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I received a call today from a NYC investment banker. I charged him
US$ 300 per hour.
After I hung up, I realized that this was too cheap. One cannot
teach wisdom and understanding in ONE hour. Recently I have
traversed my 10 year anniversary in my Brazilian adventure and
learning curve.
Some days I wonder if I have learned anything at all and then other
days I get calls from newbies with the latest investment idea. I
then realize that I am a PhD level expert in comparison.
Today's call was on how much it would cost to set up a sugarcane
plantation and mill.
I have heard all this before. After Hurricane Katrina,
everyone was sugarcane crazy back in 2006/2007. A great majority of
these new sugar mill startups went broke during the crisis.
Today many have been consolidated by the big guys and are back on
track.
With the short USA corn crop and smaller than expected Brazil
sugarcane crop, the investment guys wheels are turning. How can we
get into the next Brazil sugar wave? How much does it cost? What are
the returns? If we can pencil in 6-7% return, we can raise a
“hundred million.”
No problem………
Today's call was from
a researcher who has never been to Brazil. He had no idea where
Goiás was. How do you spell it? He had no idea that
there were restrictions on foreign ownership of land in Brazil. He
did not realize that sugarcane needed to be zoned. He was surprised
to hear that some counties do not want sugarcane in them. So much of
this is covered in the
newsletters. When I start to add some color and history to the
recent sugarcane events in Brazil such as recent drought and frosts,
he interrupts me and says that is not important.
We are looking at sugar costs from today going forward. History and
context was not necessary. I could not believe it.
Investments in Brazil cannot be run by remote control from NYC or
London. One must have boots on the ground. One must have competent
local Brazilian management. This only comes with time invested in
the country - short cuts lead to disaster.
I approached Brazil 10 years ago with the mindset of investing in
time, language and contacts before I invested here. Without that, I
knew I did not stand a chance of surviving much less thriving. I am
still here, many others have came and gone. New “fads” are being
schemed up everyday for Brazil. It truly is amazing……
I also got an email today from a good friend in Parana state. He was
asking me for marketing advice for 2012 soybeans. Grain buyers and
coops are eager to buy 2012 soybean production.
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