Sugar Cane Investment

[loong]

Update and a few more details

First, my TG's mother is the one who wants to buy the harvest as an investment.

She/my TG/relatives and other locals are certain it is a good deal at 150,000 but of course, none have the cash on hand.

The mother would take care of the sugar cane along with her sons.

I am posting here to get an idea from those who know sugarcane whether her mother will be able to pay me back from the profits.

If I was to give her mother the money, she would have to pay me back and the profits would be hers.

There have been offers flying around from potential buyers for the harvest as high as 200,000 baht but they want to pay in installments.

I know that you have already decided to politely decline, but I'd just like to say

There have been offers flying around from potential buyers for the harvest as high as 200,000 baht but they want to pay in installments.

These are lies, only intended to make you feel sure that you would be getting a good deal.

We rented land last year and when the time came to pay the rent again, the owner slapped a big increase on with no warning. The reason being that others had offered more money to rent. We declined.

The following week she was back, saying that the people who wanted to rent will only pay in installments, so she will reduce the increase if we pay everything up front.

We politely declined

The following week, she was back and offered us the land at the old price.

We declined and now she has no rental income.

[ozzydom]

Engrin, there are many very valid points in the replies to your topic. I'm not going to write about the why's and wherefore's regarding the family or loans, just about sugarcane itself.

Firstly, we grow sugarcane -- that's not actually me, but my wife and most of her family. We are surrounded by the stuff. I think I know what I'm writing about but no doubt like any other topic on TV, there are those that will disagree with me. It's up to you to determine what's bullshit and what's not.

My first question to you is what is the 1,100 your gf's father has been guaranteed ? Is this the price per ton from the factory because if it is, it's wrong. I think you mean 11,000 baht per ton but if it is, it's way over optimistic. In April of this year, we got 9,500 baht per ton which is LESS than last year's price. As previously written, we also expect the price to be lower again this year. Two reasons for that. With all the rain, some of the crop has been standing in water for a couple of weeks and if the water doesn't go down soon, it'll start to rot and will not recover. Second reason is volume and the number of farmers switching to sugarcane. The factories cannot cope with the extra volume now. And remember, we had to take out all the harvesting, loading and transport costs from this figure.

A quick lesson on sugarcane growing. In the first year, you will incur the greatest costs and have the smallest yield. Greatest costs because you have to pay for the initial plants plus special equipment for planting. You may get up to 5 years / harvests from the original planting but then it will have to be replaced equals start again. Some people only get 3 years / crops. All we do is keep some of the crop back and use it for re-planting.

Don't believe all the factory representative will tell you. For the last two years ( and one of the reasons which proves the factories can't cope ) we have been told the factory will send cutting teams and trucks at harvest time. Should have been here in January. We ended up cutting and transporting by ourselves and that was in April of both this year and last year so we've lost 3 months growing time. When you reckon you only get one harvest per year, 3 months is a big chunk of growing time.

14 tons per rai is very optimistic. No doubt there will be someone who has got 14 tons, but I've never come across one yet. 10 tons per rai is a better figure to work on as an absolute maximum.

As I've mentioned in paragraph 3, the price is going down. Another poster has mentioned a residual payment. This is correct. We got it the first year, but not last year. Who knows what will happen when we harvest again next year. I wanted to rip the crop out in April of this year, but the misses wanted to leave it in for another year to somewhat spread the inital planting costs. As we don't rely on the money for anything, I agreed, but this crop will be the last. Some of the family who already have rubber trees have planted more rubber in place of the sugarcane where the land is higher. This is the way I want to go but as we all know, the price of rubber is very volatile at the moment with farmers very angry with the government over a falling price and the government now saying it is illegal to store rubber sheets for when the price rises.

If I've missed anything, just ask.....

I think you added an extra zero mick,9500 baht a tonne is about 2 mill if you are cropping 10 tonne a rai from 20 rai.

Yes Ozzydom, you are correct -- got a bit carried away no doubt from all that bullshit in the mushroom farm. My apologies to one and all.

[engrin]

The mother plans to seek financing from other sources ie a loan shark. I hope this doesn't go sideways for her

[slapout]

Don't be surprised to see another attempt to get the funds from you, somehow. Grilfriend, mother's, sister wants (not needs) money to hurry up a house build. Now mother may have to resort to a loan shark for the money.

In my first post on this topic, I tried to be nice and just point out the deal could go sour very easily, but after reading the additional input from family members with some numbers that seemed a tad high, a lot of second hand communication between your girlfriend and aunt, making it third hand to you, etc. I do not thionk your quite ready to jump into being a farmer as I would never depend on third hand info to make a decision on this kind of monetary outlay, I know no one else that would either.

