Transcription Episode 033

MC: This is “Cashflow Ninja” episode 33 with David Sewell.

Announcer: Welcome to the “Cashflow Ninja” the podcast empowering and inspiring people to discover how to generate their own income. And manage, grow and protect their own wealth in the new economy. Now, here is your host M.C Laubscher.

MC: Hello, everyone, MC Laubscher and welcome to another episode of the “Cashflow Ninja”. I have a very interesting show for you today. I try to do my very best to bring remarkable guests on the show every week to share different ideas and ideas of how to create income streams in this new global economy. And I must say, I think after today's show, you're going to look differently at a cup of coffee. It's been extremely interesting researching and preparing for today's show and interview. About 83% of adults drink coffee in the United States, the world's biggest consumer of the beverage. And coffee is the second most traded commodity in the world after oil.

Coffee is a $90 billion industry annually second only to oil in terms of dollar volume traded. Today's guest will share with you how to create a sustainable income stream from coffee farms in Panama. Coffee is a proven product with sustainable and growing demands and limited and declining supply worldwide. You can own the land, an appreciating real hard asset, safe and secure, private and offshore. Your coffee parcel [SP] farms are professionally operated for you by a very experienced management team. You can also earn a sustainable long-term offshore income with really nice returns.

So this investment really plays well into international diversification strategies where you plant multiple flags in different countries as the previous guest, Jeff Berwick “The Dollar Vigilante” discussed on episode 27 for those of you interested in privacy and less government involvement in your life and finances. Another very significant reason to consider this unique opportunity carefully also is, when you own farm parcel on one of these coffee farms, it's only one of two ways to own assets that currently does not require reporting them to the U.S. government. So, international real estate in your name is currently not reportable under the FBAR or FATCA regulations.

Our guest today is David Sewell, the Managing Director of International Coffee Farms. David is a Canadian who has lived, worked, and invested in Latin America since 1989. Well educated and traveled, David joined the Royal Canadian Navy in 1968 and served for 12 years as a shipboard officer. He holds an MBA in finance and a BSC in Biology and has been licensed as a realtor and stockbroker. With an extensive business background in venture capital and offshore private wealth management, David provides a diverse portfolio of international expertise to anyone interested in offshore real estate investing.

Before we are joined by David, just a reminder that you can download any book for free when you try Audible for 30 days. You can grab your free trial and audiobook download at cashflowninja.com/freebookdownload. And my friend [SP] Minesh Bhindi from Gold and Silver for Life is hosting a webinar “Three Steps to Cash Flow Gold and Silver”. Minesh has shown people how to use their gold and silver holdings to create income streams. You can register for the webinar at cashflowninja.com/goldsilverwebinar.

All of our prior shows and show notes are available at cashflowninja.com and you can also join our community and mailing list by texting the word CASHFLOWNINJA one word, all capitalized to 44222 that's two fours and three twos. If you sign up to join our community, I will email you three of the top 10 books ever written on building wealth.

John Lee Dumas: Hey, this is John Lee Dumas from the “Entrepreneur on Fire” and you're listening to the “Cashflow Ninja” podcast with your host MC Laubscher. You must be prepared to ignite.

MC: David. welcome to the show.

David: Thank you very much, MC. Pleased to be here.

MC: Could you please share a little bit about your background and your journey and how you ended up in Panama and co-founded International Coffee Farms.

David: Sure can. I'm Canadian, and I left the Great White North in 1989 for two reasons. As I speak at investment conferences, I tell people that I was interested then and still now in warmer weather and lower taxes. And I found both of those by going offshore from Canada of course. Ended up originally in the United States in Southern California which was, interestingly enough, a tax savings compared to the marginal tax rates in Canada in 1989 which were 52%. I kept on going from there to Costa Rica, Mexico in the next 10, 12 years. Made a trip to Argentina for three weeks, really liked it and stayed for a year and a half. Found out that I over corrected and they had snow, so I came back up north and landed in Panama. My wife and I and our two cats have been here for 10 years.

MC: You started the company in Colombia and implemented the same business model in Panama. Can you please tell us about your International Coffee Farms, and what service and value you provide to the marketplace?

David: Sure. What we did is I was consulting at the time to a group of people in Columbia that had some coffee farms and wanted to do a private placement offering to raise capital for the company. The structure of the offering was inappropriate and wouldn't work for me. My background is venture capital and have been doing private placements for 25 years. It just wouldn't work.

