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Welcome to the Gold Collar investor podcast with your host Pancham Gupta. This podcast is dedicated to helping the high paid professionals to break out of the Wall Street investments and create multiple income streams.
Here’s your host, Pancham Gupta.
Pancham: Real Estate Investing is a general term. Even though I have invested in different types of asset classes, I call myself a real estate investor primarily. However, within real estate, there are many, many different sub asset classes. For example, we have single family homes, multi-family homes, resorts, hotels, self-storage, notes, the real estate notes, RV parks, mobile home parks, retail malls, strip malls, the list goes on and on. Each of these sub-asset classes have their own business models. Sometimes, I feel that I have barely scratched the surface. Today, we are going to talk about investing in agricultural land. Now is that real estate investing? Maybe. I would call it more of investing in a business that needs a piece of land to produce inventory. My guest today, Darren Doyle does just that. His company grows coffee and cocoa in the country of Panama and Belize. Darren, welcome to the show.
Darren: Good morning, my friend. Thank you for having me.
Pancham: No, thanks for coming on. Are you ready to fire up my listeners break out of Wall Street investments?
Darren: Absolutely.
Pancham: Great. So Darren, before we begin, do you want to give a quick overview to my audience on how you got started out in coffee and cocoa business?
Darren: Sure. Before I do, I want to say congratulations to you for doing what we spoke about on the investment cruise about six months ago. Congratulations. You’ve quit your full time job. But you’re doing well with your podcast. So first of all, congratulations to you.
Pancham: Oh, thank you, Darren. And thank you so much.
Darren: So yeah, so what we do I’m down here in Panama City, Panama in Central America. We started off down here. I came down here to live about seven or eight years ago, and I met my now business partner, David Sewell. And he was consulting on the investment circuit. I was brand new. To cut a long story short, they always say the best way to get a head started in investing is to find yourself a mentor, and that’s what I did. So I worked originally for David, and now we’re partners in everything that we do. And he got started in this idea of the pizza cookie cutter idea where you buy a piece of real estate, cut it up into individual half acre parcels and sell it to investors. Together we started the company, International Coffee Farms in 2014. We raised our initial capital together with our own investment capital to get it started. We acquired our first farm and January 2, I believe 2015. A very small little 3.3-hectare farm. Our second farm acquired soon afterwards in February, and now in 2019. We have 11 coffee farms here in Panama.
Pancham: Wow. That’s pretty amazing. And how about for cacao? How many farms do you have for cacao?
Darren: Cacao? We started a few years later, I believe we started the process in 2016 acquired the farms in 2017. We have five farms now, for the first three were acquired in 2017 the trees on those farms about two years old, and we acquired two new farms last year, and which we have now just planted so five farms in Belize and 11 in Panama. That’s great. That’s amazing. All right. So you know, I would have never thought you can create passive stream of income via agricultural land. How do you do that?
Darren: Well, it was quite a good idea by David, when he was setting this up as a start, because previously, everybody knows that investing in, in agriculture and like coffees and $90 billion business and industry chocolates 100 billion dollar industry, but usually that type of investment opportunity was only available to the mega rich. So being based here in Panama, where coffee and cacao grows, especially specialty coffee grows in what’s called the coffee belt, which is between the tropics of Capricorn and cancer. So Panama and believes fall inside that belt and they’re the perfect growing conditions for those products. And we were in the industry we learned about us and we started acquiring farms subdividing them selling deeded ownership to outside investors to help us grow bigger, faster. Over the course of the years, then we like I said, we started very small at one farm. Fast forward now to 2019, we’re completely vertically integrated. We have processing facilities in place we have our own on site mill around nursery and even now our own coffee testing laboratory and our coffee shop at the end. So we have the full value chain on the control and how it works for as a passive investor, if you want to see one investor, the coffee industry, you want to invest in the business but you don’t want to move to Panama, learn Spanish and do it all yourself. You can own a half acre parcel, we manage it as part of our portfolio and the planting the growing the farming, the marketing and sales of the coffee is all done for you. And then you participate in the profits on the bottom line with us.
Pancham: I see I see. So then an investor buys it, then you said that you offer these half-acre parcels.
Darren: Half-acre. So 2000 square meters.