[wolfrunes]

sounds too fishy to go ahead.

I'm new here (both in this forum and living in thailand) and still learning on trading (not growing) sugarcane.

figures provided are not that realistic and your latest update on loansharks make it sound like they are trying to emotionally blackmail you.

Suggest "smile politely and decline". They may curse you behind your back till the cows come home but end of the day, the money will still be in your pocket and thats all that matters.

[engrin]

Again thanks for the posts from the those who have sugarcane knowledge. Regarding posts that make derogatory remarks towards Thais and more specifically my TG's family, please realize that not all people can be painted with the same brush.

This investment is being made by her mother so that she can earn some money. It is not the mother asking for money because she wants to buy a house. The mother believes it is a good investment and is going forward. Let's wish her the best of luck.

[loong]

The mother plans to seek financing from other sources ie a loan shark. I hope this doesn't go sideways for her

One wonders why, the person who is trying to raise the money from the crop didn't go this route. Assuming that she has experience and knowledge and a realistic estimation of the yield. Wouldn't she rather pay a bit of interest and keep all profits over and above the 150,000 plus interest herself?

[David48]

The mother plans to seek financing from other sources ie a loan shark. I hope this doesn't go sideways for her

Mate, glad to hear that she had found a provider for her finance.

Don't feel guilty.

Most times, others problems aren't yours.

[vincentc]

There have been offers flying around from potential buyers for the harvest as high as 200,000 baht but they want to pay in installments.

200k for 20 Rai of cane land?

Please redirect these buyers to me. I will even give them a discount; they can get 20 rai of good quality KK3 or K11 for 190000 THB....

[patongphil]

Again thanks for the posts from the those who have sugarcane knowledge. Regarding posts that make derogatory remarks towards Thais and more specifically my TG's family, please realize that not all people can be painted with the same brush.

This investment is being made by her mother so that she can earn some money. It is not the mother asking for money because she wants to buy a house. The mother believes it is a good investment and is going forward. Let's wish her the best of luck.

Who is going to foot the bill when it all goes tits up?

[teletiger]

'Ya know....do what the rest of Thailand does. Hand over 2 times the loan in assets. Chanotes, gold...... there is nothing else. 'And change the name on the Chanote/s.....Show them you're not a mug. Offer a straight loan at 1.5 Baht on assets. That's 25% cheaper than Thai loans.

Regards.

Edit: It's family. Offer 1% with assets handed over. That's 50% better than any other offer they got. You ever wonder why they came to you?

Edited October 15, 2013 by teletiger

[nev]

There have been offers flying around from potential buyers for the harvest as high as 200,000 baht but they want to pay in installments.

200k for 20 Rai of cane land?

Please redirect these buyers to me. I will even give them a discount; they can get 20 rai of good quality KK3 or K11 for 190000 THB....

I think you are reading it wrong, 200,000 baht is the harvest price not a selling price for the land, or is it me reading it wrong?

By the way latest i news from the sugar cane factory where my wife went last week said a figure of 850 baht a tonne is being talked about well below last year and even last year we failed to make a profit, we are doing less sugar cane and more cassava, and reduced our quota to the factory too.

[wolfrunes]

Anyone here still selling their cane? I'm interested to buy if distance is not too far off from me

[engrin]

They are cutting now. . What price are you offering?

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[wolfrunes]

Just sent you pm

[Canada]

There have been offers flying around from potential buyers for the harvest as high as 200,000 baht but they want to pay in installments.

200k for 20 Rai of cane land?

Please redirect these buyers to me. I will even give them a discount; they can get 20 rai of good quality KK3 or K11 for 190000 THB....

I think you are reading it wrong, 200,000 baht is the harvest price not a selling price for the land, or is it me reading it wrong?

By the way latest i news from the sugar cane factory where my wife went last week said a figure of 850 baht a tonne is being talked about well below last year and even last year we failed to make a profit, we are doing less sugar cane and more cassava, and reduced our quota to the factory too.

850 at the factory....minus-cutting and transport. 20 rai you'll cut fresh and it'll take 4 workers per rai per day, if it's easy cutting. I just did this. I got 1050 per tonne at a local buy depot. I transported it myself. It still cost 20 % of the take to cut and load it. So that's 200 per tonne. You'll pay that plus transport at about 180 per tonne. Call it 400 even for the two. You'll have left over, 450 per tonne at roughly 200 tonnes which equals about 90,000 baht for something that you paid 150,00 for. You can't sell to the factory because you don't have a quota so you'll sell to a local buy depot which means that you will not cut any CCS, cutting, transport, or improvement subsidies.