So we sat down and collaboratively wrote this business model that came up from the investor's point of view to be able to provide certain features and advantages and benefits that investors would be looking for. It turned out to be wildly successful quickly. It included having offshore hard assets that people could diversify their portfolios into that weren't correlated with the stock market. Had to do with passive income so it needed to be turnkey managed for you offshore. Had to have a reasonably decent income but nothing crazy but sustainable income from the offshore agricultural sector which is a hot sector these days and should be because of the growing population in the world and the lack of distribution, effective distribution for food, so high demand.

A proven product, so we were going to do anything perishable or anything that we had to reinvent the wheel on. Coffee being the second largest traded commodity in the world, we are only behind oil in dollar terms. It was pretty well a slam dunk that coffee's a proven product. So we had all those things on our Ben Franklin sheet, our closing sheet for ourselves, ticked all those off, added social sustainability to the program which is extremely important in supporting and improving the lives of the coffee farm workers that work for us, and I mean collectively for us, for the owners of parcels ourselves and everybody else.

They're the people that grow the coffee that we sell that make the profit. The social sustainability part is very important. So the whole group benefits together and added up to a company that could converge under-performing commercial coffee farms into well run, state of the art specialty coffee farms. That's the stuff you pay 15, 20, 25 bucks, 40 bucks a pound for in the store. That's the part of the market that represents 20% of a 90 billion with a B market in coffee alone. Twenty percent of that market is specialty coffee, and it's growing at 16% a year. So that's the why of why we're doing this.

MC: Now you have mentioned social sustainability and one of the values and principles, obviously, that you bought your organization on. Can you talk about the three pillars which one is the social. Can you talk about the other pillars of sustainability that you have identified?

David: Sure. Like any table, you need three legs to have it stable at least [inaudible 00:08:56] fall over. You can do it on others but three's better. Economic, of course, is the leading factor. You need economic sustainability. It has to make money or you just can't stay around. You need capital to invest in the beginning. This is fairly capital intensive by the time you acquired a farm, spend three or four years turning those farms around before there was any really significant cash flow from the specialty coffee. We could sell the coffee we acquired early as commercial coffee, but that's a no-go. It's a non-starter because the coffee market is so variable. It's up and down from the last two years alone from $3 a pound to $1 a pound and it costs $1.60 to make it. So often, it's just not economically viable to be in the commercial coffee business. But economic viability with those numbers being in specialty coffee is there and it's important that you have that economic leg on your table otherwise, you're gonna go away.

Secondly, of course, and lots of people talk about it, is being green, which is simply environmental sustainability. Leave what you found in better shape than when you got it. And that should more or less solve the issue of environmental sustainability. Treat it properly. Leave it for other people in the future in better shape than you found it.

Finally, social sustainability which is often missed out in many, many business plans where people either pay lip service to or do not recognize the fact that we are under an awful lot of people in the chain of events that make this happen. We consider everybody from our general manager, a sophisticated engineers 30 years in the business, right through our mandador, which is Spanish for our farm foreman, qualified agricultural engineer, agronomist, all the way down to the youngest 17, 18-year-old native Indian farmhand working our farms as integral to the process. Everybody is involved in that social sustainability program. We take 20% that is not to be violated away from the gross operating income. We take our revenues from our farm less our direct operating expenses and come up with the gross operating income number and we take it from the top line. We take 20% of that, put it aside and that is for the people. That is for the bonuses, that is for the higher wages that we get from the get go. That's for the accommodations we provide for them. That's for flush toilets and showers, and laundry washing facilities, roofs that do not leak, and electricity, and floors that don't have bugs crawling up through a hole in them. Better working conditions. Sometimes shorter hours, better clothing to wear, much more high-tech equipment to use so their job is easier. All of that's rolled up into the 20% which comes out first. From there, we split 80/20 with the investors.

MC: Now the value that you and your company provided and offer as a business model with a proof of concept and an established experience, a local team to implement and execute this model and plan, can you provide some you provide some of the insights on how you implement the strategy after you acquire a new farm?

David: Sure can. The critical thing to do, the most important, the one thing there's a good book out there called that.

MC: Love that book.

