Investing in sustainable and profitable fine cacao farming

Harvesting Hybridcacao promotes countrysides

development

.

Website link: https://www.cacaogrow.com

11/13/2018 1

Harvesting Hybridcacao promotes countrysides

development

Online contract link:

https://cacaogrow.com/hybrid-cacao/

Cacao (or cocoa for some) Is a bean

derived from the Theobroma cacao or

cocoa tree, which grows in elevations of

1,000 meters above sea level. It is

originated from South American

rainforests. Some say the first trees grew

in the Amazon basin of Brazil, while

others place its origin in the Orinoco

Valley of Venezuela. Wherever its first

home, we know the cacao tree is strictly

a tropical plant thriving only in hot, rainy

climates. Cocoa can only be cultivated

within 20 degrees north or south of the

equator

Cocoa is source material for by product

for chocolate and cocoa powder. Derived

from roasted cocoa beans is cocoa

butter which is prominently used by the

cosmetic and pharmaceutical industries.

Other uses of cocoa beans include

treatments for a wide variety of diseases

including diabetes. In the Philippines,

most small-scale producers process

their cocoa beans into “tableya,” a native

chocolate confection.

Today, sustainably produced cacao is

particularly valuable and fetches higher

prices on the market than bulk cacao.

Forty tropical countries produce cacao.

The price has significantly increased

alongside the global demand for

chocolate. In 2013, the world consumed

more than 4 million metric tons (MT) of

cacao beans, registering a 32% increase

from the past decade (ICCO, 2014). The

upsurge encouraged many cocoa

farmers, particularly in the two countries

with account of more 50% of global

production , Ghana and the Ivory Coast,

to augment production.

There is a growing demand for cocoa

products and the world may soon run

out of chocolate- giving rise to the

Philippine Cacao Challenge 2022 ,

According to the Department of

Agriculture, the global demand is

expected to reach between 4.7 Million to

5 Million metric tons by the year 2022,

and global supply will be at a deficit of

100,000 Metric ton.

The shortfall is real and will remain for

the next decades.

For the Philippines alone, the local

consumption is at 50,000MT annually,

but the local supply is only around

10,000MT, making the country a net

importer. This looming deficit has given

rise to the Philippine Cacao Challenge,

which commits the Philippines to

producing 100,000MT by the year 2022

and onwards.

Sustainable Cocoa Growing:

Small farmers in tropical regions of the

world are important partners in the

future production of the world’s supply

of cocoa. Through sustainable cocoa

growing, small farmers cultivate cacao

trees as part of a renewable agricultural

environment — one that can support the

farmer year after year, balancing

economic needs with preservation of the

natural environment. Cacao trees are

grown in the shade of trees that provide

other food and cash crops. The farmer

tends all of his trees carefully using

“machete technology.” If a pod is

diseased, it is cut away with a machete

or sharp knife and discarded before the

disease can spread to other pods. This

regular care limits the need for

pesticides and fertilizers.

We build farm and make hybrid cacao – Join us!

Top right and Top left: Freshly cocoa fruits are

ready for processing. In the Cacaogrow farm, we

grow yellow, orange and red fruits. In spite of their

different colours, all of them are rare fine cocoa

varieties increasingly in demand.

Bottom: One look at the forest edge tells you,

how old is the rain forest San Felipe, Laur Nueva,

Ecija , in the northern Philippines. Forest Trees,

shrubs, bananas and plantation of green

vegetables plantation are vigorously towering the

area before cacao plantation was made on this

area.

Content Page We build farm and make hybrid cacao– join us

2

Philippines is one of ideal location for hybrid cocoa

3

Our offer at a glance 4

Yield development model and forecasts for one

hectare of Cacaogrow farm 5

Risks – in all frankness 6

Probability of occurrence and safety measures 7

Economic, ecological an social sustainability 8

Our concept – your benefit 9

11/13/2018 2

Philippines – is one of ideal location of fine cocoa

All chocolate begins with cocoa beans, the

fruit of the cacao tree (also called a cocoa

tree). Scientists know that the cacao tree

originated somewhere in South or Central

America. Some say the first trees grew in the

Amazon basin of Brazil, while others place

its origin in the Orinoco Valley of Venezuela.

Wherever its first home, we know the cacao

tree is strictly a tropical plant thriving only in

hot, rainy climates. Cocoa can only be

cultivated within 20 degrees north or south of

the equator.

Varieties of Cocoa:

There are two main species of cocoa: Criollo

and Forastero. Criollo is sometimes called the

prince of cacaos because it is a very high

quality grade of cocoa with exceptional flavor

and aroma. Less than 15 percent of the world's

cocoa is Criollo, grown mainly in Central

America and the Caribbean. Forastero is a

much more plentiful variety of high quality

cocoa, representing most of the cocoa grown in

the world. Grown mainly in Brazil and Africa, it

is hardier, more productive (higher yielding)

and easier to cultivate than Criollo and is used

in just about every blend of chocolate that is

made.

