May 2nd, 2009 fmorgan
One of the areas I think that baffles foreigners most when living in Costa Rica is what things cost. First of all, you have to deal with a new currency, the colon. On top of that, some things are much cheaper here (for example, we just bought a pineapple for less than 50 cents), and other things, much more expensive (imported goods mainly–an apple is about $1.50).
So, getting prices straight can be challenging, especially when you start talking in millions of colones. We just sold a used ATV for 2 million (about 3600 dollars).
We all want to know ahead of time what it will cost to build something, but the price always ends up being more than quoted. I finally figured out that contractors here give a bid for the best case scenario. Basically, if everything goes perfectly, it will be that price. In a country where even plans for meetings are preceded by “Si Dios quiere…” (If God wills), you can guess how often everything goes perfectly. You would think that the estimates would reflect the normal course of events, but it doesn’t work that way. Since everyone bids for the impossible ideal situation, anyone who gives an accurate estimate will not get the job. Cost overruns are therefore the norm, and you are responsible for adding your own buffer instead of the contractor tacking it on. The odds of you coming out at the original bid and getting to keep that buffer are worse than the lottery, but I guess it’s fun to try. We have seen that if you work the price down to below usual, what you pay in the end will be the same as if you accepted a quote for around the going price, what with one thing and another. It is very possible the lower bid will end up being the most expensive when you redo the rushed job.
Bargaining is practically a national pastime in Costa Rica, if not an art form. Where you live, are you accustomed to hearing an exchange like this in a retail furniture store? “I appeal to your conscience on the price you are asking me to pay.” “My conscience is perfectly clear, thank you, I know our prices are some of the best around.” That last said with a big smile.
It seems everything can be dickered over, and everything is considered for sale. People frequently walk up to our door and ask to buy equipment that we are using in our business. The above-mentioned ATV was in daily use, but somebody asked if we would part with it. It is always good when you are not the one trying to sell, but the other party is trying to buy.
If you come up to a farmer and say, “I like your farm, how much?” expect to be shocked at the price. The custom is to offer it at 3 times a reasonable amount, which is to say, “I don’t really want to sell, but if you really want it…” More than a few farmers have been shocked when the crazy foreigner paid what they asked, and more than a few foreigners have been very upset to discover they paid three times market value.
The best way to buy land is to locate yourself in the area for a while and give yourself a few months to learn what a good price is. Then let it be known that you will buy land for that price. Resist the pressure to go look at properties that are more than your asking price per hectare or square meter. Eventually someone will show up with a property in your price range, because that is what the locals are paying.
After seven years of doing business in Costa Rica, I can see us now on our next visit to the United States trying to appeal to the conscience of some baffled clerk in Home Depot.
Posted in bargaining, business in Costa Rica, buying land, campo, construction, culture, finca, investing | No Comments »
January 11th, 2009 fmorgan
Sorry for not writting for a while. In truth, I have been writing a lot, but it has been software for the company. It has been keeping me rather busy, and amused if the truth be known.
We have had several people contacting us making sure we are okay, which we appreciate and of course they are also interested in the effect of the earthquake on the trees.
First of all, we barely felt the earthquake. I didn’t feel it at all even though I was standing next to people who did. I did hear the gates rattle though. The most exciting thing we had happen was for a vehicle in the repair garage to shimmy sideways during the earthquake.
Nothing else in our neck of the jungle. We happen to in an area that is probably the most stable in all of Costa Rica. Normally we don’t feel much at all, if we do, it is from Managua, Nicaragua. In fact, at first we were concerned that Managua had had another large earthquake.
A few comments on the earthquake. If it wasn’t in January, or another part of the country, there probably would be no news - a 6.2 isn’t much. I can recall at least three that we have had since we have been here. The problem is the time of year and the location. Most of the time they are down at the border of Panama or near the beaches at Parita. This was in the mountains above the Central Valley. This area is very steep (unlike the coast, of course) and very deforested - and very populated. If it had been a 7.0, it would have been much, much worse.
The building codes of Costa Rica are very very good, but, people will cut corners and the inspections in the countryside are not what they are in the city. One thing however, most homes have a tin roof - even ours. This trend I hear started after the traditional clay roofs that you think of in Spanish construction killed many people in the earthquake in Cartago many years ago.
This earthquake as far as loss of life and property damage is the worst in a very long time I gather. Having a significant earthquake in January is a real problem. It is when the soils are the wettest. I know you have probably heard that the dry season in Costa Rica starts in December - well not on this side of the mountain. From December to about the middle of January is one of the wettest times of year. The land is saturated. If you take saturated soils, little rock, and deforestation and add an earthquake, you get landslides, which were the causes of loss of life.
Anytime something like this happens, the thought that goes through my mind is “Surely those who removed all the trees above their homes didnot realize they were dooming their family…” And my next thought is usually, “I wonder what things I am doing that are setting up disaster in the future for those I love.”
Though it isn’t healthy to always worry about the future, it also is not healthy to asssume there will not be dreadful consequences if we don’t consider the future outcomes to our actions. The most difficult ones are the actions that are like a time bomb. If, when you cut down a tree on a steep slope , immediately you had a landslide, no one would do it. But, what happens is that you took the tree and left the roots, and until the roots decay, the tree is still holding the slope together. But eventually (and this could be ten years and more for some trees) the roots will be gone - and then the slope will start to move. As you drive around Costa Rica, you can see slopes that have moved - usually about this time of year.
