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ETP2601 Assignment 4 Semester 1 Memo | Due 8 May 2025. All questions fully answered.
LIVESTOCK WEALTH BECOMES MULTIMILLION-RAND ENTERPRISE
Livestock Wealth (LSW), a livestock crowd farming platform, has become a multimillion-rand
enterprise, and is expanding its offerings to include agricultural food products, planted in a smart
farming connected system. Developed by KwaZulu-Natal-born electro-mechanical engineer Ntuthuko
Shezi in 2015, Livestock Wealth offers people with no access to land, time or skills the opportunity to
own livestock within a professionally managed farming operation.
The Web and mobile application allow investors to invest their money in cows rather than in unit
trusts, shares or exchange-traded funds. Through connecting its network of small-scale partner farmers
to investors, the business model allows farmers who cannot afford to scale their business to access
capital, while offering the investor an opportunity to invest in assets which are not influenced by
financial market trends.
Cattle farming in South Africa is estimated to be worth around R142 billion, with the local beef
industry generating an estimated $144 million in exports in 2017, according to data from Trade Map.
After seeing multimillion-rand growth, the investment company says it has now expanded its offerings
to include an array of agricultural assets that can be owned by potential investors, including sugar cane
plants, macadamia trees, and maize plants and a separate option of investing in a connected garden
system which grows all types of organic vegetables.
Speaking at a business update in Johannesburg yesterday, Shezi explained that the new offerings give
investors who lack the time and farming expertise the opportunity to own tangible, high value,
growing assets.
“Our goal is to give ordinary citizens an opportunity to invest in a long-term investment plan on any
agricultural product that has the potential to yield great investments. For instance, macadamia trees,
the most lucrative crop in South Africa, can cost around R20 000 per hectare for the investor, but after
a few years of growth, one tree can reap rewards on a minimum investment of around R80 000.”
Potential investors can buy online, from the partner farmer, while Livestock Wealth facilitates and
manages the assets like an investment portfolio.
The South African macadamia industry is the largest producer of macadamia nuts worldwide.
According to the 2018 World Nut and Dried Fruit Conference, an estimated yield of 53 500 tonnes of
macadamia trees reaped a sales value of well over R3.2 billion in 2018. The connected garden system,
a pool-table-sized garden which grows any vegetable crop, including spinach, lettuce, cauliflower and
brussel sprouts, is managed around the clock by an experienced partner farmer.
Investors can own several smart garden systems, which are connected to an internet of things
monitoring system, allowing the farmer to track the environmental condition of the plants, while the
investor can view and track the plants at almost any time via the app. “Because farmers receive a
seasonal income, the biggest problem they face is gaining access to funding to help them grow their
business and take care of expenses, such as paying salaries, feeding livestock with quality food,
maintaining tractors and providing medical care for the stock. Banks often require collateral for taking
loans and with most black farmers renting out their farms from government, it becomes impossible to
provide the required collateral.” The crowd farming company has partnered with Woolworths and
wholesaler Cavalier Foods, to provide them with free-range beef, which is free of antibiotics and
growth hormones.
The farming business says it is engaging potential partners such as restaurant chains, public hospitals,
prisons and retailers to connect them to its farmer partners who will then supply them with fresh
produce on a regular basis.
“Typically, we are looking at supplying institutions such as Johannesburg General Hospital with
onions or lettuce on a daily basis and also supply some retailers and restaurants with a few kilograms
of veggies on a daily or weekly basis. The farming systems are not limited to vegetables, but also
include growing plants that will be used to make food spices, such as seeds, buds, fruits, flowers, bark
and roots of plants.”
Livestock Wealth started with 26 cattle in 2015 and currently manages a herd of around 2 000 cattle at
four farms across the country. These have a total value of over R20 million and are managed on behalf
of 800 investors who are not only South Africans but include Germans, Americans, Canadians, Irish,
English and Chinese.
The company says since inception, it has paid out almost R5 million in dividends.
Its business model works like a bank fixed deposit, where the client would invest in a cow for a six- or
12-month period with an option to re-invest. The 12-month option means investing in a pregnant cow
(R18 730) and the six-month option is investing in a calf (R11 529), which will eventually be sold for
free-range beef with an average return on investment of about 12%. Another alternative is the
shared-investment option (R576) where the investor buys a portion of a cow together with other
investors.
“Government can’t give us all a farm divided into small amounts. We need to move away from the old
farm model of one person owning land, having all the skills and farming their own product,” says
Shezi. “With crowd farming, one entity owns the land, and the farmer who loves farming and has the
skills continues to farm, and then others invest in the production. Whether it is cattle or blueberries or
veggies, other people can be involved in production without the investors getting their hands dirty.”
The company has also partnered with MTN Connected Livestock, which helps monitor the livestock
online through a tracking device, providing investors with data about the condition of their animals
through the app.
“We are hoping that our business model will be a game-changer in lowering the barrier to entry for
millions of aspirant farmers. The main definer is that the two parties each have what the other wants,
and we are committed to managing the relationship between the investor and the farmer, by giving the
farmer the option and the ability to unlock the hidden value in their crops and livestock.”
Source: (Mmako, Sambo & Shambare, 2023)
Question 1
Ntuthuko Shezi is clear about the goals he wants to achieve for Livestock Wealth. With reference to the case study, Explain to Ntuthuko how important setting goals is for his livestock business. (10)
Question 2
2.1 Use both qualitative and quantitative criteria to unpack the definition of small business (8)
2.2 In terms of the definition, where would you classify Livestock Wealth in terms of the business size and why (3)
Question 3
With specific reference to the case study, explain to Ntuthuko the principle of SMART goals as he embarks on setting business goals for Livestock Wealth (4)
Question 4
With reference to the case study, identify (0) and discuss the five factors (10) that Livestock wealth needs to take into consideration when deciding on a promotional mix. Your answer should include relevant extracts from the case study. (10)
TOTAL: 35 MARKS
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