested areas (lumber)
C) 25% of known world natural gas supplies.
D) Large deposits of Metals (iron, nickel, zinc, copper, aluminum…)
E) Undeveloped proven gold reserves
F) Undeveloped proven oil reserves
G) Etc…
As investors flee the dollar's devaluation and the derivative market's
collapse, a flood of capital will pour into Russia to develop this sources of
raw material (fear of investing in the US will far exceed any fears of
investing in Russia by this point).
3) A highly exaggerated anti-Russian bias in the western media has scared
away many Western investors, making Russian assets more attractive. In fact,
western investors in Russia have earned very high returns exactly because of
this bias, which keeps capital away and gives higher returns to the capital
that does come in.
4) Because of subsidies, land in West is overpriced compared to developing
world (Land in Russian is selling for less than one tenth the
price it goes for in the US and Europe). When skyrocketing commodities
increase farming’s profitable and Western governments run into budget
problems as the dollar collapse, these subsidies are likely to be reduced,
negating some of the benefit of owning agricultural land in those countries.
5) Russian agricultural land is enormously underpriced, even compared to
countries without generous government subsidies. Compared the Average price
of land in the
Average price of land:
A) US = $10,000 per ha (subsidized)
B) Europe = $20,000 per ha (subsidized)
C) Argentina and Brazil = $5000 per ha (not subsidized)
D) Russia = $500 - $1000 per ha (not subsidized)
6) The Russian government is eager for western investment in its agriculture
sector and has policies to subsidize and promote investment there. Unlike in
the West, these subsidies are not at risk of disappearing.
7) Russia was the first nation to officially call for a new international
reserve currency to replace the dollar. As such, they have likely better
prepared themselves for the dollar's collapses than most other nations.
8) Russia is very politically stable, unlike the Ukraine, and
many African countries
From a personal point of view, setting up an investment in Russian
agriculture makes sense. I have travelled to Moscow several times, and I have
local contacts with whom I have been discussing investing in Russian agriculture.
Why now?
We are rapidly approaching the end game in this financial crisis. Things on
Wall Street and in Washington will likely fall apart this summer. The main
reasons behind this timeframe can be found in the major entry below:
*******Gold Manipulation OFFICIALLY CONFIRMED*******
*****2010 Food Crisis for Dummies*****
*****Worst Harvest Season Ever Seen*****
Gold Market Reaching The Breaking Point
Why start a fund?
A direct investment via a fund is the best way I can recommend to invest in
Russian agriculture.
1) Window of opportunity. If I took the time and did the work to
research which public companies might be the best to invest in, by the time I
published my findings it could be too late to get in at an attractive price.
2) Direct exposure. The advantage of investing via a fund is that you
know your money is going directly into agricultural land and you stand to
make all the profits from the appreciation of that land. In contrast, by
buying a potentially overvalued stock, you could miss out one much of this
profit.
3) Leverage. When investing directly you can borrow from Russian banks
at government subsidized rates an amount equal to the amount you are
investing. That is a great deal for the investor. You don’t get this
investing in the big companies. They tend to usually already have a full
credit line.
4) Benefiting from future round financing at higher valuations. Early
round investors benefit from less expensive future financing.
5) Price. As a general rule, you can buy agricultural assets much
cheaper when buying directly rather than buying stock of public companies.
6) Lack of options. There are two public companies one can currently
invest in. One of them, Black Earth Farming, has had serious management
problems which they have not fixed yet.
Who else is involved in running Regia Fund?
I am working with Charles Bausman and Rich Selby to acquire Russian farmland.
Charles Bausman
Charles is a Russia-based American with experience in Russian agribusiness.
Charles Bausman also has great deal of experience (18 years) in working in
Russia and speaks fluent Russian. Charles will identify, do due diligence on,
and acquire properties, and then be responsible for setting up efficient
management on the properties. He has already identified a number of
properties for potential acquisition, and he is also a director of the fund.
