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  1. 1. Ukraine Agricultural Land Investment Low-entry – just US$1,865 per hectare High-yield – 415% forecast appreciation after five years Fully-managed – a hassle-free addition to an investment portfolio
  2. 2. The BBC investigate why buying Ukraineagricultural land is a must for anyserious investor.“As fast as the combines can get the wheat out of the fields,it’s being gobbled up by a ravenous international market.” Jeremy Cooke, BBCBBC Newsnight Report, 24th August 2009In a special report on the food shortages facing the world, Jeremy Cooke,a top journalist and specialist on agricultural issues, visited the vastfarmlands of Ukraine to report on the huge changes currently taking placeon one of the world’s most fertile but least exploited agricultural areas. To watch Jeremy Cooke’s report in full on BBC Newsnight visit:
  3. 3. Contents4 Why Invest in Agricultural Land in Ukraine? 5 The Investment6 Investment Model: Wheat7-8 Why Invest in Agricultural Land?9 Why Invest in Agricultural Land & Crops in Ukraine?10 - 11 An Overview of Ukraine12 About Aston Lloyd & Eurofarms13 Purchase Process14 - 15 Crops16 Why Buy Agricultural Land in Ukraine?17 About Obelisk Lutsk Kyiv Kharkov Lviv Dnipropetrovsk Donetsk Zaporozhye Odessa Sevastopol Yalta 3 To find out more about this investment visit: WWW.OBELISKINVESTMENTPROPERTY.COM
  4. 4. Ukraine Agricultural Land InvestmentWhy Invest in Agricultural Land in Ukraine • Incredibly low entry price – just US$1,865 per hectare. • Investment with a well-established London-based plc with over €120 million in property currently under management. • 415% projected capital appreciation after five years. • Dual-moneymaking opportunity – annual return from harvest profits and capital gains from increasing value of the land. • Ukraine’s harvest yield is expected to double over the next five years. • Fully-managed and therefore worry-free investment. • Rising world population and higher prices are creating food shortages meaning the need for additional food supplies is urgent. • Opportunity to diversify your portfolio. • Due to increasing oil prices, crops grown for biofuels, such as wheat and rapeseed, are in very high demand. 4 To find out more about this investment visit: WWW.OBELISKINVESTMENTPROPERTY.COM
  5. 5. Ukraine Agricultural Land Investment “The business of feeding the world has emerged as an important investment theme which should have a place in all well diversified investment portfolios.” (Baring Global Agricultural Fund)The InvestmentThis latest Obelisk recommendation offers several outstanding investment advantages: • low-entry – just US$1,865 per hectare. • high-yield – 415% projected capital appreciation after five years. • fully-managed – a hassle-free addition to an investment portfolio.The investment involves the purchase of land rights The purchase of land rights offers investors dualin agricultural land situated in the Crimean Peninsula returns. The land will be planted (as from February/in Ukraine. Ukraine has one of the world’s richest March 2010) with five different crops (wheat, barley,and most fertile soils. Around 70% of the country is rapeseed, sunflower and corn) on a rotational basisarable and Ukraine boasts a significant proportion and harvested. Every January during the investmentof the world’s chernozems (highly-fertile black period, investors receive 30% of the net harvest profittopsoil). Known as the ‘bread basket of Europe’, from the previous year. At the end of Year 5 of theUkraine grows a variety of agricultural products and investment period, the site is expected to be soldis the world’s 10th largest cereal exporting country, in its entirety to institutional funds, offering investorsalthough non-intensive farming methods mean that substantial return on their initial investment.yields currently fall short of potential. Farmland has recently sparked considerableDespite its rich soil and agricultural potential, interest among institutions and foreign prices in Ukraine per hectare are currently For example, the Baring Global Agricultural Fundfar below those in other key grain-producing launched in January 2009 gained 28.6% fromcountries. For example, prices in Argentina range April to October 