A third type of cocoa also deserves mention.

Trinitario, a hybrid or cross between strains of

the other two types, originated in Trinidad

nearly 300 years ago. It possesses a good,

aromatic flavor and the trees are particularly

suitable for cultivation.

Within these main types, there are several

varieties of cocoa, each with distinct qualities.

Chocolate makers purchase different varieties

of beans and blend them to create their

chocolate products.

Laur, Gabaldon and anearby areas in

Nueva Ecija Map

Philippine Map

Nonetheless, the most relevant

characteristics of fine cocoa are the genetic

origin of seeds, the morphological properties

of the plant as well as chemical properties of

the cocoa beans and differences in colour.

Above all, the difference between fine cocoa

and bulk cocoa lies in the taste and quality.

Fine cocoa is called flavoured type cocoa

while bulk cocoa is an ordinary cocoa

The share of fine cocoa in the global

cocoa trade is only approximately five

percent. Consequently, the fine beans are

in high demand and expensive.

The market value for our sustainably

produced cocoa is, when compared to the

prices of conventional bulk cocoa, much

higher and consistently stable. It is not

represented by the international cocoa price

index. Currently, a surplus of approximately

15 percent is paid for premium cocoa. For

rare, special varieties and certified cocoa, the

price is even higher.

Cacaogrow Agrofarm Inc.

11/13/2018 3

Our offer at a glance

Investing in Cacaogrow means investing in sustainably developed and

managed Cacao farm which allows you to achieve regular return from the

production of high quality and ecologically produced fine cacao in the

Philippines. It provides permanent job and livelihood opportunities It

promotes countryside development.

CacaoGrow: Investment overview

Contrac

t term

Investmen

t

Returns Payouts Concept

20 yrs Min.

50,000PHP

Approx. 16-22%

IRR . The return is

based on 45/20/35

ratio of net

revenue, 45%

profit sharing for

investors, 20% for

farm lender and

35% for company

royalty.

Annually from

year 3 on

possible,

depending on

growth. Time of

payment may

differ from time of

harvest

80% fine

Cocoa,

sustainably

developed and

managed

cacao farm

plantation in

the Philippines

Minimum investment in a cacao

farm development at 50,000PHP.

With contract term of 20 years.

Your investment is a part of the

total cost of investment for

development of 19 hectares cacao

farm for production of high quality,

ecologically produced fine cocoa in

Laur, Gabaldon, Nueva Ecija in the

Phiippines

The calculated returns are based on

forecast harvests and sales of fine

cacao

It is up to the agrofarm manager to

decide on the economically best

time for the cocoa harvest (see

page 5).

IRR (Internal Rate of Return) is a method of dynamic investment calculation which is used to calculate the

average annual return

According to the National Statistics Office – Foreign Trade Statistics (NSO-FTS), the

bulk of the Annual Domestic Consumption of the Philippines from 2002-2012 was on

powder and cake, equivalent to 17,738 MT, or 73% of the total annual domestic

consumption. In order to address the underutilization of the capacity of local grinders,

it is evident that the expansion and strengthening of the production aspect of the

industry be given emphasis. The growing number of restaurants and coffee shops

serving cocoa-based drinks and food items, and the growing industry of medium and

small-scale chocolatiers requiring high quality cocoa beans contributed to the

attractive price of cacao in the domestic market.

Other than these, changes in consumer preferences such as increasing consumption

of “Tsokolate” (Tablea) drinks and chocolates, and increasing purchasing power of

middleaged working class pose opportunities for manufacturers of tablea and

chocolates including cocoa beans producers. According to Euromonitor International,

the Philippines’ Chocolate market is forecasted to grow at 13% by 2017.

For bean exporters, more opportunities are open due to the widening of supply and

demand gap in the world market. A 10% market share in the world supply can already

provide a profitable income to the country and its producers.

11/13/2018 4

Yield development model and forecasts for 19 hectares of Hybridcacao farm

Your investment in Cacaogrow farm covers the establishment of the plantation during the first two years.

From year 3 on, regular harvests take place. Your proceeds from the sale of cocoa are paid out annually.

The charts below depict possible returns in the case of a good, normal or bad investment development.

One hectare of Cacaogrow farm consists 1338 trees. The return information is based on 19 hectare price

of 18,882,085 PHP.

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Year

Forecasted return in

case of good

development:

This scenario is not

impossible, but rather

unlikely, as consistently

good harvests would have to

correlate with steadily

increasing cocoa prices.