I encourage you to contact him directly with any
question about Russian agriculture or Regia Russia Agro Investment Ltd.
Charles also has extensive experience in fund management and should be able
to answer all your questions.
Rich Selby
Rich
is a well known veteran in international agribusiness. with 22 year
experience, who has been working in Russia for the last 16 years and has a
deep experience in large-scale agriculture operations in Russia. He is
currently on leave in Des Moines, Iowa, during which he will be meeting with
investors in various locations around the US.
Rich also owns and operates a private corporate security consulting
company specializing in Russia and has worked with various large western
corporate clients in Russia on security and dispute resolution issues. Regia
Fund couldn’t hope to find a better person to insure the safety of its
Russian investments.
(See end of entry
for complete bios of regia fund team)
Amazing opportunity to acquire Black Earth farmland
Right now is a
once in a life time opportunity to invest in agriculture. It will be decades
before the world sees farmland as undervalued as it is in Russia today.
However, once gold/food shortages are revealed to the world this summer, the
situation will quickly change as panicked investors flee into hard assets
around the globe.
For anyone considering investing in agriculture, now is the time to act.
1) There are some incredibly attractive opportunities available
right now to acquire black earth farmland at firesale prices (below $600 per
hectare), some of which we know won’t last much longer.
Investments in Regia will immediately be used to secure land at rock bottom
prices.
2) Agricultural commodities are going to start rallying going into the summer
on tightening supply (See *****2010 Food Crisis for Dummies*****),
which will start driving up farmland prices.
3) With gold
manipulation OFFICIALLY CONFIRMED, the collapse of
the London paper gold market and the dollar is imminent. Owning hard assets
outside the US financial system will become very attractive, and this will
also start pushing up the price of farmland.
Again, please email me or Charles Bausman if
you’re interested.
-------------
Pictures From
Visiting Russian Farmland
The pictures below were taken when I was visiting Russian farmland on September 2,
2009.
Russia’s improving infrastructure
Black earth farmland for sale
20,000
rubles per hector ($650 per Hectare)
Visiting apple
orchard
(truck
full of apples in background)
More apples
No water problems
Huge fields of
black earth
See more pictures from January visit of farmland in Tambov
region.
-------------
The Richest Soil In The World
Nova Online explains Black Earth.
Black
Earth
The Black Earth, or chernozem (чернозём from
the Russian words for "black soil," chernaia zemlia), region is a
belt of extremely rich and fertile soil stretching from the Moldova and the
Western Ukraine eastward, narrowing as it goes further east into
Siberia, before coming to an end near Irkutsk. This is some of the richest
soil in the world.
The chernozem contains a very high percentage of humus, anywhere up to
about fifteen percent, and also important organic minerals such as phosphorus
and ammonia. The depth of the chernozem has been measured at anywhere
from forty to two hundred and fifty inches, but is usually about a foot deep.
Because it very fertile and does not require any fertilizer, it is
considered some of the best soil in the world for growing grains. The
"black earth" region of Ukraine extends throughout about two-thirds
of the country.
For centuries the Black Earth region was mainly steppe, open grasslands with
no real agricultural being carried out. The problem was that the upper level
of the soil was so thoroughly entangled with roots, that it proved impossible
to cultivate with wooden ploughs. Only when steel-tipped ploughs were
introduced in the early nineteenth century did agriculture become important. With
more improved machinery and efficient cultivation techniques, the Black Earth
region really emerged as the bread-basket of Russia at about the turn of the
twentieth century. The region proved to be enormously important to the
industrialization of Russia that was carried out by Sergei Witte because
Russia could now export wheat to make money to invest in its industrial
development. During the collectivization and industrialization of the Soviet
Union as part of Stalin's first five-year-plan, the Black Earth region again
bankrolled industrial development in the country by exporting wheat from the
Soviet Union, but this time widespread famine resulted throughout the region
as not enough wheat was saved for domestic consumption.