Posted in buying land, conservation, earthquake, finca, forest, landslides, resources, trees | No Comments »
January 19th, 2008 fmorgan
Mixed species planting on one of our tree farms
One of our contract forestry engineers told us about a “plantation” that went astray. Many years ago in Guanacaste a person bought a lot of land, about 200 hectares or about 500 acres. He planted all sorts of different trees on it and then left it to grow, planning on coming back in several years to start realizing profit.
This is pretty much what you do up North, buy some land, plant some trees and go away for a long time because everything takes a long time to grow. Perhaps your kids will have a harvest. Here it isn’t that way as growth rates are up to 10 times faster.
Sadly, he never registered any of the land as a plantation, so MINAE doesn’t think it is. Now MINAE is rejecting his request to cut any trees because the “plantation” looks like secondary growth (it IS secondary growth because it wasn’t cared for) and he has no proof to the contrary. There are never permits issued to cut anything inside secondary growth.
This is so common down here. People assume that the laws of Costa Rica are the same as up North and go from the idea that if it is my land, I can do with it as I wish. This is not true at all here. In fact, Costa Rica now has a law in place that to start a business activity, you need to have it approved and how it will effect the waterways particularly. Even for us to build a modest workshop for building furniture and processing wood, we had to go through various steps.
Our plantations look like parks, all well cared for and no brush. I have had more than a few people wonder why, and this is why: If it doesn’t look like a plantation (i.e. rows of the same species), it is secondary forest unless you register with MINAE that you planted that way and it was the plan.
There are lots of abandoned plantations in Costa Rica. Around 1997 there were a lot of trees planted and not cared for. The plantations that are teak are pretty much a waste, and the few plantations that have natives, if they were left alone like this and not documented, are now part of the protected zone and untouchable. It is really sad, too, because there is not enough wood available in Costa Rica, in fact, only half of what is needed. If these investors had actually put in the kind of money and attention that is necessary to do it right, they would be retiring comfortably right now.
It isn’t like all of this information is not available. It is all documented in the forestry law, but a lot of investors just listen to their neighbors. You shouldn’t accept legal advice regarding plantations from anyone besides a registered forestry engineer, preferably two or three. Then read the law for yourself.
Posted in MINAE, buying land, finca, investing, trees, wood | No Comments »
January 16th, 2008 fmorgan
Today I went to visit a new finca (farm) that we are looking at buying. We already have one finca for planting this year called Quebradon, but it only has enough space for 35,000 trees, which might not be enough this year. There is another, much larger, finca connected to it that we visited today.
By we, I mean myself and Nelson, our general manager. We didn’t drive to it, we took the ATV. When going back into the campo, it really makes sense to use an ATV instead of a car — after all, if the ATV gets stuck, you can just lift it out.
As time passes we have to find larger farms, and that generally means more remote. Also, this helps us keep the price down on trees. It does raise the cost a little while planting, but not that much. It is a blance between accessibility and price. More remote generally means better land, since it has not been farmed for too long. There is always much more wildlife as well.
Visiting a finca is usually done from horseback, especially the larger fincas. This finca is 183 manzanas, or about 311 acres, or 128 hectares. It has about 30 hectares of forest and the rest is pasture. Remember that 100 hectares is a square kilometer, to give you a perspective on the size.
As usual, the owner figured since I am growing trees what I want to see is trees! Not really, what I want to see is pasture, because that is where we grow trees. But what happens is that I first got a guided tour of the forested areas. This of course is the roughest section of the finca to travel in. Think the downhill ride/slide in the movie Man from Snowy River! I can’t believe the kind of terrain I ride on regularly. Today one spot was really bad and we actually had to dismount to help the horses go up it. It was worth the pain though — at the bottom of the hill was the largest Spanish cedar I have ever seen. We also had a snack of heart of palm — very nice. You haven’t had heart of palm until you have had it fresh.
You know that you are in trouble when visiting a finca and the owner asks twice if you know how to ride horses before you start. He really wants to make sure you can handle what you’re about to go through. Thankfully he gave me the best horse and the best saddle. His saddle was just a piece of leather with stririps tied on with rope, and he still rode better than me, but that’s no surprise. I swear some of the Tico cowboys defy gravity when riding. Perhaps they superglue themselves to the seat.
This finca is off the grid, that is, there are no electrical lines or phone. However, it does have power. First of all, the electrical monopoly here has a program of renting out solar panels that will give you enough power for three lights and a TV for 2 dollars a month. Also, within this finca is an mini-hydroelectric system that used to work. It can be repaired and will be.
The finca looks like a winner for sure. It is a good price and well suited for our planting. With this finca and our other that it is connected to, it will mean about 265 manzanas connected together, or 450 acres. One side connects to the reserve that extends from there to Arenal to Tilaran to Bagaces — I think that would be about 60 kilometers. Just a little bit inside the reserve I am told is a 100-foot waterfall. It should be fun to visit.
The next step is to have a forestry engineer review the titles to the property for any issues (such as it can’t be sold because it was a government gift house) as well as determine which areas can be planted with what species. After that, we make the deal.
Posted in buying land, campo, finca, forest, horses, off the grid, trees | 3 Comments »