2009. According to Baring’sfrom US$4,400 to US$7,800, those in the US, October 2009 report, “the business of feeding theUS$4,500 to US$11,000 and those in Western world has emerged as an important investmentEurope, US$13,200 to US$32,200. theme which should have a place in all well diversified investment portfolios”. InvestmentInvestors purchase the land rights for a minimum of specifically in Ukraine includes Morgan Stanleyone ‘pai’* of prime agricultural land at the very low who bought 40,000 hectares in March 2009 andprice of US$1,000 per hectare (plus legal fees of Landkom International (the UK company featured$115 per hectare). In January 2010, investors are on the BBC2 Newsnight report) who has leasedrequired to make a one-off cultivation payment of 115,000 hectares to farm directly.US$750 per hectare. * Ukrainian term for an area of land consisting of between 2 and 20 hectares. 5 5 To find out more about this investment visit: WWW.OBELISKINVESTMENTPROPERTY.COM
  6. 6. $3,403 pergain Ukraine Agricultural Land Investment Investment Model: Wheat Land purchase Annual projected ROI annual Projected land ROI land return from harvest yield value per ha value harvest per ha* Initial Investment US$1,000 Year 1 US$93 12.4% US$1,920 192% Year 2 US$125 16.7% US$2,457 246% Year 3 US$160 21.3% US$3,145 315% Year 4 US$198 26.4% US$4,026 403% Year 5 US$240 32% US$5,153 515% Total US$816 per ha 108.8% 5 year US$4,153 per 415% (241% equivalent ha gain including $750 cultivation) Current income projections in the above table are highly conservative in Yield: recent analysis into Ukraine’s agricultural industry comparison to the 8.6 mt/ha generated in the UK (Scottish Government, 2009) and has found yields (i.e. metric tonnes of produce per ha) in consideration of projected increases in commodity prices and yields as a result of surging above 2010 projections. The yield is projected continued investment in the region. to be within 3.5 and 8 metric tonnes per hectare (Agricultural Marketing Resource Centre, 2009). Harvest Projections: Wheat Exit: as a result of expressed interest from institutional funds, we expect the site to be sold in its entirety after Potential Crop Price** 5 years, offering significant ROI for investors. US$205 US$215 US$220 US$230 4 mt/ha US$81 US$93 US$99 US$111 per Hectare*** Metric Tonne 5 mt/ha US$143 US$158 US$165 US$180 6 mt/ha US$204 US$222 US$231 US$249 7 mt/ha US$266 US$287 US$297 US$318 * Based on a combined projected wheat price and crop yield increase. ** Based on projected wheat price released by Chicago Board of Trade, November 2009. *** Based on a potential yield growth of between 3.5 and 8 mt/ha (USDA, 2009). 6 To find out more about this investment visit: WWW.OBELISKINVESTMENTPROPERTY.COM
  7. 7. Ukraine Agricultural Land Investment “The bottom line is that the world’s population is going up and food supply is going to be more of a problem.” (Professor David Pink from Warwick University and interviewed on BBC2 Newsnight)Why Invest inAgricultural Land?Agricultural produce provides the world’s food Prices of agricultural commodities rose to recordand as long as people need to eat, there will be levels in 2008. At the height of demand, wheatdemand for agriculture. This demand, whether reached US$13 a bushel, its highest price ever,crops for human consumption or crops for animal with corn costing US$7.50 a bushel. 2008feed, is consistently growing fuelled by an ever saw record crop yields, which led to a fall inincreasing world population and by changes in crop prices, although the international price ofdiet, particularly in China and India. grain has risen strongly since March this year. Several factors lead experts to believe thatThe world’s population is growing at an astonishing prices are likely to continue a steady upwardrate. According to the US Census Bureau, the global trend. According to a report published by thepopulation reached 6.79 billion in November International Food Policy Research Institute in2009. The UN expects the world population to rise October 2009, climate change means crop pricesby 33% by 2030 when it will reach 8 billion. The will rise spectacularly by 2050. For example,Food and Agriculture Organisation (FAO) projects wheat prices are expected to increase by 194%,that