Manila, Philippines
geri@investmoney.com.ph

What is FarmOn 2.0? Other Updates as FarmOn Opens Cycle 22

what is farmon 2.0
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We have manageable investments in FarmOn since 2017 and so far so good. In case you missed it, we’re actually compiling the historical returns we received from FarmOn, so if you’re also curious about FarmOn, I suggest you bookmark the following link:

Updated and Historical FarmOn ROI

We will update above page as and when we receive harvests.

What is FarmOn again?

Watch this short video for a quick refresher (don’t forget to click subscribe to our YouTube channel to be updated of our latest videos on investments and personal finance):

As a crowdfunding platform, it connects investors who have money to those who need money for productive use, in this case, farming. So the investments are put into in rice farming, raising livestock, crops, fish ponds, piggery, poultry, etc. Then upon harvest, the proceeds are shared by the farmers, FarmOn and the investor.

Caveat emptor. We are not part of FarmOn’s management, we just have a minimal investment with them. Likewise, returns are not guaranteed. But so far returns are able to beat time deposits and managed funds returns on investments (ROI), on an annualized basis, as we have shown in our historical FarmOn ROI article.

If you are planning to join FarmOn, get ready to sign-up for the next cycle opening.

FarmOn Cycle 22

FarmOn announced the opening of cycle 22 through their Facebook page with the following details:

  • Opening Date: April 22, 2019 (next week after Holy Week!)
  • Closing Date: June 7, 2019
  • Planting Date: July 15, 2019
  • Available Products:
    • Rice (Amaryllis)
    • Rice (Bouvardia)
    • Rice (Carnations)
    • Rice (Daffodils)
    • Banana
    • Squash (Growers)
    • Watermelon (Growers)

Notice that there is a lag between the time you fund the investment (towards closing date) and the actual planting date. We have incorporated this time lag in our estimate of annualized ROI. 🙂

Lately, FarmOn has been focusing more on rice products and less of the popular ones during early cycles (e.g. fish pond, pekin duck, etc) and here’s what they have to say about it (quoted from FarmOn Facebook page):

Every year we are plagued by issues on rice shortage. Just last year, our overall supply went down to only 45 days and we are waiting for imported rice to sustain our needs.

As a farming company based in our country we would like to share in our own little way in addressing the issue. We have developed a package of technology that will increase the yield and have brought equipments and facilities that will make farming a lot easier.

 

Notice that our ROI during the previous crops are slowly decreasing. The reason behind is that many farmers have followed our footstep and have planted pechay, squash and other similar crops that we are planting.

Many farmers have also converted their rice fields into fish pens.

As a result, the market is now flooded with such products making it difficult for us to sell our produce. And as the law of supply and demand dictates, the price of those products have gone down. Those products even have limited shelf life and so we can’t store them and wait for the price to go high.

As to the pecking duck and fish, they have an ideal maturity period and when that is reached, they have to be sold. When the pecking ducks reach their optimum size, they no longer grow and so if they are not sold, we are just feeding them for nothing plus their meat is no longer tender making more difficult to sell. Same thing happens with tilapia. Oversized tilapia is very difficult to sell.

That explains why the ROI is slowly going down and if we continue to do what we are doing now, expect that we might be giving even lower ROI in the next coming seasons.

We would like to protect our partners and so we are doing our very best to shield them from earning little or worse even incurring loss.

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what is farmon 2.0

What is FarmOn 2.0?

Caveat first. As of this writing, we don’t have investments in FarmOn 2.0, but hey we are open minded.

Recently, FarmOn also announced FarmOn 2.0. It’s dubbed as 2.0 because what we used to know as simply FarmOn – crowdfunding for agricultural products and farms, shall now be called FarmOn 1.0 moving forward. So what is FarmOn 2.0 then?

Upgraded Version

Before, FarmOn uses investors money to buy products readily available in the market and supply these to farmers: seedlings, fingerlings, fertilizers, and other farm inputs. With FarmOn 2.0, they aim to use technology to develop their own farming inputs, especially in rice such as use of hormones and nanotech. They are also leveraging on technology to make farming easier such as use of drone sprayers and transplanters. So in short, upgraded version through technology.

They are also expanding to other areas not previously covered in FarmOn 1.0. They are working with foreign partners and the government to upgrade the level of technology being used in farming all over the country.

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Fund Projects, Not Crops

With FarmOn 2.0, investors will no longer choose any crops to invest it. Instead, the investments will be pooled and placed into 6 different projects, namely:

  1. Irrigation System
  2. Farm Mechanization
  3. Agro-chemical inputs & Fertilizer
  4. Post-harvest Facility
  5. Rice Processing & Warehousing
  6. Logistics and Rice Distribution

So this is like FarmOn getting funding from the public to finance these 6 projects, just like how corporations borrow money from the public investors via bonds.

Register Anytime, Suggested Holding Period

Registration may also be done anytime and is not dependent on cycle openings, unlike in FarmOn 1.0. There is no lock-in period for your investment so you don’t need to wait for harvest unlike in FarmOn 1.0. But judging on the projects to be financed, it will take a while to bear fruit, as such FarmOn’s suggested holding period is 5 years. Compared to FarmOn 1.0 which usually lasts 6 to 12 months, FarmOn 2.0 is more long term.

What’s the Value of My Investment?

In FarmOn 2.0, they are introducing the Current Value (CV), which is computed as

CV = Current Rate per Unit (CRPU) x Total Units of Participation (TUP)

CV = CRPU x TUP

CRPU is the price today, TUP is the number of units you bought / invested in.

Judging from this, this also looks like a managed fund or UITF, wherein the market value of your investment is equal to number of units you have now multiplied by unit price as of today. Read more here on How to Compute Value of my UITF Investment

What if I need to Withdraw?

In FarmOn 1.0, you may withdraw the available funds (example from harvest), you just need to abide by their cut-off (which is every 1st to 10th of the month) and will be paid towards the end of the month. We tried withdrawing funds last Dec 4, 2018 and we were able to get the money before 2018 ended

In FarmOn 2.0, since this is a long term investment, again suggested period is 5 years, but if you really need the money, you may pull-out 6 months after you invested, but that will be subject to CRPU for that day (so you may incur gains or losses depending on how much the value is that day).

What’s the Projected ROI?

Meanwhile, below is the fund illustration ASSUMING you invested 100K worth, and again ASSUMING it grows by 10-20% annually. Again, caveat here, these are mere assumptions and are not in any way guaranteed.

As of now, it’s too early to tell whether this will fly, and whether the CRPU will increase in price over time (due to market demand and/or increase in value due to profitability of projects). Probably, once the projects are already up and running, that’s the time we will fully appreciate whether the CRPU will indeed become more valuable.

How Much Minimum Investment?

A quick check in the FarmOn portal shows that current price per unit (CRPU) as of this writing is P100, and minimum to invest is one unit (I assume, I did not submit the investment just yet).

Read more details on FarmOn 2.0 in their FAQs.

Will update here if and when we decide to invest in FarmOn 2.0, or we prefer to stay with FarmOn 1.0.

Again, caveat. Invest only the money you can afford to lose. Again, we have a managed exposure in FarmOn, so far it’s been giving us good gains, but this is not for everybody. If you’re looking for other investment options, click here to see what other investment options we tackle because really, there are many options to grow your money.

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*Images are from FarmOn website and Facebook page

 

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