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Costa Rica Property: A Costa Rica Coffee Farm?

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By : Rebecca Wheeler    99 or more times read
Are you dreaming of peaceful living with nature in a pleasant climate?

Having a nice home in the mountains?

Generating some income from the land?

If you answer yes to these questions then owning a small coffee farm in Costa Rica may be right for you.

Costa Rica is truly a tropical paradise with a diversity of choices for climate, proximity to nature and to urban amenities, and easy management businesses or crops that will allow you to supplement your income and in time to recapture your investment in land.

Investment options include a Bed and Breakfast located in nature, finding a parcel of land and building homes for resale, taking over a small business, or, among other options, buying a small farm.

A coffee farm is a good option for acosta rica property investment as it allows one to have a home and manageable business in a location in nature and still be close to urban services while living in a very agreeable climate. Naranjo and San Ramon, cities west of San Jose and not far from the airport, are excellent locations. These areas produce high quality coffee with good yields.

I recently completed a detailed study of the investment required and expense and income from coffee production. Here I summarize the major data, a Business Plan can be obtained by contacting us at our website.

Operating expense data are based on a study of the national average by the Costa Rica Coffee Institute, ICAFE, for the year 2007-2008. The Costa Rican colon was converted to U.S. $ at c506.65 to $1. The dollar entries would be relatively accurate for the 2009-2010 harvest.

We determined average price to be c57,000, $113 per fanega. A Fanega is 400 liters of fresh beans and produces after processing one Quintal, 100 lb of dried green bean.

Prices for coffee farms have approximately doubled from 2004 to 2009. In part this is due to sale of land for residential projects and to a lesser extent due to better prices for coffee. We have used $20,000 per hectare because at a higher price the long-term return on coffee would not justify the investment, unless the Costa Rica land were to produce high yields of high quality specialty or organic coffee commanding a much better price.

Costs of production have also increased over the last 5 years, but prices also increased. The average annual yield in the ICAFE research was 25.4 fanegas per hectare. This is very low, probably due to producers cutting maintenance expenses due to the low prices in prior years. Yields of well managed plantations in prime areas can be as high as 60 fanegas. For projecting yield and income in our Business Plan we use 25.4 as the low yield, 32 as a medium yield, and 40 as high yield.

We use a 20 hectare farm as a model because if properly managed it will yield enough income to provide a decent living. Of course it is possible to find a five hectare farm that will be less investment and management.

INITIAL INVESTMENT: ($U.S.) Hectare 20 Hectares
Land purchase, $20,000 per hectare, 20 hectares 20,000 400,000
Vehicle, used pick up 36 891
Storage shed 20 503
Equipment 14 357
Initial improvements to increase yield and quality 400 8,000
________ _______
Total start-up investment 20,420 409,751
Home Construction, 1500 square feet at $50 75,000

(In the detailed study, we break expense and income down by low, medium, and high yield, as well as by ordinary bean and speciality coffee)
Labor, materials, harvest, specialty with high yield 2,252 45,049
Overhead costs 443 8,860
Income, specialty bean, high yield, @$139 fanega 5,560 111,200
Income, net of expense 2,865 57,300

Recovery period for investment=7 years

The aim of proper coffee management should be to produce quality coffee sold at specialty prices and to maximize yield, even though this may involve a larger initial investment in Costa Rica land purchase and crop improvement. Net return is substantially less for ordinary coffee bean and if the yield is lower.

Generally coffee produced at elevations above 1200 meters is considered specialty, but this depends upon the mini-climate, soil quality, and growing conditions in particular regions. Higher elevations around Naranjo and San Ramon produce specialty coffee and there are cooperatives and private firms that purchase from the producers. San Ramon has an organic growers cooperative.

An option for those who wish to label and market their own coffee is to pay a Beneficio, a processor, to prepare Grano Oro, that is beans ready to roast and package. This cost is approximately $18 per fanega, or 100lb. If your cost of production is $85/fanega and $18 processing, the total is $103 per hundredweight, plus roasting, packaging and shipping which might be around $30 per 100 lbs. You can also contract to process, roast, and package your coffee at $1 per kilogram, or $45 per hundredweight.

Competent local management and experienced labor are readily available for coffee, so that owners’ management responsibility is not great.

Risks include years in which the price of coffee is low or even does not exceed the cost of production and adverse weather or disease problems, which reduce yield or quality.
Request a free detailed report aboutCosta Rica property or Costa Rica land for investment purposes with a coffee farm.

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