Pancham: Yeah. 2000. Okay, so when they buy this, at that point, it’s just a raw land. It doesn’t have coffee or cocoa already planted. Is that right?
Darren: Well, it depends…Farm to farm. The first two farms that we acquired with what we called producing farms, which meant it was an underperforming kind of commercial coffee farm. And there’s basically two types of farms there’s very well run farms that are producing efficiently the best coffee in the world on selling on price and on the score the grading that it gets. But there’s also a lot of farmers that are fourth and fifth generational and the guys haven’t invested the money. The trees are old, but they still have the same natural resources. They still have the same volcanic soil, altitude, microclimates necessary. They just weren’t being one property. So kind of like buying, rundown housing and rehabbing. We started rehabbing coffee farms. So we didn’t need to reinvent the wheel. We just needed it to do what the successful families in the area were already doing. And all we needed to do is the application the capital
Pancham: God. So you just streamline the process and when these investors buy this, they it depends on the farm, it could be producing farm or it could be non-producing farm and if it is non-producing, you would actually go in and actually, you know, sow the seeds and do all those things to actually have the process a start. Is that right?
Darren: Yeah, so the last maybe five or six farms we acquired with what we considered raw land. So we don’t we don’t wait for investors to buy in before we do anything because everything in agriculture runs on a cycle and you can’t afford to miss planting seeds. You can’t afford to miss the different parts of the cycle. So our team on the ground, they have nothing to do with the investments. They’re just coffee farmers. So they know this is planting season, this is harvest season. So we acquired the farms. We get them prepared. We sometimes after work on access and shade cover and stuff like that. And then we’re planting seeds and comes with plants. So the rope they’re planting these coffee farms now. And now whenever an investor is ready to come on, it depends on the timing, but usually you know that goes straight into a firm that’s already in process.
Pancham: Got it? Got it. So how long does it take for land like this? Let’s say coffee. We can talk about it separately – coffee versus cacao to start making a profit. To start selling the produce that is produced from these farms.
Darren: Okay, so with anything with agriculture, it’s down to Mother Nature. So we buy these….We will use this current farm as an example. We acquired it last year, we’ve been working on the soil prepared and getting everything ready at the same time, growing 70 plus thousand saplings in our nursery, which needs to be six or seven months old before they go into the grounds. Now we’re at the stage where we’re planting these farms. That same coffee startling that goes into grounds will give you a first coffee cherry in year three. So then in Panama, we have an annual coffee harvest, it runs from October through to around March. So once we get the first cherries, we harvest them, process them, rest them for a few months before they’re cooked and grade and scored in around June or July and then sold and then we do our distributions in around September. So there’s no cash flow for the first two or three years and that’s something that when you’re investing in agriculture, you need to be sure that this part of your portfolio, you can afford to wait for the cash flow because agriculture just takes time. Three years for the first crop. Cash flow in year four, if it’s a raw land, farm. And then those farms, those trees will produce high-end specialty coffee for about 12, 15 years. And then like everything in life is the C curve. You’ll start to get a little bit less coffee a little bit less quality, and at that stage will rotate some of the trees every year until you rehab the farm. You do it maybe 10, 15% of the oldest trees at a time so that you don’t have a big drop off in production. But once you rotate the trees, you get another 12 to 15 years. And you can do that same rotation two or three times. So you can get kind of 45 years out of one section that way. Once you get to that stage, if our in house agronomists or biologists have decided the root system and these trees now too old, you simply plant saplings from our nursery in the rows in between the older trees, let them grow in the shade. Nice and protected. And then when they’re ready to produce your cut down the older trees, and you’ve now rehabbed that whole area, and you can do another three times, 12 to 15 years. So that’s an idea of the lifestyle life cycle.
Pancham: Got it? Got it. And what about cacao? How long does it take for cacao to start producing? Is it still here for or it’s different?
Darren: It depends. So it should be around here for we’re starting to see some pods in our threes as early as year to know there were babies and immature. But this year in year three, we will have a harvest from the trees that we planted, and that’s down to virgin soil and on how well the team have done both for safety sake. You should look at around year four and then a cacao tree will give you a good quality product for 25 years.
Pancham: Got it? Got it. Okay. So how do the returns look like once they start producing?