However, should that prices

rise by an average of 3 %

annually in the course of 20

years, returns of about and above 24% are conceivable.

Year

Forecasted return in

case of normal

development:

We consider this scenario

to be the most likely one,

based on an annual

increase in cocoa prices of

0.8 %, normal harvests and

minimally increasing

harvest costs for 20 years,

returns of about and above

18%

Forecasted return

in case of bad

development:

We consider this scenario

to be rather unlikely, as it

requires both bad harvests

and decreasing cocoa

prices for 20 years.

However, the loss of capital

and even total loss is

possible with this

investment.

Investing in Cacaogrow means

investing in a natural raw

material. Thus, the success

depends on natural factors such

as the climate, soil, etc., which

have an influence on the cocoa

quantity and quality as well as on

proceeds from sales that can be

achieved on the market. Every

change of one of the calculation

parameters (such as harvest

yield, quality and price) has an

influence on the total result. We

speak of a good development, if

we can harvest much cocoa of

high quality after a very good

growth period for a very good

price. A bad development results

from a long period of growth with

low-quality cocoa and very bad

market prices. Bad harvests or –

although this is very unlikely –

the loss of a whole cocoa

investment are also possible.

Such an event could even lead to

a total loss of the invested

capital.

As all good or all bad factors

almost never occur at once in

nature, we consider a mixture of

good and not so good events, the

normal development, to be the

most realistic expectation.

The returns that we generate

from the sale of cocoa determine

the amounts of payouts and are

influenced by the quantity, quality

and market price of the cocoa.

Our calculations are based on

long-term experience, on current

price developments and safety

margins and represent an

average forecast.

Please note: our yield and return

forecasts are regularly adjusted

to current market developments.

For this reason, you may find

different return forecasts for

apparently similar products in our

information material. These

changes are always adjustments

to current market developments

or meant to improve

transparency and better inform

our customers. For this reason,

you may find deviating

calculations and return forecasts

in different publications. All of our

calculations in this brochure are

based on a current Philippine

peso exchange rate of 52 per US

dollars.

Forecasted Net Revenue in case of

good development

Forecasted Net Revenue in

case of normal development

Forecasted Net Revenue in

case of bad development

Cacaogrow

11/13/2018 5

Risk Safety Measures

There are natural risk such as natural disasters, fires and pests, which has positive influence

on process from sales due to their impact of harvest quantity and quality of

The cocoa. Please see next page or risk analysis.

We rely on efficient measures from the

Cacao foundation in the Philippines that

have proven themselves for more than

decades

There is no trading market comparable to the securities market (restricted fungibility). Thus, a

premature, individual sale of the investment is not guaranteed and could be linked to significant

financial losses.

We help investors and work together

towards the best possible solution.

The financial situation of Cacaogrow could influence the capability of Cacaogrow to deliver the

cacao farm development and management as agreed upon in the contract during the contract

term, which could impact the harvest quantity and quality

We will prove our efficiency in the course

of performace.The business reports with

audited balance sheets are published

annually.

Currency fluctuations could have an impact on the payout of harvest returns.

You are investing in the real asset cocoa.

For the most part, its value is independent

from worldwide exchange rate

Risk – In all frankness Cacaogrow is a direct investment in the raw

material cocoa. The certainty of economic

result rely on successful management of the

farm and can only be forecast. Guarantees

for those forecasts is based on the positive

crop yield. Therefore, this direct investment

is linked to significant risks and can even

lead to the total loss of the invested capital.

Every person interested should consider this

aspect in the process of decision-making. At

the Cacaogrow Group, we respond to those

risks in order to be successful in the cacao

venture.

Thrust through transparency

At www.cacaogrow.com, you will find

information on our work and the quality

management as well as up-to-date reports.

We annually publish business reports

including information on the situation and the

corresponding evaluation, outlooks and

goals as well as the financial

Statement of cacaogrow.com In our activity and

farm development reports, you can inform

yourself about the corporate environmental

footprint or the developments

and activities of cacao farm where you have

investments. We always provide the newest

figures and data of the farm for you in our

customer area.

Cacaogrow

11/13/2018 6

Risks that are, in the opinion of the

cacaogrow management are classified in the

following scheme under the aspects risk

identification, probability of occurrence,

extent of damage and risk management.

Each risk is attributed with the risk classes

high, average or low. These are the risks

that are, most likely to occur.

Probability of occurrence and safety measures

Even if the Cacaogrow has taken all

measures to ensure the economic

success of the investment, damages

that could lead to a total loss of the

investment cannot be ruled out entirely

Risk

identification

Unusual weather

event

Fire Diseases and Pests Cocoa Price Mismanagement

Wind breakage due

to storms and

heavy

thunderstorms, tree

damages due to

flooding after heavy

rainfalls, harvest

losses due to

droughts

Forest fire during

dry season, due to

slash-and-burn

practice on

neighbouring fields

etc.