If you are not cutting fresh, you'll get 700 per tonne today at a local buy depot, not 850 or 900.

I did that rather quickly, so correct my math if I am wrong.

I only cut 3 rai which is on our home plot. We "experiment" on it. We got 60 tonne off 3 rai. The other 100 rai, I sold to a broker and he is cutting it now. I cannot cut that much yet as I have no trucks.

[Canada]

BTW. You can sell it to a broker in the field. But you are still looking at a break even/minimal profit situation at 12 tonne per rai at that price.

I know I'm late on the topic. It's just something that interested me.

[wolfrunes]

I'm buying at 960/ton for fresh cane.

Burnt cane at 900/ton.

Based at PakThongChai, Nakorn Ratchasima. Pm me if interested to negotiate

Edited December 18, 2013 by wolfrunes

[engrin]

Price being offers is 900 plus extra for sweetness etc

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[wolfrunes]

@ engrin. True. But if cant reached quota agreed upon, everything is moot.

[engrin]

They are confident they are getting around 1200. Wish them the best

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[nev]

There have been offers flying around from potential buyers for the harvest as high as 200,000 baht but they want to pay in installments.

200k for 20 Rai of cane land?

Please redirect these buyers to me. I will even give them a discount; they can get 20 rai of good quality KK3 or K11 for 190000 THB....

I think you are reading it wrong, 200,000 baht is the harvest price not a selling price for the land, or is it me reading it wrong?

By the way latest i news from the sugar cane factory where my wife went last week said a figure of 850 baht a tonne is being talked about well below last year and even last year we failed to make a profit, we are doing less sugar cane and more cassava, and reduced our quota to the factory too.

850 at the factory....minus-cutting and transport. 20 rai you'll cut fresh and it'll take 4 workers per rai per day, if it's easy cutting. I just did this. I got 1050 per tonne at a local buy depot. I transported it myself. It still cost 20 % of the take to cut and load it. So that's 200 per tonne. You'll pay that plus transport at about 180 per tonne. Call it 400 even for the two. You'll have left over, 450 per tonne at roughly 200 tonnes which equals about 90,000 baht for something that you paid 150,00 for. You can't sell to the factory because you don't have a quota so you'll sell to a local buy depot which means that you will not cut any CCS, cutting, transport, or improvement subsidies.

If you are not cutting fresh, you'll get 700 per tonne today at a local buy depot, not 850 or 900.

I did that rather quickly, so correct my math if I am wrong.

I only cut 3 rai which is on our home plot. We "experiment" on it. We got 60 tonne off 3 rai. The other 100 rai, I sold to a broker and he is cutting it now. I cannot cut that much yet as I have no trucks.

We have a quota at the factory and have our own truck and workers, we have finished cutting sent to factory and planted our next years sugar cane crops, and now rent our truck out to other farmers.

Now putting down cassava done around 44 rai have another 18 rai to go, we have been ;picking up good cassava seed from local sellers at a fair price.

[Canada]

They are confident they are getting around 1200. Wish them the best

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That's a last years price at a "local buy depot". Nobody around here buying at anywhere near that price. my 1050 was lucky and has since dropped to 900.

[loong]

So did your MIL manage to come out with a profit?

[wolfrunes]

@Canada, lack of competition among the brokers over at your area?

Price for fresh and burnt cane is still stuck at 950 for my area.

[Canada]

that's exactly the problem....

[engrin]

It's my understanding that they are getting 950 plus a future payment for sweetness etc

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[Jotham79]

You could go to the farmer and offer a 150,000 baht loan for 90 days with a repayment of 160,000 baht. This is lower that the 5% per month which is common in the country with unsecured loans. Secure the note against the land, make sure it is chanote. Don't make this deal with family, make it with the farmer. If the farmer is not willing to take a risk, then you shouldn't either.

[loong]

They are confident they are getting around 1200. Wish them the best

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So did your MIL manage to come out with a profit?

It's my understanding that they are getting 950 plus a future payment for sweetness etc

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950 is a big difference from the 1200 they were certain about before.

Be warned, if you bail them out for the loss they they will make on this deal, you will open the door for subsidising every hare brained scheme that the family come up with.

[engrin]

As I mentioned, there is a future payment. I don't know if it will bring the price close to 1200. Wait and see. Thank for the "bail out" comment. /sarcasm