David: The one thing that's very important in the coffee farming business, after we acquire a farm, is to immediately take possession of the farm. We may do a deal where there's some terms and conditions where we're going to hold back some funds based on finding the right boundaries for the territory for the farm or various other conditions here and there that are particular to coffee farming. But in general, we take over the farm immediately because most farms that we're buying are owned by older gentleman. By that I mean, 80, 85, 90 plus, gentlemen that have been farming business forever. But they know that they're not going to be able to continue because the kids are not interested. They're gone to Miami or Panama City or wherever. They're doing their thing and they're not interested in digging in the dirt and drawing coffee anymore. The Millennials, they're the Millennials and that's not in their game plan. But the money is. So the father, the patriarch knows that the farm is going to be sold, he doesn't really invest a lot of money in the farm in the last few years before he's going to do that. The tendency to have the farms be quite a bit older. Trees being quite a bit older than we would consider optimal because they don't maintain their farms particularly well. They take what God gives them every year, sell that to one buyer, put the cash in their pocket, and wait for the next harvest. Not a sustainable model for us who are developing a legacy investment for people here that can go on forever and ever and ever.

So we take over the farm very quickly so that we can feed the trees. We can fertilize the trees. We can combat the bugs. We can combat the rust. And these things are easily handleable if get on them. If you don't get on 'em, they go quickly and they can really destroy your farm in a hurry. That's the biggest thing that we do is we provide the capital quickly to grab a hold of this less than well-maintained, a little bit under-loved, and definitely under-capitalized farm so that we can make the best of this coffee farm as quickly as we can.

MC: What's the long-term goal for your company and your vision for international coffee farms?

David: Well, we have acquired as many farms as we can get our hands on. We are constantly in the acquisition mode. We did 5…in the first 15 months, we acquired five full farms and we are in the process of acquiring four more at the same time right now. We'll stage them a little bit where our acquisition speed is ramping up because we've got reputation now of doing what we said we're going to do when we're going to do it. We negotiate a fair and reasonable price with a willing buyer, that's us, and a willing seller, and we close. And we do what we say we're doing. We live in a small town. Rumor mill's crazy, so you better produce and deliver on what you promise. We're doing that so farms are being offered to us more frequently in the right locations at the right prices, and we're acquiring as many of those farms as we can as quickly as we can.

Happy to say that we can't keep up with the demand from an individual people who would like to be an owner of a parcel, and we generally have more park people in line with their contract in place and their funds in place than we have farms. We acquire the farms, and we allocate people from the enrollment queue backwards into those farms and often we'll fill up a farm the same day we acquire it.

So it's best for people who are interested to get in the line and they'll be allocated into a farm as soon as we get it in the order they funded. So we want to acquire as many firms as we can. The idea is to provide very long term passive incomes. Coffee is coffee. It's not going away anytime soon. It's growing rapidly. Specialty coffee is a craze. It's not a boom and bust kind of philosophy. Coffee's been around for 5000 years and all these countries where we live, 400 or 500 years the economy's based on coffee. So we're into that business model. We're working to provide very long term passive income for patient people who can turn this into a legacy investment. Invest young and keep it for themselves forever and invest old and give it to your kids. And if you don't like your kids, give it to somebody else. And so those are the goals to be able to provide a perpetual offshore hard asset with passive income attached to it.

MC: Let's get into some of the details so my listeners that's interested in this. How do people get to participate in this investment and what's your investor profile?

David: Well, the investor profile is something different to me. Frankly, I'm in the venture capital business for 25 or 30 years and generally, in those days, the average investor was 50, 60, 70, 80 years old, had accumulated some capital and was male professional. Now, we run the gamut from I think as young as 21 years old that has invested in this long-term investment still to the same people that are 80. We have a gentleman that is 93 that's an owner of parcels, obviously, for his children. And everywhere in between. Very strong demographic of women who had not been a major source of clients for me over the last 25 or 30 years. They like the social sustainability part of this program a lot I believe.

And so we have a profile across the board. Men and women young, median, and old, professional and becoming professional. People with small amounts of money, large amounts of money. People putting in one or two parcels to get their toe wet to see what we're really like, coming down on a tour, checking us out and adding significantly more to their portfolio. People who are just starting out in their investment career and are Millennials that don't have large amounts of available capital because they're building families and other things that take money, and they come in for one parcel and will be building over their lifetime. We purposely kept the price low per parcel so that we could attract as many people to the opportunity, so we can help teach them offshore investing. The advantages of portfolio diversification, non-correlation to the stock market, planting five flags outside of the country for various reasons etc., etc. That's our profile.