the world will need an additional 1 billion maize by 153% and rice by 121%.tonnes of grain by 2030. “The bottom line is that the world’s populationThe world’s appetite is changing too. As wealth is going up and food supply is going to beincreases in the world’s largest countries such as more of a problem,” says Professor David Pink,China and India, so does the desire for a better interviewed on BBC2 Newsnight. In countries likestandard of living, which includes better food. For China and India, grain is not just a commodityexample, demand for meat among the Chinese but also a strategic material.and Indian fast-expanding middle classes hasgrown hugely over the last few years. Therefore,the demand for animal feed has also grown,which in turn has led to rises in crop prices. 7 5 To find out more about this investment visit: WWW.OBELISKINVESTMENTPROPERTY.COM
  8. 8. Ukraine Agricultural Land InvestmentThe Facts Wheat yields (2008/2009) projections 9 8 Crop yield (mt/per ha) 7 6 5 4 3 2 1 USDA, 2009 0 y e y e a S. a UK an nc ar ai n in U. tin er m Fr a ng Uk r Ch ge n G Hu Ar Potential wheat yields: Current versus obtainable yield 9.0 8.0 7.0 Current 6.0 Obtainable 5.0 4.0 3.0 2.0 World Bank, Ukraine’s 1.0 response to the global 0.0 food crisis. May 2008 y ne y ia il a a an ai A ke tin ni m r US Tu r i op az n a er Uk Eth Br ge nz G Ar Ta 8 3 To find out more about this investment visit: WWW.OBELISKINVESTMENTPROPERTY.COM
  9. 9. Ukraine Agricultural Land InvestmentWhy Invest In Agricultural Land & Crops in Ukraine?Known as ‘the bread basket of Europe’, Ukraine has In 2008, a European Bank for Reconstructiona long-standing tradition of agricultural production. & Development (EBRD)/FAO report identifiedHome to rich fertile soil with an abundance of Ukraine along with Kazakhstan and Russiachernozems, Ukraine is 70% arable land and as three of the few countries where both anis currently the world’s 8th largest exporter of expansion of arable land-use and considerablewheat and ranks 10th for overall cereals exports. intensification could take place without seriousAccording to World Focus, “the perfect balance of environmental consequences. According to thesunshine and rainfall on Ukraine farmland means it report, these three countries could have a crucialis bursting with marketable products”. impact on the world food situation. Professor Ian Crute, Director of Rothamsted Research (the UK’sThe forecast for yields and production of major largest agricultural research centre) says thatgrains (e.g. wheat and oilseeds) in Ukraine for “prospectively, Ukraine is becoming an important2009 are excellent. As of early November, Ukraine source of food supplies”.had harvested almost 45 million tonnes of grain. Farming practices and grain storage facilities areUkraine is a grain-producing country with huge currently under major improvement in Ukraine inpotential to produce more (see Table 3 on page order to increase agricultural output. This is known8). At a time when the world’s demand for food as the ‘catch-up effect’, and Ukraine’s harvestis increasing dramatically, Ukraine is, according yield (metric tonne per hectare) is expected toto the World Bank, “in a position to make a more than double over the next five years.significant contribution to the international effort todeal with the food crisis”. 9 To find out more about this investment visit: WWW.OBELISKINVESTMENTPROPERTY.COM
  10. 10. Ukraine Agricultural Land Investment Known as ‘the bread basket of Europe’, to the international effort to deal wi Ukraine has a long-standing tradition of food crisis”. agricultural production. Home to rich fertile soil with an abundance of chernozems, In 2008, a European Bank for Reco Ukraine is 70% arable land and is currently & Development/FAO report identifie the world’s 8th largest exporter of wheat and Ukraine along with Kazakhstan and ranks 10th for overall cereals exports. as three of the few countries where an expansion of arable land-use an The forecast for yields and production of considerable intensification could ta major grains (e.g. wheat and oilseeds) in without serious environmental conse Ukraine for this year are good, with wheat According to the report, these three production expected to reach the highest could have a crucial