Cacao pod burn

(Conopormorpha),

Vascular Streak

dieback(caused by

Oncobasidium

theobromae),

Black Pod Rot and

Canker Control

Method (caused by

Phytophtora

palmivora), Stem

Borer Control

Method (Zeuzera),

Strong fluctuation Flaws in the cacao

farm and

management

Probability of

occurrence

Low for big

damage; however,

smaller damages

due to wind

breakage are more

common

Low; dry season

lasts almost weeks,

neighbours

supervise their

forestry methods

on a mutual basis

and can be held

responsible for

damages

Low for strong

infestation in case

suitable locations,

resilient cocoa

varieties and sound

planting systems

have been selected

and a monitoring

keeps pests and

diseases below an

economically

significant level

High; the stock

market price for

bulk cocoa is

fluctuating due to

individual events in

important

cultivation

countries and

speculating

Low; the staff

working on the

cacao farm is

qualified and has

much experience

in cultivating

cocoa

Extent of damage

Differs according to

extent of the

respective weather

event

Average to low,

since there is no

real drought in

general and

measures against

fire are taken

immediately

High in the case of

inadequate

plantation

management

Average;

Cacaogrow

produces fine

cocoa, the price of

which contrary to

bulk cocoa does

not completely

depend on stock

market

developments

High; flaws or

lacking knowledge

of the farm

manager could

have an impact on

the production

Risk

management

Planting of hedges

as wind shields on

the edges of the

cocoa areas, use of

storm resilient

shading trees,

construction of

drainage canals

Permanent fire

monitoring on site

by our employees;

the cocoa farming

and other crops

farming neighbours

watch out for each

other’s plantation

areas in the region

Regular control by

qualified employees,

mechanical removal

of infested fruits and

plant parts, use of

mostly organic

pesticides in rare

cases

The sale is mostly

regulated by

contracts with

chocolate

producers with

negotiated prices

that are stable in

the long term and

independent from

the stock market

Cacaogrow

manages big

cocoa fine cocoa

clones.

Cacaogrow

11/13/2018 7

Economic, ecological and social sustainability

Economic: We believe in values. This includes values that mean a

fair profit for the investor. All “stakeholders” shall receive

their part of the natural added value: the investor, the

people on site, the Cacaogrow management, nature. We

do not aim to achieve maximum short-term profits. Instead,

we prefer sound middle and long-term returns gained from

natural real assets

Social: We put the people at the heart of our activities. We

know that safety and success are only possible in the long

run if we integrate and motivate the people on site to

protect the newly created forests. We plan and develop for

the next 50 years and for future generations.

Ecological: Our cocoa does grow in a farm plantation, but in a

forest hills, Thriving in the shade and protection of other

trees, the cocoa benefits from this concept – and so does

nature: the various plants provide precious living space for

many animals

Our Concern – Your benefits

Stability Quantity

Cocoa prices tendentially increasing

for years in spite of volatility, with

rising demand.

High-quality fine cocoa

Cooperation with renowned cocoa

experts with long-term experience

First cocoa harvests will marketed and

revenues paid out to investors at third

year and revenues paid out to

customers

Ecology Social Benefits

More biodiversity through the

creation of new habitats for a variety

of plants and animals

Mixed forest concept

Water storage and restoration of

filtering functions, positive impact on

local and global climate

Creation of permanent jobs in the rural

area and nearby locality, qualification

of employees at a high level, thereby

improvement of living conditions

Promote development in countryside

Fair payment and social benefits

Left: Banana harvest in every Cacaogrow farm. The banana trees

provide shade for the cocoa trees, which are vulnerable to the

sun, and generate additional revenues on the cocoa farm

intercrops Right: Cacao pods harvest, Top: Guyavano harvest in

every Cacao grow farm as intercrrops for permanent shades of

cacao plants

11/13/2018 8

Website link: https://www.cacaogrow.com

11/13/2018 9

Subject to changes, errors or misprints. 05-27-2018

Published by and responsible for:

Cacaogrow Agrofarm Inc.

Corporate Address:

B11 L15 Ph 4 Schumann St., North

Olympus, Novaiiches, Quezon City ,

Philippines 1124.

CEO: Engr. Oscar B. Paragas

Email obparagas@cacagrow.com

Our contact information: Cacaogrow

Agrofarm Inc., Quezon City

Corporate Office/Residence

Tel: +639089815313,

Land Line 6329620960. 6327941699

Business Location.

Laur , Gabadon, Nueva Ecija.

Moble Phone +639089815313