To participate in the investments, it's quite simple. You go to the website which is www.internationalcoffeefarms.com and all the information's there. There's videos. There's all kinds of articles and stuff where you can bone up on what's going on in the coffee business if you don't already spend four dollars a day at Starbucks and measure the line outside or every morning around the block and they have three stores in every corner. So it's research on the product is not too hard to do. You go right through the site. It explains who we are, what we do, how you do it. And at the end of the day, you get to a Getting Stared button and click on there. It's a landing page. You put in your information, send it to us. Automatically, you'll receive an e-mail that explains in detail what the program is. You get a 16-page full-color brochure on how a coffee farm operates in Panama. How to own your own parcel of a coffee farm in Panama, which is simply a frequently asked questions book answering almost all the questions we've been asked hundred times by quite a few hundred investors. You get all that. No commitment whatsoever. You make your mind up. If you want to participate or not or if you have more questions, you communicate with us and we'll get back to you with your answers. We probably will never call you. We don't solicit your business. If you are interested, give us a shout. And like I said, we're always oversubscribing.

MC: There's some fantastic information available on that. I download that in my research for our chat today. So I would highly encourage all our listeners if you're interested in that, to get that information. Let's look at the income stream that you create for investors. How long from funding the investment until an investor will start to receive cash flow from this investment?

David: It depends on when you invest vis a vis the timing of the harvest. We only harvest once a year. We have a mixture of farms of high altitude and low altitude. We're harvesting low altitude arms from around September until December, and then we're harvesting the high altitude farms from January through March or April.

Depending on when you joined, the standard answer is should expect cash flow within 12 to 15 months of when you are funded and allocated into a farm .So that's the standard answer. It could be shorter depending on when you joined us based on harvest. I could be a little longer depending on how long it takes us to get a farm, but you can count on somewhere between 12 and 15 months for initial returns.

The farms take about three years to turn them around from an under-loved, under-capitalized, under-managed commercial coffee farm into specialty coffee farm that's full of love. And that time, there's cash flow in there, but it's not really the reason you're investing. It's low, small amounts of cash flow, but that cash flow builds very rapidly after those three years of the turnaround process are in place and will hit double-digit figures annually quickly, and high double-digit figures and talking 20% and 30% a year as time goes on. So this is a patient investment, long-term, long-term hold, with some cash flows to start with, significant cash flow for many, many years once the turnarounds complete. And at the moment, we have an average annual return forecast of around 12% annually.

MC: Do you also host farm tours for prospective investors at some stage. How frequently do you have these tours and where can my listeners receive more information on these tours?

David: Again, all the information's on the website. So there's a Farms Tour button. You can go there and get all the information you need from there. We hold group tours currently about three times a year. The next one is in July 29-31st of this year. Then we have another one scheduled for just before Thanksgiving in November with the exact date to be determined. There will be another one after the new year, but three to four group of tours a year. They're fun because you get them alongside a dozen or so other like-minded people. Most of the people bond amongst themselves quite strongly when they're on the tour. And we also teach you a heck of a lot about coffee. There's no charge for that tour. You get yourself here. We'll host you for the first night in a hotel. We'll host you for that weekend, for your meals and drinks, and transportation. We'll show you all of our farms. We'll take you to a professional cupping [SP] lab, which we're building our own right now, and show you how to cup a great coffee. What's all the hubbub behind specialty coffee? What really is specialty coffee, how we grow it, how we pick it, how we process it.

You'll to be able to see our brand new coffee processing mill, which we're in the process of constructing right now. It's called El Beneficio in Spanish. You'll have some fun. You'll have dinners and drinks and in the evening meet some cool people. It's a fun weekend for three days. If you're interested in real estate around here, we can also introduce you to a real estate brokerage firm that'll take you out and show you the opportunities of possible buy a second home. We can also help you out on those tours during the time you're here with family nation's visas, second passports, bank accounts. You know various other things that our boots on the ground experience over the last 10 years can…you can take advantage of. Having said all that, those are the formal kinds of things. But if you're ever in country, and you're here on a vacation, and you wanna come and see us, we'll be happy to take anybody on an individual coffee farm tour for the day.

MC: Fantastic. Now one thing that you spoke about earlier and touched upon was just planting flags and five different flags in different countries and the whole idea of international diversification. Can you speak to that a little bit more?

