LET THE BUYERS BEWARE
Awarning to the industry
It’s come to our attention that a firm by the name of Agri Smart Investments is touting a poultry meat production scheme which, on the face of it, appears to be a very lucrative investment opportunity. It isn’t SAPA’S role to act as an investment advisor, but we’d caution any producers potentially interested in any scheme to take independent financial advice before acting on offers such as these. As can be seen from the financial results of the major poultry businesses, poultry meat production does not normally produce high margin profits, and in recent times most of the major companies have been
running at negative or very low margins.
We also caution potential investors that having a fixed and successful market channel is the key to running a profitable poultry business, and that the live sales market is not always a reliable market. It should also be noted that income in this business is not monthly but is determined by cycles. This model apparently seeks to produce birds much bigger than standard for slaughter purposes.
The website refers to SAPA accreditation. Agri Smart Investments is not a SAPA accredited training institution. Neither do we have any formal relationship with them. They have telephonically advised that “their farms are registered with SAPA and that they send all participants on two day SAPA training courses”. As you’ll know, we’ve got farmers as members - not farms, and we have no records of any two day training course being done on behalf of Agri Smart Investments.
It’s also worth noting that a number of new entrants to the poultry market might wish to conduct their business on land that falls within the jurisdiction of Traditional Authorities, whose powers don’t include the selling of land. For those producers who wish to purchase free-hold title farmland, there are various arms of government that are looking to assist new entrants with land purchases through different schemes and that reduce the cost of land acquisition. Producers are urged to make use of all the government support available.
Government also has various packages available to support the working capital requirements of new entrant farmers. The cost of this capital will generally be less than the normal commercial rates. For those wishing to use commercial funding, we suggest the cost of this funding is compared to the cost of funding implicit in the Agri Smart Investments model which, on limited examination, appears to be quite expensive capital.
In short SAPA would suggest that all producers exercise the principle of caveat emptor – let the buyer beware - in considering participation in the offerings of this company.
Kevin Lovell CEO/HUB The South African Poultry Association