LET THE BUY­ERS BE­WARE

The Poultry Bulletin - - FRONT PAGE -

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.

Sin­cerely yours,

Kevin Lovell CEO/HUB The South African Poul­try As­so­ci­a­tion

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