Irish buy 22,000 acres in Argentina

By Pat O'Keeffe

Frustrated by the restrictions attached to farming in Ireland, two of our largest scale tillage farmers have made a big investment in Argentina.

At Dublin airport last Saturday evening, I spoke to Jim McCarthy from Castledermot and Walter Furlong from Enniscorthy as they prepared to board a plane for South America.

They are the main drivers behind an investment vehicle that has recently purchased a total of 22,000 acres of tillage land in Argentina. They are betting on a large increase in world commodity prices, which are currently at historic lows. They believe that demand from the bio-energy sector in particular is set to send wheat, maize and soya prices on an upward plane.

They are now seeking additional investors and estimate that the project will return an annual dividend of 8%. The minimum investment is $250,000. A total of $32m has already been raised, with a further $7m being sought.

Walter Furlong explained that he was attracted to Argentina by the price of the land and the return on investment. "Eight to 10% from farming is unheard of in this country. We couldn't expand any more here in Ireland and this allows us to invest in a business that we know very well - farming, grain handling and trading of grain.''

Both McCarthy and Furlong have experience of running 2,000 acres of tillage in Ireland. "So scale doesn't faze us,'' Walter Furlong said.

His 2,000 acres in Ireland is spread across 25 farms. His 22,000 acres in Argentina consists of just two - one of 13,000 acres and one of 9,000 acres.

Jim McCarthy said that Argentina was chosen because:

• Land is very cheap.

• Fantastic climate for tillage.

• Three feet of topsoil and 1,100mm of rainfall.

• Most fields are 100 hectares.

• All major transactions such as land purchase and grain sales are based in American dollars.

• Argentina has very strong land law - non-nationals have the same rights as the nationals under the Constitution.

• Land is "so flat it's hard to imagine''.

Land price in Argentina can range from $200 - $20,000 per hectare. "We are trying to find double cropping land that we can buy at a price that will give us an 8% annual return at current commodity prices,'' Jim McCarthy explained.

Double cropping means that two crops, such as wheat and soya beans, can be harvested from the same land in the one year.

Maize for grain production will also be grown, while sunflowers and oilseed rape may also feature. "We see it as a five to six year plan. We're going to extend to five or six farms and get them up and running profitably,'' Jim McCarthy explained.

I asked Jim McCarthy to highlight the potential negatives. "You're dealing with South America, where socialism is common,'' he said. "We could get very wet or very dry years. The other big risk is that a rise in commodity price will not come.''

The full details of the investment are contained in a prospectus, but key points include:

Investors must remain for at least two years, after which point a value will be placed on their shares based on the prevailing land values.

Voting rights are tied to shareholding.

Choice of leaving your money in to grow your holding or taking an annual dividend.

25 October is the closing date for investors.

The pair work closely with a farming company in Argentina, but Jim McCarthy will run the farms and spend most of his time in Argentina. Walter Furlong will visit on a quarterly basis.

As well as tillage, Walter Furlong runs Target Fertilizers, a company that he says "has grown to take a 20% share of the Irish fertilizer market from a standing start in 2000''.

He is also the managing director of Cooney Furlong, which is based in Enniscorthy and handles over 50,000 tonnes of grain per year.

"We're not promising anything - this is farming. But we expect very significant increases in commodity prices and a good increase in land values,'' Jim McCarthy concluded.

For more information contact Walter Furlong, Caim, Enniscorthy, Co Wexford on 053-9255389.