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The Citrus Growers Association is looking for investors – and today made a public offering of preferred stock in a company called Plant World Nurseries.  It’s a venture we first told you about in 2015, an effort to make the industry more resilient.  But now CGA has divested the company and made it completely independent, firewalled from whatever financial difficulties the CGA may face. 

Plant World is offering a 6% return on investment – which is better than what you’d get at a bank.  They are looking to attract industry stakeholders, small farmers and institutional investors to buy into 40% of the company’s equity. Â Ervin Perez of the Legacy Fund which is arranging the sale, made the pitch along with executives from the CGA:…

Ervin Perez - Managing Partner, Legacy Fund
"CGA is willing to offer institutional investors and the country as a whole, small farmer an opportunity to invest in one of the fastest growing opportunities within the industry. You understand the industry whether you’re in the CGA or not in the CGA as a farmer you need to replant. There's only one certified nursery between Brazil and Florida and that's the one here."

Henry Anderson - CEO, Citrus Growers Assoc.
"What we're seeing is that plant world nursery is one of the largest nurseries between Brazil and Florida. Brazil industry is much larger so they have nurseries that do over a million plants, Florida industry as well is much larger but when you go from Mexico down we are in that conversation as one of the larger ones, that's what we're seeing."

Thomas Tate - Manager, Plant World Nursery
"We are implementing a quality management system with the implementation of the ISO-9001 system that will help us with improving the processes that we do. Also we're looking at importing HLB tolerant root stocks and varieties into the country. Those have been done in Florida and we're trying our best right now to get them to Belize so that we can provide them our growers."

Ervin Perez - Managing Partner, Legacy Fund
"As you can see from the inception of the entity it will be a profitable company. As we mentioned interims of our discussion with our client CGA we are suggesting that the minimum investment be low to allow even a small farmer to participate. And here are some the benefits, we know in this current market getting a return on your dollar is a very hard thing. We're at this point presenting a 6% dividend yield on the investment which is if you have 100 dollars you'll get 6 dollars at the end of the year there about. Some of the other benefits I don't know if you look at your own portfolios but you want to be diversified in terms of an investment. What does that mean? That you want to have your money in different things, so you have from the energy sector if you had some BEL debentures, BEL shares all the way to local government debt in terms of treasury notes this would be another diversification that would be in that basket of investments; having an equity stake in a growing entity within a major industry in the country. Fortunately we have a tremendous amount of extra savings in the banking system so basically our commercial banks are sitting down on the money and they are not turning it over which creates the problem of not producing enough. This opportunity that CGA is going to be presenting to the stakeholders is an opportunity to move some of this excess cash and turn it into productive use."

Henry Anderson - CEO, Citrus Growers Assoc.
"And we thing the opportunity is now to do something like this because this might open and blaze a trail for other agriculture sectors that require financing to get back up to speed. The reality is that the productive sector has been unable to attract affordably structured financing and this is what it creates. So if you're a investor looking at everything else, this is a product that you want to look at because it's putting right back in the productive sector that can bring the foreign exchange and drive the economy."

Indeed, the economy is in recession primarily because of a decline in what’s known as the primary sector, that’s basically agriculture, forestry, fishing and mining.  And while citrus is key to the economy, investors may also consider it to be substantially more risky.  We mention it because investors know that the rate of return is tied to risk;  basically,  the higher the risk, the higher the rate.  Problem is, this 6% rate is the same one that BEL gives on its very low risk debentures.

So, shouldn’t this rate then be higher considering that the citrus industry has been wracked by citrus greening disease and yearly downturns in production?  That’s what we asked:…

Ervin Perez - Managing Partner, Legacy Fund
"I think 6% given the opportunity cost so there's only so much BEL securities in the market, you can't get a BEL security so you have to compare it to what the alternative; so the alternative for looking at a saving account at the bank might be giving you 1-2% maximum. If you're looking at a term deposit, 2-3% at the maximum if the bank will accept your money because the bank is saying we just have too much money so we're not going to be paying you on nothing. So we're looking at it in relative to where an investor can put his money at this time. Given that there is a dirt of investment right now in the economy and we think 6% is reasonable but then the market will decide because how this take place is with a continuous conversation with institutional investors and they may come back like Jules and say you know we think the risk requires a little higher yield on this investment and then we'll have to discuss."

Jules Vasquez
"How do you assure an investor that Plant World Nursery is sufficiently firewall from the various encumbrances which CGA faces?"

Ervin Perez - Managing Partner, Legacy Fund
"That's a very excellent question and that is actually one of the reasons why it's being set up as a separate legal entity. One of the reasons for doing this type of exercise is exactly your concern, if Plant World -- if CGA given perhaps as you have mentioned some concerns, the investor maybe a little bit more weary of making a direct investment in CGA in certain something like this. Separating this entity as a legal separate entity on of its own having its own board of directors, a different set of shareholders; again they  bring in a fresh set of shareholders through the small farmers institutional that will ensure that the board of directors operates within the best interest of Plant World Nursery."

The shares go on sale at the end of January.  The minimum investment is 500 dollars, which is equivalent to 100 shares.