Darren: So you’re looking at an average annual return of around 12% on both. With the coffee, like you said, first few years, you don’t see anything. You’ll start to see around seven, eight percent in your first year of cash flow. Which is year 4. It can get up to 19% in year 10. 28% in year 15. Up in the 30s by the year 20. 20 years is a long way away. We can use our formulas to estimate that with inflation and the prices and everything. So if you can see an average standard return of around 15, 16% in perpetuity, I think everybody be pretty happy.
Pancham: Right? Right. Okay. And that’s same for both coffee and cocoa. They’re roughly the same. Yeah. Okay. All right. So what are some of the things that you need to be careful about before investing in either coffee or cocoa forms? Can people lose their principal and if so, what are the chances?
Darren: So, not so much things to be careful of the things to be comfortable with. You need to be comfortable in getting into an agricultural business where you know if you have an apartment building with X amount of people in your apartment paying X amount of rent per month, you can tell you know exactly how much rent you’re going to collect December.
Pancham: Right
Darren: In agriculture, there are variables. So we have, even in one coffee farm, you could have 20 different micro loans that sell for different prices. And you’re going to have little things that that influencer weather and stuff like that. So you need to be a little bit more flexible. You need to be comfortable in doing something offshore could be in a country that you’ve never been to. And we do encourage you to come on an investment tour like the one that we just hosted this weekend to get more comfortable with the country and the team. And you just need to be comfortable with the slow passive nature of agriculture. It’s a good, maybe a counterbalance and as much asset protection as it is profitability and cash flow. And there’s just a little bit if you’re a traditional real estate investor, you just need to be comfortable with the differences of investing in agriculture.
Pancham: Right? So the chances of losing your principal unless really something bad happens…
Darren: Unless the volcano erupts and takes us all out, you’re going to be okay.
Pancham: Right. Something like that has to happen. Got it? Correct.
Darren: People ask us quite often about natural disasters because it does present a world that we’re in Panama actually…I have been here seven years, we don’t get hurricanes and earthquakes and stuff like that. The weather patterns in the Caribbean doesn’t affect the coffee growing area because we are on the opposite coast. Belize is a little bit more exposed. So we do have hurricane insurance out there for the chocolate shop. But using the natural disasters is not we’re not really in that path.
Pancham: Right, right. I was in Panama, saw the Mahogany Bay village and there was the shop. It’s pretty nice out there.
Darren: Did you get a chance to try the chocolate?
Pancham: Unfortunately, that day, it was closed. The shop was closed for some reason.
Darren: The chocolate shop is closed one day of the week. Would you like to try?
Pancham: Thank you.
Darren: Did you try some of the chocolate on the cruise the last time?
Pancham: Yes, yes. No, I did. I did. It was absolutely amazing.
Darren: I think I have a photograph of the two of us in our pajamas on our last night in Belize.
Pancham: That’s right. That’s right. All right. So from the typical passive investor point of view, how does this look like? You know, they can invest anytime of the year basically, and buy this stuff from you. And, and then like, I know that this is in Panama and Belize. How does that overseas part of investment looks like for people who are in the United States?
Darren: So it’s different when you’re investing in real estate in the United States, you guys get a huge amount of tax benefits.
Pancham: Right, right.
Darren: When you’re investing offshore, those types of tax incentives like your depreciation, amortization, they don’t apply because it’s offshore. What you gain is the asset protection side of the diversification. You’ve got geographical diversification, you’ve got your income coming from food coming from food, from specialty products not coming from a US real estate or rental market. And so that’s the main thing you get is the diversification into geographically and into the specialty foods Market.
Pancham: I see and what about the actual investment itself? So let’s say I want to buy a half-acre parcel. Will that be in my name in Panama?
Darren: Ideally, ideally. We used to…for the first three or four years, we used to do maybe 30% of our business in self-directed IRAs. Over the last couple of years due to what is going on in the United States and the World Bank and who the final owner of all the assets in Panama is, they are no longer willing to do for benefit, on a deed. So we’re encouraging all of our investors to just invest straight up just in your own name. And it’s just easier and simpler for created the deed.
Pancham: And all of these are cash investments. Right? Correct. And how does the taxation part of it works like you gave out some K-1. There’s no K-1 here. Right?
