Investing in farming business in EU

Discussion in 'International Business' started by legumesgrower, Jun 25, 2021.

  1. legumesgrower

    legumesgrower UKBF Newcomer

    3 0
    Hi,

    This is a first draft of a business plan and I'm trying to ascertain a way forward.

    Basically, I have a contact in EU Schegen zone who has several years farming experience and the necessary contacts to sell the produce. This is why I'm attracted to the investment.

    The land value is 300K Euros and the basic plan is to share the cost of the land purchase.

    I'm from UK and the other party an EU national.

    There are questions I need to address.

    Is it better to try and get a business loan? How likely am I to get a loan for this sum?

    Now, let's imagine things go sour for whatever reason. What kind of exit strategy options do I have? Once the business is up and running, I can't imagine there'd be any problems but it's obviously wise to plan for every eventuality. What if I have a dispute with the business partner and can't find a way forward?
     
    Posted: Jun 25, 2021 By: legumesgrower Member since: Jun 25, 2021
    #1
  2. atmosbob

    atmosbob Contributor

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    Different EU countries have different setups. France has vast amounts of unused land for instance. Some areas have schemes for subsidised emergency water for irrigation. There are also grants for providing jobs in the countryside.
     
    Posted: Jun 25, 2021 By: atmosbob Member since: Oct 26, 2009
    #2
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  3. Trevor Andrews

    Trevor Andrews Contributor

    302 89
    As far as business loan is concerned I would expect a bank would want some degree of collateral so have you a property that could support such a loan.
    As mentioned in another response grants, government support and mortgages may be other options .
    As for disputes well it is the same as any other business. It depends on the legal structure you chose and the country the company is registered in.
     
    Posted: Jun 26, 2021 By: Trevor Andrews Member since: Feb 9, 2021
    #3
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  4. Mr D

    Mr D Contributor

    28,528 3,537
    Exit strategy? Depends how you set it up. Are you going to have any collateral for your investment? Or just hope at some point the business can repay you?
    Or are you buying shares? In which case could you later sell shares to the other parties involved? Of course just because you want to sell at a price does not mean others have to buy....
    Often enough the shares are effectively worthless at some point.
    If the other party stops working then what? Still own part of the business but maybe no income for the business...

    Dispute? Depends again on set up. We often tell people on here get an agreement in writing now while you are still talking that can be used when you have stopped talking.
    Lots of people trusted their friend / family member / trusted associate etc and when it all goes wrong are getting nothing and have stopped communicating.
     
    Posted: Jun 26, 2021 By: Mr D Member since: Feb 12, 2017
    #4
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  5. legumesgrower

    legumesgrower UKBF Newcomer

    3 0
    The other party wants to buy the land and is open to sharing the cost of it. I'm not certain of the exact land value but per plot I believe it's 300-400 K euros. So, therefore I'd have to be able to invest 150-200 K euros. The other party would manage the farm as he has the experience. Obviously inputs and workers would have to be paid for.

    "Some areas have schemes for subsidised emergency water for irrigation. There are also grants for providing jobs in the countryside." (SORRY, I DON'T UNDERSTAND YOUR SYSTEM OF QUOTING ON THIS FORUM? IT SEEMS UNNECESSARILY COMPLICATED. USUALLY I COPY TEXT FROM A QUOTE AND HIGHLIGHT AS A QUOTE BUT WHEN I CLICK ON YOUR QUOTE BUTTON I GET CONFUSED AND THEN I SEEM TO BE SPAMMED WITH MORE POP UPS)

    Yes, the EU grant option is a good idea. I heard there are schemes available for agriculture. The land is in southern Europe i.e. it gets very hot in summer.

    Investing my own money in the scheme is probably too risky and getting EU subsidy somehow makes more sense. If anyone can point me in the right direction that'd be appreciated.
     
    Posted: Jun 29, 2021 By: legumesgrower Member since: Jun 25, 2021
    #5
  6. Mr D

    Mr D Contributor

    28,528 3,537

    Would you not be setting up the business before getting the EU subsidy?
    ie investing money already and then the subsidy becomes business income?
     
    Posted: Jun 29, 2021 By: Mr D Member since: Feb 12, 2017
    #6
  7. Financial-Modeller

    Financial-Modeller Contributor

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    Posted: Jun 29, 2021 By: Financial-Modeller Member since: Jul 3, 2012
    #7
  8. legumesgrower

    legumesgrower UKBF Newcomer

    3 0
    There's lot of information about EU subsidies for farmers out there though it's a bit of a maze and of course when I actually hone down to the specific office in the region I'm interested in, the offices actually don't have email addresses to contact and I don't speak the language?

    Well, the land hasn't been purchased yet. It seems sensible to try and get whatever help possible from the beginning. Like I said, the business model works but I/we just don't have the land, which is why I'm posting here.
     
    Posted: Jun 29, 2021 By: legumesgrower Member since: Jun 25, 2021
    #8
  9. The Byre

    The Byre Full Member
    Contributor

    11,527 5,001
    There are plenty of farming opportunities in Eastern Europe - but you must understand the culture and speak the language - and of course, understand the legal system there and understand farming and the economics of farming.

    Rule One in business - only invest in things you really understand!
     
    Posted: Jun 29, 2021 By: The Byre Member since: Aug 13, 2013
    #9
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  10. getitstraight

    getitstraight Contributor

    121 8
    Rent the land (not necessary this partricular land plot) for at least couple years to see how your cooperation works, then consider buying it.
    Also see if he is not over inflating the price of the land plot (doing a favor for the seller he knows etc)
     
    Posted: Jul 20, 2021 By: getitstraight Member since: Sep 5, 2009
    #10