Considering an investment in Panama agriculture and farmland? Panama offers a tropical climate very suitable for a variety of agricultural activities. And farms for sale in Panama may be an easy entry into this small but very lucrative market.
The key to this type of investment in Panama farmland is to find a good management team. A team that can operate quality farmland with sophisticated farming experience and knowledge.
Agricultural Investment in Latin America
A foreign investor needs to take into account the framework a country provides. When looking closer, Latin American countries vary significantly in their investor friendliness.
Brazil, a famous member of the BRIC countries, offers an attractive and growing market. However, there are other factors to consider when it comes to direct investment in Brazilian business.
Foreign investors face a complicated tax system and restrictions on foreign ownership. They may also face exchange controls, which makes it cumbersome to invest.
Other Latin American countries have a history of nationalizations on foreign-owned assets. For example, Venezuela and Argentina. Basically putting these destinations on a blacklist for many foreign investors.
Why Panama? An investor-friendly country
Investing in Panama, on the contrary, is straightforward. The economy is dollar-based, there are no restrictions on foreign ownership and no exchange controls. In addition, Panama’s economy is one of the strongest growing economies in Latin America.
Foreign investments in Panama amount up to 9% of GDP, which is the largest share in the Americas. And the clear proof of the country’s investor friendliness.
Panama Agriculture
Panama’s tropical climate is very favorable for agricultural activities. The humid climate allows crops to grow fast and can even achieve 2 cycles per year. With the right farming techniques, of course!
In the countryside, Panama’s economy still strongly depends on the agricultural sector. Although, many of the country’s farmers are facing increased competition. For this reason, there are often opportunities to buy farms for sale in Panama. Oftentimes, directly from the cash strapped farmers who need to liquidate the holdings they have had for generations.
The most widely planted farmland crops in Panama are rice, maize, and sugar cane. (According to the data of the Food and Agricultural Organization of the United Nations.) One-third of Panama’s harvested area alone consists of rice farms.
Panama – Harvested area 2010 (000 hectares)
Source: FAO Stat Feb 2013
Rice is a basic consumer staple that is nearly only produced for the domestic market in Panama. Rice is part of the national diet and is one of the cheaper food alternatives for the poor population in Panama. Maize is another important crop in Panama; produced to be used as a basic staple or also as animal feed. Sugar cane is the third most important crop in Panama. It is produced to supply sugar to the domestic market and also exported abroad.
Unlike Brazil or Colombia, Panama is not on the radar of many large institutional farmland investors. This is because their sponsors like them to focus on the biggest markets in Latin America only. Panama farmland is also more expensive than other Latin counties. Thus local players dominate the agricultural sector in Panama. And they operate the land with less foreign know-how, which leads to more inefficiency.
Currently, local producers face rising inflation costs. As a result, the number of producers for some crops has decreased over the years. Data from FAO shows that Panama produces less efficiently for all its major crops. This is when you compare harvest yields per hectare to other leading producer nations. For example, the USA or Australia.
Maize – Metric tons per hectare (2011)
Source: FAO Stat Feb 2013
Rice, paddy – Metric tons per hectare (2011)
Source: FAO Stat Feb 2013
Sugar Cane – Metric tons per hectare (2011)
Source: FAO Stat Feb 2013
Given the inefficiencies in the local agricultural sector, it is understandable that for certain crops Panama’s government still insists on import tariff and quotas to protect its local sector. This leads to a situation where prices for certain crops actually can be quite attractive compared to the world market.
The opportunity in agriculture
Lower harvest yields in the domestic sector in Panama can be an opportunity for experienced investors. Bringing in sophisticated agricultural know-how and transforming underutilized quality farmlands into higher-yielding assets can be an attractive economic business proposition with the right know-how and management team. The result is a steady cash flow generation at less risk to local peers when done right.
Contact us if you want to know more about agricultural investment opportunities in Panama agriculture. Or check out are listings for Panama farms for sale and land for sale in Panama.
Bruce Brown
on said
Hi, I am a white South African, 59 years old. I have a diploma in agriculture. I have been involved in agriculture all my life, inluding livestock, (sheep, beef cattle and goats). Crop farming (maize, sugar cane, lucerne and pastures) and forestry. Are there opertunities for me in Panama to contribute in some to way in its agricultural sector? Regards Bruce Brown
Kent Davis
on said
Hi Bruce,
Thanks for taking the time to share a comment. The short answer is yes, there’s definitely opportunities. Were you looking to purchase an ongoing operation, partner with a farmer, or come and work for someone here?