Darren: Is it okay one is a US thing Yeah, thanks for a nice well, because we’re not a US company. We don’t we take care of all the tax obligations in whatever country you’re invested in. So if you’re invested here in Panama, you have zero tax obligations here on Panama I distribution to you that you get at the end of every year along with your financial report, it will be up to them to you to report and or pay taxes on based on your own circumstances.
Pancham: Got it? Got it. Got it. And how about Belize? Is that similar? Same?
Darren: Same idea? Same idea.
Pancham: Okay. Sounds great. And how long does it take for one to close? Let’s say I tell you, “Darren and I want to invest today”. How long would it take?
Darren: It’s very simple. It’s as long as this person is available, and we’re still currently is you can have everything done in a week was it all the paperwork is no done by Esign. So there’s no more printing or wasting a paper. Once everything is done paperwork wise, everything’s done by an international wire transfer, and you can be done inside of a week.
Pancham: Oh, wow. That’s fairly quick. Good. I guess that answers most of my question.
Darren: One important aspects when you’re looking at is it’s all well and good saying investing in agriculture. But I think it’s important to note, we’re into very specific products and it’s not just that we’re in coffee and chocolate. Its specialty coffee, which is not just a marketing term, like saying that it’s just using as a fancy marketing word specialty coffee is coffee that is coded and graded in the same way that wine is. So it’s done very meticulously. It’s analyzed and graded on everything from the aroma, the fragrance, the body, acidity, and it’s independently scored, and coffee as a scoring range of zero to 100. To be classified as specialty coffee, you need to score 80 points and above and that’s the type of coffee that sells for 5, 6, 15, 20 or pounds or up to a couple of hundred dollars a pound. For some of the best and actually the very best coffee in Panama last year or this year sold for over $1,000 a pound. It’s quite a big difference right? Coffee on the commercial market is $1.
Pancham: Right? No, actually this is great that you bought this up. It reminded me of our conversation that we had and you were talking about differences like how Starbucks is Class C or Grade C coffee here in the United States. Is that right? Or something like that?
Darren: I think I don’t know the exact grade. But Starbucks started out as a specialty coffee company, but they became so big and became a brand and you need to have a uniform flavor and a uniform logo. I think we discussed the McDonald’s analogy. Right? McDonald’s doesn’t make a burger, but it’s very well known for selling burgers. Right? But we can talk about being in the real estate business and know that they ran for Starbucks to be able to consistently supply the same amount of specialty coffee in each of our stores from San Francisco to Dublin to Taiwan just wasn’t possible. So they lowered the quality. And then they over-roast to a specific burnt over roasted profile, and then they caramel and sugar and all these different things and they’re wildly successful. But they’re now starting to open a couple of specialty stores I believe in San Francisco and one in Seattle. But I entered speciality game.
Pancham: Yeah, it’s pretty fascinating. The differences in coffee. I’m not a coffee guy. So I probably cannot really appreciate true differences in these flavors and all that. But I’m sure there are many, many people out there who, who can do that.
Darren: Yeah. And there’s a whole industry behind the day for any of the it’s one of the things whenever I speak to someone on the phone, I always get them to do a bit of research on what is specialty coffee, because producing specialty coffee is the reason that we’re in the business. If we were producing commercial coffee, we wouldn’t be wouldn’t be doing. And as an organization, the world organization called the Specialty Coffee Association, it used to be the Specialty Coffee Association of America. And if you go to their websites, there’s amazing detail with tutorials. And it explains really, really well what is special because it’s a system and a set of guidelines that are created so that if I produce a bag of coffee or a lot of coffee here in Panama, and our team graded a lot and we say that the score is 89.5 points. So therefore we want to sell it for $20 a pound. Now we send a green sample to a guy in Japan, which is what we’re doing currently. He will then take that same green coffee roasted to the same profile, he will grind at the exact same level of fineness, and he’ll use the exact same ratio of coffee to water in the cup. And he’ll graders on the same terms, and you should get within a half a point of what we got. And then that’s what manages the whole system respect to the coffee worldwide. That same system is not in place in coffee. Yes, it’s quite a bit more opinion based in coffee and chocolate, but they’re getting there.
Pancham: You mean chocolate
Darren: Yes. Okay, cacao is that. It is the raw ingredient for chocolate that we grow, or you might pronounce it as cocoa in the US. But the part of the fruit of the bean that comes out is the cacao bean or cocoa bean. And that’s what you use to make chocolate.