David: Sure. We, obviously, offer our offshore hard assets. So there are a significant number of people and should be as many people as possible trying to diversify their portfolios away from paper into hard assets whether that be gold, which I consider money as opposed to an investment, or other hard assets offshore. But agricultural property is pretty good. You know, they're not making a whole lot more land, and we're running short of food. So having an eye on ag offshore hard assets is a way to diversify your investment portfolio away from manipulated paper, the stock markets where you have zero control into something where you do have a deeded interest in a piece of land. It's not going anywhere. That is a very nice flag to plant.

Going along with that, there are numerous people who think that things might not all go well in the United States or Canada or other countries, and we're seeing a lot of nowadays with offshore terrorism and problems developing in first world countries. Some people think that having a prepackaged visa that allows you permanent residency in another country that you might need to use is a good idea. Some people just want it so they come here and hang out for three or four months and don't have to go across the border to renew their passport. In other words, they're invited guests. They're permanent. They have a legal reason to be here, and it's cool. It's a nice way to go. It does lead to a passport down the road if you decide that you want another passport. That also has some advantages to certain people. We have a lot of experience here with real estate agents and who's good and who's not, which houses are priced right, which aren't, and lawyers that can do the job and lawyers that can't do the job, and banks that are difficult to deal with and banks that are less difficult to deal with.

None of them are easy to deal with, but there are some that less difficult. So we can point you into a place where you can open a bank account at the appropriate time. You can put your distributions from the coffee farms into there. There's lots of things we can do that we can help as a result of having boots on the ground.

MC: Thank you for sharing that. It's extremely important, obviously, growing up in South Africa, I understand the importance of this international diversification. And if we just look around the world and what's happened just in the neighboring country and South Africa, Zimbabwe and then obviously now on Venezuela. But as well in first world countries too. So definitely a very, very crucial part of an overall just diversification strategy. Now, David love your philosophical approach to investing and business and some of the values and principles that you built your company on. And a question that I ask all of my guests just as if you cannot pass on any money to your children and grandchildren and you are only allowed on to pass five principles to them to build wealth, achieve success and happiness, and for future generations, what would they be?

David: That's a large list. I have three kids and seven grandkids so far. I don't if there's five specific ones, but I think the most important one is to develop yourself personally. I'm fairly tuned into the spiritual world. I'm not into material things particularly. I've spent quite a bit of time being introspective, talking to myself about myself and how I'm going to improve myself. And I don't often share that with many people how I'm gonna do that or what I'm gonna do that. I just do it. I strongly believe in the saying that says, “There is no try.” I'm not gonna try to do anything. Do it or don't do it. I don't like people telling me they're gonna try to do something because there's really not commitment there. So I think a committing to yourself, to your own personal development over the years. It doesn't happen overnight many, many, many years of personal development, reading widely, listening to other audio text people telling you these things about how they've done it. But not trying to be a better person but just do be a better person.

Practically, you can quickly, as quickly as you can read Kiyosaki's books and get out of making money for somebody else. Stop earning money for somebody else and start earning it for yourself as soon as you possibly can. Easier said than done. Young people, marriages, kids, houses, mortgages, but it can be done. So do it and do it now. Develop yourself, make the money for yourself. That's what I think is key to having fun 50 years.

MC: Thank you for sharing that and thank you so much for coming on our show and just sharing your knowledge and your journey and providing so much value to my listeners. I really appreciate it. Thank you so much.

David: You're more than welcome. Thank you.

MC: Thank you for joining me and my guest, David Sewell, Managing Director of International Coffee Farms. Please remember to grab your free audiobook download from Audible. You can download any book for free when you try Audible for 30 days. You can grab your free trial and order your book download at cashflowninja.com/freebookdownload. And just a reminder to sign up for the free webinar hosted by my friend Minesh Bhindi from Gold and Silver For Life “Three Steps to Cash Flow Gold and Silver”. Minesh has shown people how to use their gold and silver holdings to create income streams.

You can register for the webinar at cashflowninja.com/goldsilverwebinar. All of our past shows and show notes are available at cashflowninja.com, and you can join our community and mailing list by texting the word CASHFLOWNINJA, one word, all capitalized to 44222 that's two fours and three twos. If you sign up to join our community, I'll email you three of the top 10 books ever written on building wealth. As always, guys, if there's any way that I can provide more value to you and serve you better, please go to our contact page and send me an email or leave me a voicemail on our speak by voicemail line. That's our show for today, everyone. Until next time, live a life of passion and purpose on your terms.

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