impact on the levels since 2002/03. Acreages and yields food situation. of all crops are predicted to increase on last year’s. Farming practices and grain storagAn Overview of Ukraine Ukraine is a grain-producing country with huge potential to produce more (see Table are currently under major improvem Ukraine in order to increase agricu output. This is known as the ‘catch-u ?? on page 5). At a time when the world’s and Ukraine’s harvest yield (metricUkraine’s economydemand for food is increasing dramatically, In common with the is expected to more than d saw growth was 7.9%. hectare) vast majority of nations worldwide, Ukraine experienced aextraordinary growth between to theslowdown last year, althoughover thewas still years. Ukraine is, according World Bank, “in growth next five a position to make a significant contributionindependence and 2007 when 2.1%. In its Economic Update in October 2009 on Ukraine, the World Bank predicted 2.5% growth inGDP growth was 7.9%. In 2010. The EBRD is predicting 3%. These predictionscommon with the vast majority of vastly improved growth are based on Ukraine’s strong export market comprised mainly of steel,of nations worldwide, Ukraine chemicals and grain.experienced a slowdown last year, Ukraine became independent from the formeralthough growth was still 2.1%. Soviet Union in 1991 when a democratic republic was established.With an area of 603,700km2, Ukraine is Europe’ssecond largest country and has a population of Improvements in the political situation led toaround 45.9 million. Located at the crossroads of the IMF Mission to Ukraine in October 2009east-west and north-south trading routes, Ukraine reporting that the economic and financial situationenjoys an ideal position for exports, which is in Ukraine is stabilising. The IMF has allocated aenhanced by high-tech transport infrastructure. US$16.4 billion loan to Ukraine.Ukraine’s economy saw extraordinary growthbetween independence and 2007 when GDP 10 To find out more about this investment visit: WWW.OBELISKINVESTMENTPROPERTY.COM
  11. 11. Ukraine Agricultural Land InvestmentUkraine became a member of the World TradeOrganisation in May 2008 and belongs to theEU Eastern Partnership (EP), an alliance similarto a customs union. EP membership has allocatedUkraine €494 million in EU funds between 2007and 2010. In addition, in late October 2009, theEU Commission agreed a loan of €500 millionto Ukraine. Discussions for membership of NATOare well advanced and Ukraine aspires to EUmembership within the next few years.Ukraine’s property market expanded hugelybetween 2002 and 2007, particularly in thecapital, Kyiv. The capital’s property marketremained stable during 2008, although the houseprice increase of 7.2% was the lowest since2003. In common with property markets globally,Ukraine has been affected by the economicslowdown. However, property in Donetsk,Kharkiv, Kyiv and Lviv is expected to receive aboost from the UEFA Euro 2012 matches held inthese cities.Ukraine’s tourism is currently under-developed,although expanding fast. According to the WorldTravel and Tourism Council (WTTC), the tourismsector in Ukraine will see real growth of 6.4%annually over the next decade. The WTTC ranksUkrainian tourism 20th in the world in terms ofgrowth. Ukraine received nearly 25.5 millionvisitors in 2008, a massive 10% increase on theprevious year. 11 To find out more about this investment visit: WWW.OBELISKINVESTMENTPROPERTY.COM
  12. 12. Ukraine Agricultural Land Investment Aston Lloyd About& Eurofarms This latest Obelisk investment recommendation is backed by firm credentials, affording the investor peace of mind along with excellent returns. Owners of the lease on the land in Ukraine are Aston Lloyd Agri-Commodities Ukraine, a Ukraine-registered limited liability company (LLC). This LLC is in turn owned by Aston Lloyd Agri-Commodities Ltd, asubsidiary of Aston Lloyd Holdings plc, a London-based property development and investment company.Aston Lloyd Holdings plc brings over 30 years property investment experience to this low-entry investment andthe company currently has a property management portfolio of over €120 million. Specialising in emergingmarkets, Aston Lloyd’s existing portfolio includes residential and hotel developments in