By Nadja Atwal – www.nadjaatwal.net
Carsten Pfau has a unique story. While people usually try to map out a path for success from Latin America to the US or Europe in search for a better life, he left his mother country Germany and – together with his brother – moved to Paraguay in his twenties.
He has since built an impressive family business and enjoys the reputation as one of Paraguay’s most successful Investors and richest residents. His company Agri Terra Group had a fantastic 2020 , as agriculture investments have made a big splash during the pandemic.
Shortages of fresh produce in my favorite Manhattan supermarkets left many of us downright stunned and scared. Suddenly fresh organic chicken became a high commodity like caviar pre 2020. As a result Investors expanded or simply shifted their portfolio and started to look at agriculture investment opportunities. After all: if 2020 taught us one thing : we always have to eat. Agri Terra only offers projects to investors where the company itself invests its own funds. In fact it is the single largest investor in most of these projects.
Pfau’s latest move has been the take over of Indusur a Paraguay based company that produced alkalized water. Drinking water with high PH level has become a must for most health conscious people over the recent years – and not just in my hometown New York (even though the trend may well have started here…like so many others).
We sat down with the multi-facetted German entrepreneur for an exclusive interview in between the filming of his new TV hit show EL AUDAZ (The Audacious One) which is also part of Agri Terra’s endeavors. In fact TV production has become a highly successful, fast-growing business endeavor of the company. As a synergetic effect the success of the media projects nicely feed the credibility and trust in Agri-Terra’s larger investments.
Pfau already established himself in Paraguay’s TV landscape as a top producer and TV host with a weekly panel-style talkshow format that discusses political and economic topics both where his in depth knowledge of global economics and geopolitical developments come in handy and where the panel is not simply served water, but – of course – orange juice from his own production…..
Take us back to life in Germany. Did you grow up in an entrepreneurial family?
Yes indeed; my dad was an entrepreneur, who inspired me to think like a businessman already at a very young age. Occasionally, he took me with him to meetings -I would sit quietly in a corner and just listen-, and he would be my first and best client whenever I started little business ventures as a child. My grandfather and my grand-grandfather were also businessmen.
When did you first decide that the entrepreneurial path was the right one for you?
As long as I can remember, I wanted to be an entrepreneur. I never even thought about something else. I was about six years old when I ´borrowed´ some flowers from a neighbor´s back yard and sold them in front of the apartment building my family was living in at the time. I made about ten Cents but felt like Rockefeller. A little later, I convinced children (who were much older than me) in my building to paint some pictures and to sell those pictures in the street; they had to share the profits with me since I had the idea.
I was about twelve years old when I organized a betting pool on the 1982 football world cup in Spain and would charge a 30% fee on all bets. I was thirteen when I started an agency where people could purchase a service check book – they had to pay me on a monthly basis and in return, got a check book I had made myself on a typewriter and by hand (there were no computers available to children yet).
Delivering the check to me would entitle the clients to receive services such as washing the car, cleaning the driveway or doing grocery shopping. The clou was, I would just hire kids from the neighborhood for actually doing the work whenever a check was delievered. If a client did not have any need for the services I provided, he still had to pay me anyway, that was the deal. Age fourteen, I sold certificates for a closed-end real estate fund my dad was involved in. I needed a special permit signed by my parents to do that, and I was quite successful.
I would sell those certificates to anybody I knew – friends, family members, neighbors. I would not give up until somebody had signed a contract. At age seventeen, I opened my first real estate company, and since there were no cell-phones yet, I conducted my business over my school´s payphone. You can see how I never even thought about a 9 to 5 job?
How did you end up in Paraguay?
My dad had bought land in Paraguay, even though he never had visited the country, ever. He had seen an ad in a newspaper, advertizing farm land in Paraguay, and so he bought a very small fraction. From that moment on, Paraguay was on our radar, so to speak. About ten years after that event, he was asked by a friend to participate in a bid for a large building project in Paraguay, so he decided to travel there, for the first time.
When he got back from that trip, he was very enthusiastic about the potential of Paraguay, as a developing country. On his second trip to Paraguay, he took his two sons with him, and my brother and I were equally excited about doing business there. My brother and I had some money to invest, and we bought some farm land ourselves.
A little later, I graduated from University in Mannheim, Germany, and decided to go to Paraguay for a year. I just wanted to learn the language and wanted to do something with the farm land my brother and I had bought. That did not really work out well and we sold the land shortly after, but I still remained in the country, especially because I saw the huge potential for business there. Well, and now, 25 years later, I still live in Paraguay
Was coming from a European background an advantage or disadvantage when starting business in Paraguay?
I believe all over Latin America, it is an advantage to be from Europe. It doesn`t really matter which country you´re from, but if you´re from Europe, you have a lot of credibility. In Paraguay in particular, it helps if you`re German. Paraguay has large Mennonite colonies and people respect them a lot. They call them `the Germans´. At the same time, Paraguayans love Mercedes Benz, and if you´re German, you´re from the country that manufactures those beautifully reliable cars. Some irony here, by the way, since I mainly drive a Bentley…
As a family business what are the advantages and disadvantages of running a family business with your brother – how do you decide who does what role?
The downside of running a family business is probably that the business is always present. No matter whether it´s Christmas time or a family member´s birthday party, the business is always part of the event. I should add that my brother and I own the company, still the entire family is involved in it as well. Our wives, our sister and our brother in law also work for the company. So it is even worse. There´s never any family gathering where we do not end up talking about the business. The upside is of course that family always sticks together a little more than people who are not related.
