Alfredo said, ” I warned you.”
“El dulce pica los dientes” in Spanish does not translate well, but it gives you the idea. “Sweet makes your teeth itch,” summed up the former president of the Rice Growers Association, Alfredo Lago.
In the case of Conexión Ganadera, República and Grupo Larrarte, Alfredo Lago summed up how “unrealistic” it is to obtain the published returns.
“It stung the creators of these funds because there was a ‘line’ to deliver capital to them. It stung the intermediaries (consignees and rural desks) who have made good deals for themselves. And it stung the investors, who believed that the profitability was secure,” he said at the beginning of a series of messages on X.
There, Lago also pointed out that – in response to questions from trusted people – he never recommended them to use this instrument since, based on his experience in the agricultural sector, he considered it “unrealistic” that the agreed returns could be sustained over time.
He also reviewed the characteristics of the business, from the situation of its beginnings to the comments of the “conversations” between agricultural leaders.
According to him, the early 2000s, with the foot-and-mouth disease, the banking crisis and the devaluation, created a scenario for some businesses that, for a specific time, could deliver 10% annual returns on capital. However, over time, production costs increased and profitability fell.
“So how could they continue to promise the same returns as at the beginning?” he asked.
“The answer: it is impossible. The way was to create a ‘financial bicycle’ based on the trust sold on the honesty of the actors. Paying returns to the ‘old investors’ with the capital from the ‘new’ ones is as old as the hole in the mate cup,” he added.
According to Lago, the current situation will lead to “gullible investors” having to assume the losses.
“When I say gullible, I say it because the authentic spokesmen of the agricultural sector, the representatives of the farming unions, are continually declaring about the problems of competitiveness, of markets (barriers and tariffs), of the climate, in short, of the low profitability of the sector.
However, investors chose not to believe them; they accepted the “smoke of the promotors”, who said they efficiently managed the livestock activity.
He also said these funds “have never financed the livestock sector.”
Towards the end of his messages, Lago said that, over the years, both family and friends have asked him whether putting money into these livestock funds was a good idea. “My answer was always the same: I don’t recommend it,” he explained.
“All of us in the productive sector know this business is unrealistic and cannot be maintained over time by paying the agreed returns. The question in the conversations was: when will they go bust?
Many of those I advised in those early years told me: ‘You don’t know anything; everyone is doing well.’ They are calling to thank me these days,” he said later.
Source: Montevideo Portal
Contact the Gateway to South America team to discover the best investment opportunities in the region. This company sets the standard for foreign investors aiming to invest in Argentina, Brazil, Chile, Paraguay, Peru, and Uruguay, providing expert guidance on property acquisition and investment tours.
Argentina – Brazil – Chile – Paraguay – Peru – Uruguay
The Gateway Team – When You’re Serious About Property
www.gatewaytosouthamerica.com
Latin American Real Estate News Options
Founded in 2004, GTSA began as a single office in Buenos Aires. Since then, it has grown into a vibrant regional network, providing professional real estate marketing services to clients in AR, BR, CL, PY, PE, and UY.
