Venezuela is a country very rich in natural resources, with many natural resources. investment opportunities in the agricultural sector. Currently, agricultural products continue to satisfy domestic demand and are gradually recovering as an industry. And in view of the latent need for foreign investment, different mechanisms are being developed that will make possible the recovery of both livestock and agriculture in Venezuela. In that sense, in this article we will talk about the agricultural industry in Venezuela and how foreign investors can be integrated in its activities.
Current context of the agricultural industry in Venezuela
Currently, the slight economic recovery experienced in Venezuela has balanced the consumption and purchasing power of Venezuelans. But this has not represented a drastic change in the commercialization of agricultural products, nor has it been able to help local producers due to the numerous problems Venezuela is facing. For this reason, some items such as rice, lentils, beans and white corn continue to depend on imports to satisfy local demand. Despite the considerable efforts of producers to increase the number of hectares planted in the country.
Since last year, the easing of exchange controls and the possibility of importing raw materials more easily has allowed the local industry to oxygenate. However, problems such as smuggling, transportation and cash flow have slowed down commercial processes, causing producers to decide to plant other products for export. As a result, there has been a doubling of crops that are not destined for local consumption, such as emerald beans. The 2021-2022 season has been one of the most successful in recent years, reaching a production of 70,000 tons that are successfully positioned in Asian markets.
In the case of the livestock industry, domestic production is able to supply 98% of the demand for meat products in the country. In fact, the local herd is capable of supplying this demand and exporting the small surplus to international markets. In 2021, 280,000 head of cattle were exported to countries such as Egypt, Lebanon and Iran, which is considered an important recovery for the local industry.
Is there an agricultural investment model in Venezuela?
In view of this small recovery of the agricultural industry in Venezuela, the national government has communicated its desire to attract foreign investors. At the same time, private initiatives are being developed to benefit local producers with investments and credits so that they can continue their activities.
Among these initiatives are the Digital Livestock Investment Certificates issued by Inversora Finagro S.A. and endorsed by the National Superintendence of Securities (Sunaval). These are securities that make possible investments in the Venezuelan countryside by means of a standard contract issued by the stock exchange. This contract comprises the investment in cattle fattening, specifically 50 animals, approaching a live weight of 17,500 Kg. and offers a yield of 8.78% after 6 months, through the use of bolivars, crypto-assets and foreign currency. Likewise, this financial instrument may be used to invest in other agricultural products such as palm oil, sugar cane, among others.
These investment models are beneficial because the portfolio of producing companies includes experts with many years of experience. Therefore, they invest in real economy, mitigating the risks associated with the sanitary and productive conditions of livestock and other items.
Recommendations for investing in Venezuela's agricultural industry
Investing in the agricultural industry in Venezuela may seem like a challenge with a lot of uncertainty. While it is true that variables that are not found in other markets must be overcome, the benefits may outweigh the disadvantages of each business. That is why when analyzing an investment opportunity, the project must be studied in detail to identify its viability. Therefore, some of the tips we can share with you when investing in the Venezuelan agricultural industry are:
1- Study the water needs and supply system of the project.
This is very important when reviewing a project, especially in fields and properties in certain states of the country. For this reason, we recommend analyzing the irrigation infrastructure and comparing it with the rainfall conditions of the place, as well as the conditions during the dry season. Although this cannot be solved by the investors, it will give them a clear idea of the scope of the project and the expertise of the executing company.
2- To take into account that cost structures in agricultural companies may vary in Venezuela.
In Venezuela there are independent variables that are not found in any international market. These variables are the result of the large number of needs that the country has in terms of roads, transportation, basic services, among others. Therefore, it is necessary to prepare for possible price increases, shortage of inputs, increase in operating costs, among others, especially if the agricultural companies operate in sectors with a lot of competition. In these situations, companies must identify and establish protection mechanisms that will enable them to counteract the effects of these external factors.
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