Pancham: Pretty amazing. Pretty amazing. Cool. So anything else before we move on to our next section of the show?
Darren: Now, one other small thing, it’s not the reason that we’re doing it but a key element of our business model is to be socially sustainable. And again, it’s not just thrown around as a buzzword. It is something that we take very seriously. So we take 20% of the gross profits of our farms and they put them into a socially sustainable pool to provide a better life for the coffee farm workers.
Pancham: Great
Darren: And employees as well. So when we started buying coffee farms, we were surprised to see the young, the native Indian Panamanian workers living on the farms in the conditions that they were living at, which was a mode floor and a little tin shack with no running water, no cooking facilities, no toilets, nothing. So we have been building…for I always say it’s not the Ritz but it’s a solid structure with a solid floor real beds, gas stoves, flushing water, clean, drinkable water, septic system, all that kind of stuff to make, just to give them so much that they can be all the things that we take for granted. We’re just supplying them so they can have some pride and a place they call home. We started a scholar program with nine kids which ended up being 27. And now we’re very proud to say we’ve got 61 kids in school, and we’ve got a few of the adults that are going back to finish their education as well. This was something that we said over this there. Because when we saw the conditions that we were in, we wanted to be part of the solution as part of the problem. And it has grown into a pretty big aspect of the company that’s quite pretty important for a lot of our investors. They want to feel that when they’re investing in one thing that they’re getting the returns is great. But they also want to see that they’re making a bit of a difference as well
Pancham: That is pretty awesome. Very, very nice. And you know, one of these days, I would like to visit and see these coffee farms as well.
Darren: And sure enough, good as heck. That’s another thing. So we just finished our group tour. We had a group of 18 or so people that were down here this weekend, and they just spent Friday, Saturday, Sunday, hiking around the farms, and learning from our team, because you can hear David on myself on a podcast so you can read our emails and meet our spreadsheets. But anyone could do that. Right?
Pancham:
Darren: You’re right. What makes a business work is the team. The knowledge of the…ability of a team and the work ethic of the team, and just the people behind it. So they got to spend the weekend with Andreas who’s our VP of agriculture, our talent and young biologists and value chain analyst. Even spending time with the VP of operations and the VP of finance. So it was open kimono, full access, everybody got to meet the team, taste the product and get to know what it’s like to actually buy coffee from business.
Pancham: Thank you, Darren. We’ll be back after this message.
If you are an accredited investor, and have been thinking about putting your money to work for you, then I have good news for you. I have created an investor club which I call the Gold Collar investor club. I will be putting together investing opportunities exclusively for the group. These are the opportunities where I have done the due diligence for you and will be investing my own money alongside you. If you are interested, please sign up on thegoldcollarinvestor.com/club. I repeat, thegoldcollarinvestor.com/club, I will reach out to schedule a 30-minute phone conversation to discuss your investing goals once you sign up, this can be a good opportunity to diversify and take some chips off the hands of Wall Street to produce some passive income. And in case you are wondering, what is an accredited investor? Accredited investor is someone who has earned more than $200,000 as filing single or more than $300,000 filing jointly for last two years. Another way to qualify as an accredited investor is if your total network is more than $1 million, excluding your personal home. It includes your stocks, 401K’s, IRA’s, cars, etc. Just not the equity in your personal home. If this is you, I would highly encourage you to sign up. So let’s move on to the next section of the show, which I call Taking the Leap round. I ask these four questions to every guest on my show. My first question is, “When was the first time you invested outside of Wall Street”?
Darren: Well, actually, this might come as a bit of a surprise compared to so many other investors. I’ve never actually invested in Wall Street. So everything that we’ve everything that we’ve done, and I started when I moved here to Panama was investing in getting our own businesses up and running. And over the last five years, apart from I have a couple of apartment buildings downtown and apart from some golden silver, our main investment has been reinvesting in the coffee business, the cacoa business and the different syndications that we’re running ourselves.
Pancham: That’s great, you know, great way to get started. All right. So what fears, if you had any given what you’ve told me…Maybe it was there. Was there no fear there? What fears did you have to overcome when you first started investing outside of Wall Street, your case?