Bulgaria, NorthernCyprus, Slovakia and Turkey. Managing operations and cultivation of the farmland in Ukraine is Eurofarms LLC, a Ukraine-based farm management company. Eurofarms’ responsibilities include farm management, the implementation and supervision of modern technology, constant monitoring of the land, optimum soil conservation and the timely sale of agricultural products at the highest profit. Eurofarms’ principal strategies are to improve productivity and yield, to control grain storage facilities (vital for flexibility in pricing) and centralise key processes and control. These strategies will increase yield and therefore profitability from the land.Eurofarms has a highly experienced team of experts and advisors. These include the Chief Executive Officer,Richard Rozwadowski who brings more than 30 years’ farm management experience to the project. Richard’sexpertise includes heading a major EU project to develop supply chains in Ukraine and advising FAO inUkraine. Eurofarms LLC’s economic advisor and market analyst is Dr Sergey Feofilov, managing directorof UkrAgroConsult, a leading Ukrainian agricultural economic and market research company. Furtherinformation about Eurofarms is available on the company website: 12 To find out more about this investment visit: WWW.OBELISKINVESTMENTPROPERTY.COM
  13. 13. Ukraine Agricultural Land Investment Purchase Process Invest between 9th November and 31st December 2009 at US$1,000 January 2010 per hectare1 One-off cultivation fee of US$750 per (plus US$115 per hectare legal fees) hectare to be paid² January 2011 Harvest profit paid to investors4 February/March 2010 Crop plantation beginsSeptember 2010Crops sold at marketprice3 July/August 2010 Crop harvesting commences1.Investors must purchase at least one ‘pai’consistingof 2 to 20 hectares.2.In any force majeure event (e.g. drought, flood, disease orinsect attack), investors will be required to pay an additionalrecultivation fee, which will not exceed the cultivation fee.3.Time of sale and volume of produce sold is strictly dependanton market conditions and will be based on when the highest-market price can be achieved.4.Investors will receive 30% of the net profit fromthe harvest. 13 To find out more about this investment visit: WWW.OBELISKINVESTMENTPROPERTY.COM
  14. 14. Ukraine Agricultural Land InvestmentCropsUkraine’s fertile soil lends itself perfectly to the cultivation of a number of crops, all ofwhich are vital soft commodities. The following five crops will be grown on thefarmland on a rotational basis* (essential in good farming practice): Barley Barley is a main source of animal feed and is also used for malting and health food. Demand for barley is increasing along with the demand for animal feed (developing nations such as China and India are eating more meat). Since the per kilo beef /crop production ratio is 1:7, barley will continue to be in high demand. Barley is the fourth most produced crop in the world and is known for its strong yields. Drought-tolerant, barley also has a short growing season. Current market price: 130.7 (US$/mt)** Current futures price: 153 (US$/mt)*** Maize Maize (corn) is the most widely grown crop in the world. This cereal grain is mainly used in food production, particularly industrialised food as maize is a major source of starch. Maize can also be used to produce biofuel and as such is in high demand. Current market price: 167.3 (US$/mt)** Current futures price: 214.2 (US$/mt)*** Rapeseed Rapeseed is an important source of vegetable oil (like sunflower oil, it can help reduce cholesterol levels), animal feed and biofuel. According to USDA, rapeseed is the world’s third most-produced vegetable oil and the second source of protein meal. Rapeseed production is increasing annually and 2008 saw record levels of rapeseed production. Current market price: 885.83 (US$/mt)** Current futures price: 1,561 (US$/mt)*** 14 To find out more about this investment visit: WWW.OBELISKINVESTMENTPROPERTY.COM