Concerning splitting the responsibilities, I guess it came naturally to us. I was always kind of a pioneer, always eager to travel, always eager to find and develop new businesses. My brother was always far more disciplined than me, more calm and organized. I am best when it is necessary to improvise, which comes in quite handy in South America. I never had my own office. The company has many offices, but there´s no office with my name on the door. I use the board room, or the cafeteria, I do a lot of business on the phone in my car. As a counterpart, I rely on somebody highly organized and responsible, therefore I form a good team with my brother.
Take German football legend Beckenbauer – he could have never played as well if he had not have a fierce defender called Schwarzenbeck protecting his space. Or if you look at American football, hardly any quarterback can excel if there´s nobody blocking the other team´s Linebacker. Much like in sports, business people have certain talents, as well as certain weaknesses. To some extent, you can compare a company to a football team.
What were the challenges of starting a business in a foreign country?
The first challenge is naturally the language. In South America, very few people speak English or German, so I had to learn Spanish fast, in order to be able to do business here. Next is mentality. It is almost as if you needed to learn another language. Every country has a certain dominant mentality, habits and so on. For example, in a country such as Paraguay, nobody likes to say No.
So you have to learn how to distinguish a Yes that actually means No, from a Yes that really means Yes. When you need an electrician, that can be a problem. In terms of business, I had to learn that Paraguay relies a lot on equity, there is very little debt financing. During my first years in Paraguay, I wasted a lot of time pitching projects to banks. They never said No, but never provided any funding either. Over time, I learned how to get things done, but it took a while.
How did you decide on your current idea of offering investments?
I was in Germany at the time, and I was trying to put together a group of individual investors in order to jointly buy a cattle farm in Paraguay. Somebody I approached told me that investing long term in such a project, was not something he would do, but he would buy cattle if there was a possibility to just let it graze on other people´s land. That sounded interesting to me so I explored the idea further.
Talking to other people about it, I found strong interest. So my brother and I decided to formally offer a possibility to invest into Paraguayan livestock to the public. Surprisingly many people liked the idea and we bought a cattle herd on behalf of hundreds of individual investors. That went quite well, all investors made money.
We then decided to expand the business, offering investment opportunities regarding citrus plantations and later greenhouses. Year after year, we added more businesses to our portfolio, and we managed to constantly increase our sales numbers.
How does investing in agriculture compare with other investment vehicles?
I strongly believe in investing into basic needs people have. That way, demand for your product is guaranteed. People always need to eat and drink, there´s no way around it. So investing in the production of food and beverages is something highly resilient in times of crisis. Take the Covid-pandemic. People still had to eat and drink, and companies in that field did not have to shut down, and still did good business.
Next after eating and drinking is shelter. People need a roof over their heads in order to feel safe and comfortable. So we do real estate as well. Compared to other investment vehicles, agriculture and real estate may be perceived as a little boring, but in turn it is extremely safe. Tech, for example, is far more exciting, but less secure.
With inflation raging all over the globe – where is the future of agriculture and where does technology play a role in the future of agriculture?
The perfect protection against inflation, is agriculture and real estate. Today, let´s say I charge a Dollar per pound oranges. If inflation speeds up and the price of oranges goes to two Dollars per pound, what would I have to change on my plantations? Nothing. Same trees, same oranges, just a higher price.
If on the other hand you have a savings account or CD that pays you four percent, the money the bank pays you is worth less and less under inflation. Let´s say you have a deposit of one hundred Dollars and get four percent, meaning the bank pays you four Dollars. You could buy four pounds of my oranges before, right? Under inflation, with the same CD and the same interest rate, you suddenly could buy just two pounds of oranges, instead of four.
Technology certainly plays an important role in agriculture nowadays. That refers to technology in terms of increasing soil productivity as well as using IT. Our greenhouses are all high tech. The computer analyzes constantly what our plants need – more water or less, more nutrients or less, and so on. If it starts raining, the computer brings down a protective layer so all openings are covered. If it is very hot, the computer increases cooling etc. And of course we rely on technology when doing financial analysis.
How has the shortage of containers/sea transport affected the supply and demand of food?
Well, we live and work in a country that is a strong exporter of food, especially soy, corn, beef, rice and sugar. We don´t need to import food, so we did not suffer from any shortages in that area. But of course the problem of lower capacities and higher container prices do affect us indirectly.
What is the future for you and your family business ? What is your exit strategy?
For myself, I guess my exit will be the ‘beyond heaven”, hopefully… I do not see myself retiring ever in my lifetime. I love doing business, and I plan to do that as long as I possibly can. Nobody is forcing me, I could easily retire today. A wise man once said “if you love what you do, you never really work”, there´s some truth to that.
Sure, some days are tough, the sun is never always shining in business. But if you think about the big picture, if you enjoy what you do, in general, you never want to retire. I hope my children one day develop an interest in running the business, and hopefully my nephews and nieces as well. Otherwise, we can of course always choose to sell the business, or to do an IPO. But I guess as long as I live and do well health-wise, I will continue with what I am doing.
3 Tips For Entrepreneurs
1: Find out what you really like doing, and do that. You can become successful in basically anything, so there´s no need to dedicate your time to things you don`t like
2: Surround yourself with people who have a similar mindset as you do. If you´re a fighter, don´t spend time with quitters – and the other way ´round
3: Always remember that the economy behaves like the ocean – there´s a constant up and down
3 Tips To Better Recruitment
1: Hire people the way you would form a football team. You don´t need eleven goalies, you don´t need eleven strikers. As an entrepreneur, you can compare yourself to a coach who is forming a team
2: Forget degrees and diplomas. Hire people that fit into your structure
3: I always believed in offering low salaries with high incentives. The right candidates love that, the wrong ones will try to increase the base salary and to lower the incentive.