Darren: So these answers would be a little bit different. I guess from your other guests my biggest fears and what I needed to be very cognizant of was taking other people’s money when you’re building something like this when you’re syndicating, and you’re taking investors hard earned capital and making sure that you can deliver on that. That was, I wouldn’t say a fear. But that was a big thing that I need to be aware of when I was doing that. So taking the leap of setting up your own company, to be able to make payroll every week, and then being responsible for other people’s investment capital.
Pancham: Right, correct. Great. So my third question is, can you share with us one investment that did not go as expected, if you have any?
Darren: Well, as I said, what we’ve done…..When you look back here that we have, in five years got so many farms with all the infrastructure in place. That’s not to say that there’s not a lot, a lot of ups and downs. So there’s bumps along the road. There’s a lot of stuff that comes along. That’s expected, but doesn’t take as long as you stay true to your team. And the reason why you’re doing what you’re going to do and stay true and honest and upfront with your investors. Full disclosure, letting them know anyone can tell an investor good news, you need to be able to tell an investor bad news setting. Learning as you went along with the bumps along the road and adapting was the biggest thing for us.
Pancham: Great, great. So my last question is, what is one piece of advice would you give to people who are thinking of investing in the Main Street which is outside of Wall Street?
Darren: So the biggest takeaway, I think, for me, I’m very glad to be on your show. And I listen to a lot of podcasts and read a lot of books. I think a lot of people can get caught up in analysis paralysis, and I think you just need to go do something. So obviously do your due diligence, find out what’s comfortable for you, and find a reputable company to work with. If you’re going to start off investing through somebody else, whether that’s a sub-syndication or investing in someone else’s deal, vet the team, more so than the deal because you’ll never see anyone present you with a bad IRR. Right? So invest in the team and a product that you’re comfortable with. Find yourself a mentor. You can listen to as many podcasts with people like yourself who are educational and not pitching a deal. And then just go and do.
Pancham: Nice, nice. You know, this is very true for some of my listeners who are engineers, you know, engineers have this thing of analyzing anything to you know, to a paralysis stage. You know, analysis paralysis. So, yeah, definitely say that. That’s a great advice. So Darren, how can the listeners reach you and you also conduct tours? Right? Tell us about that.
Darren: So the best way to get in touch, if you can share this link, you can go to www. thegoldcollarinvestor.com/coffee. Once you sign up there, we’ll be able to send you our standards, email introduction pack, which contains our FAQ links to our podcasts, and links to our websites where you can get to start your due diligence, they’re probably the best way if you want to come and do a tour, we host three tours. Year three in Panama, three employees, and as a chance for you to come down and meet the team. So like we said, if you’re going to invest offshore, a lot of people need to be comfortable in the country that they’re investing in. So come on down, do a tour, they’re not so much an investment tour. When we set them up with the stats, we thought that 90% of the people would come on a tour and then invest. As it turns out, I think 95% of the people invest first and foremost, and then come on the tour later, which is fine. And it makes for a nice dynamic of the tour because it’s not a sales pitch. It’s literally just a load of investors and maybe one or two new buyers coming down talking about investment ideas, talking about real estate, getting to know us personally, and getting to know the team. So if you sign up for our newsletters, we’ll be able to keep you up to date will announce a full list of the 2020 events guide pretty soon. So once you’re on the mailing list, you’ll get an email with all the tours and events for 2020. And hopefully your listeners can find something that suits their schedule.
Pancham: Great. Thank you Darren for your time today and sharing all your knowledge on the show today. And I’ll probably see you one of these days.
Darren: Sure. Yeah. Thank you very much for having me. Congratulations again on getting the podcast and everything up and running and quitting your job. And all the best going forward.
Pancham: Thank you. Thank you, Darren. I hope that you guys enjoyed the show and got some perspective on this niche asset class. My goal for this podcast was to make you aware of agricultural investing. If you are getting value from the shows, I would like to hear about it. Email me p@thegoldcollarinvestor.com. That’s p as in Paul, @thegoldcollarinvestor.com. This is Pancham. I’m signing off. Until next time, take care.
Thank you for listening to the Gold Collar investor podcast. If you love what you’ve heard and you want more of Pancham Gupta, visit us at www.thegoldcollarinvestor.com and follow us on Facebook at The Gold Collar Investor. The information on this podcast or opinions as always. Please consult your own financial team before investing.

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