Map of Russian
Black Earth Region
--------------------------------
Regia Fund Team
Charles Bausman , CEO and Director
Cofounder. 18 year Russia experience. Last 2 years in Russian agribusiness.
Hands-on experience in acquiring Russian agricultural land, building
agribusiness management teams, and evaluating Russian agribusiness companies.
Strong understanding of how to finance agribusiness projects.
Prior to Regia director of Mesed Agro, a large 50,000 ha cropping company in
the Central Black Earth Region. Ongoing work with several large agriculture
investment firms in Russia identifying and acquiring properties. Extensive
experience in all aspects of agricultural asset valuation, acquisition,
title, due diligence. Based in heart of Russian farmland region with deep
local knowledge and contacts. Proven ability to retain excellent local
personnel.
Previous experience includes building a successful airfreight and mailorder
company, running Ozon.ru, Russia’s largest ecommerce retailer, hedge
fund investments in Russia and asset management. Strong network in Russian
business, finance, and government. Proven ability to build and manage strong
Russian management. Experienced in corporate finance, private equity, and
financial markets.
Age 45. US citizen. Hometown: Greenwich, Connecticut, USA. Finance MBA,
Columbia University. Location: Tambov, Russia. Foreign languages: Russian ,
German (both fluent). Married, 2 children.
Eric deCarbonnel, Managing Director
Cofounder. Founder of MarketSkeptics.com a highly successful and widely read
economics blog that has tracked the current financial crisis since September
of 2008. MarketSkeptics has a global readership and has received 2.4 million
page hits since its inception. It provides research, analysis and comment
regarding the economy and current financial events. Eric also publishes major
articles on other leading internet financial analysis sites. Prior to
founding MarketSkeptics in the spring of 2008 auditor at McGladrey &
Pullen LLP, a major Certified Public Accounting firm located in Stamford,
Connecticut, USA. For data on readership of Marketskeptics, please visit the
statistics section at the bottom of the home page at http://www.marketskeptics.com/
Age 28. US citizen. Hometown: Darien , Connecticut, USA and Geneva,
Switzerland. Eric attended Cornell University and has a BA in accounting from
Fairfield University, Connecticut, USA. Location: Moscow and Tambov, Russia.
Foreign languages: French and Spanish (fluent), Russian (learning)
Rich Selby, COO
Well known veteran in international agribusiness. 22 year experience,
16 of which in Russia. Most recently, Mr. Selby has been managing a 200 000
acre 200,000 (80,000 ha) grain and oilseed cropping operation in the Ukraine.
Previously, financial advisor to SAKHO, the largest Russian cropping company
with 400,000 ha in production. General manager agroscience division of Dow
Chemical Company, Moscow, Russia. VP at Compressor Controls Corp, a
multinational oil and gas controls company. Regional VP for agribusiness
division of AES, a Fortune 500 global power company. Special Attache for
Agricultural and Environmental Issues, US Embassy, Belarus. Comanaged the
operations of ACDIVOCA, a U.S. government-sponsored overseas agribusiness
program with extensive operations in Eastern Europe.
Strong experience in cropping operations, including large scale organic
farming. Strong experience in financing agribusiness projects in Russia.
Organic farming experience: Currently cropping consultant to Lehi
Roller Mills, one of the largest organically certified mills in the US. In
2006 founder, New Century Organics, Boulder Colorado, which identifies land
that can be converted to organic and assists owners in organic certification.
2002 board advisor to NAPI, a Navajo owned 27,000 acre organic complex near Farmington,
New Mexico.
Mr. Selby also owns and operates a private corporate security
consulting company specializing in Russia and has worked with various
large western corporate clients in Russia on security and dispute resolution
issues.
45 years old, US citizen. Hometown, Des Moines, Iowa. BA in Russian and
business administration from University of Iowa. Completed graduate studies
in agricultural economics at Iowa State University. Location Des Moines
(current), and Tambov (upon commencement of operations). Foreign languages:
Russian (fluent). Married,
2 children.
Eric
de Carbonnel
Market Skeptics
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