Global investors have taken note of a peculiar type of investment which is not at all a foreign concept to many South Africans, but has now become accessible to anyone who prefers livestock to corporate stock.
Recently highlighted by CNN, Livestock Wealth is a “crowd farming” initiative that launched in 2015, offering a modern take on a tradition trade – cattle farming.
The group allows you to invest in pregnant cows – living breathing cows – and use her offspring as a type of return or dividend as it is sent off to slaughter.
While unit trusts and shares are often intangible, numbers on a screen in a portfolio somewhere, Livestock Wealth says the cows are real – the investment is real – and investors can even go so far as visiting their cow on the farms.
According to the group, a typical investor can invest in individual cattle or in pregnant cows.
Individually, a six to eight-month old calf, which is sourced from preferred farmers, is raised at the farm until it reaches a mature age of 30 – 33 months, after which it is slaughtered to produce high value free-range, hormone-free, grass-fed beef.
The meat is sold online, or through bulk wholesale and to niche export markets, and the owner – or investor if you will – makes a return of between and 10% p.a. and 15% p.a. from the sale of the meat.
With pregnant cattle, the farm takes care of the calf (where it is expected the cow will deliver one calf a year, on average), and once suckled, is sold off to an abattoir. The returns from the sale are given to the investor.
The health and wellbeing of the stock can be tracked via a mobile app.
“It’s a stock exchange environment where the farm is the company, the cows are the stock and the babies are the dividends,” Nututhuko Shezi, founder and chief executive of Livestock Wealth, told CNN.
At current trading value, an investor can get into the livestock business from R6,280.
There is a monthly care fee of approximately R300 per month per cow – which is where Alpha Wealth makes most of its money.
The risks associated with this type of investment have mainly to do with the health of the stock. Death can occur from natural causes or from other factors – or your cow can be stolen. The monthly fee covers this potential risk, but additional insurance can be taken out, the group said.
According to CNN’s report, to date, 340 investors own 680 cows across three farms in Kokstad, Vryheid and Senekal, and the group is out of stock with a waiting list of investors.