  15. 15. Ukraine Agricultural Land InvestmentCrops Sunflower Sunflower is a highly versatile crop. It is used for vegetable oil, margarine and animal feed. Sunflower also produces latex and research is advanced in the use of sunflower as an alternative to hypoallergenic rubber. In addition, sunflower is a ‘carrier oil’ for bio-diesel production. Sunflower has a short growing season (it can be sown and harvested after wheat) and is tolerant of summer drought. Sunflower crops also improve soil quality as they help remove toxic ingredients. Ukraine forms part of the ‘sunflower triangle’ (along with Argentina and Russia), the world’s top three producers. The 6.18 million tonnes harvested during the 2008/09 Marketing year was a record in Ukraine. Current market price: 1,029 (US$/mt)** Current futures price NB: No futures market is trading for this crop Wheat As the biggest global source of dietary protein and food, wheat is the world’s most important crop. It is used in thousands of foodstuffs including bread, breakfast cereals and beer. It is also an animal feed and is even used for construction material. Like sunflower and maize, wheat is also grown for carbon-negative biofuel, considered a vital tool against global warming. For this reason, many countries are expanding their production of wheat. Wheat produces high yields and is therefore widely cultivated as a cash crop. It grows well in many countries including Ukraine and is one of the crops in highest demand in the world. The variety grown in Ukraine is mostly Hard Red Winter wheat. Current market price: 188.64 (US$/mt)** Current futures price: 215 (US$/mt)**** These crops are provided as an indication of what could be planted. Eurofarms LLC will also monitor market price performance and seedavailability of various other crops to ensure the strongest returns for investors. Therefore it may be necessary to produce a crop not listed above.** All prices are based on November 2009 figures available from the World Bank Global Commodities Index and USDA, as well as ChicagoBoard of Trade. Note, wheat price is based on production of winter wheat, the dominant wheat grade grown in Ukraine.*** Futures prices based on current global commodities index long-term futures contracts for September 2010. 15 To find out more about this investment visit: WWW.OBELISKINVESTMENTPROPERTY.COM
  16. 16. Ukraine Agricultural Land InvestmentWhy Buy Agricultural Land in Ukraine?This farmland investment opportunity offers several compelling reasons to invest: • Low-entry price. • High-yield returns on a small investment. • Opportunity to enjoy annual returns as well as capital gain at the end of the investment period. • Global demand for grains is steadily increasing. • Ukraine has huge untapped agricultural potential. • Fully-managed and therefore worry-free investment. • Investment with a well-established London-based plc with a property management portfolio worth over €100 million. • Opportunity to diversify your portfolio. 12 16 To find out more about this investment visit: WWW.OBELISKINVESTMENTPROPERTY.COM
  17. 17. About Obelisk Obelisk is an award-winning property investment company, renowned for its expertise in the world of international property investment. Obelisk carries out thorough in-house research and analysis plus compulsory due diligence on all its recommended projects ensuring that clients are provided with only the best, financially secure investments. For more information visit: www.obeliskinvestmentproperty.comDisclaimerInformation contained in this brochure is believed to be correct, but this cannot be guaranteed. Whilst Obelisk makes everyeffort to ensure that information herein is correct, it is not to be relied on as a basis of any contract or commitment and shouldnot be construed as an offer or invitation to invest. No personal recommendation is being made to you and the past is not aguide to the future. Obelisk does not accept responsibility for any of the content, effects of errors or omissions.The brochure in its entirely is protected by legislation on intellectual and industrial property and it is forbidden to reproduce,distribute, publicly disseminate or transform it, except for personal use. It is also forbidden to reproduce, relay, copy, assign orbroadcast, in whole or part, the information contained in this brochure, for whatever purpose and by whatever means. 17 To find out more about this investment visit: WWW.OBELISKINVESTMENTPROPERTY.COM
  18. 18. For general and international enquiries: Tel: (0034) 952 820 319 Fax: (0034) 952 825 790 l