An innovative funding concept, combined with modern farming techniques, is making a huge impact in the agricultural industry. In the Vhembe District alone this has not only created much-needed jobs, but also enabled everyday citizens to "own" a part of a farm and share in the wealth.
On Wednesday, 16 February, the Madimbo Macadamia Farm at Ha-Mashau, not far from Elim, was a hive of activity. The farm has partnered with investment company Livestock Wealth to hold an open day, to which members of the press as well as more than 100 local farmers were invited. The aim of the day was to showcase the success of the project and explain how such a public-private partnership works.
The Madimbo Farm company was started in 2005 but originally focused on growing spinach, with only a small portion set aside for macadamia trees. The owners quickly realised the potential of macadamia farming and focused their attention on this aspect of the business.
The CEO of the Madimbo farm, Mr Gene Likhanya, explained that 30 hectares of the 88-hectare farm was initially set aside for planting macadamia trees. They wanted to expand on this, but one of the challenges was to find the capital to do this expansion. This is where Livestock Wealth entered the picture. This South African company runs a "crowd-farming" platform, which enables ordinary citizens to invest in a farming enterprise.
Livestock Wealth's chief executive officer, Mr Ntutuko Shezi, outlined that their funding model assists farmers to utilise their lands. "There are a lot of farmers in the rural areas who have ample land, but there is no funding available to enable them to plant, grow and create an income from those lands. So, as Livestock Wealth, our job is to fund farmers through our crowdfunding platforms," he said.
Shezi explained that macadamia farmers especially face a big challenge, because these trees take about six years before they are fully productive. This means that the farmer has to carry all the costs, such as paying for labour, fertiliser and irrigation. Livestock Wealth makes it possible for investors to buy the trees, own them for six years and then sell them back to the farmer.
The Livestock Wealth platform has nearly 4 000 investors and nearly R100 million of assets under management. "Our vision is to end wealth inequality by using agriculture as the engine to foster local economic growth," said Shezi in a press release.
Gene Likhanya told the media that the trees on the farm were bought by 6 000 Livestock Wealth investors, who have invested R12 million in the assets. Each investor made a minimum investment of R2 000 per tree. Likhanya said that they now have around 25 000 trees on some 80 hectares across all their farms. The average return on investment over the period was 17%.
Likhanya explained that part of the success of the enterprise lies in the economies of scale. If you are big enough, you can buy large quantities and you have a lot more bargaining power. It allows you to buy things at affordable prices, which creates better profit margins, he told the media.
Wednesday's open day was also aimed at educating local farmers and helping them find solutions for their everyday problems. "We just want local farmers to get inspiration and see how it gets done. We want them to know that they can own a farm like this. We also expose them to other funding solutions, compared to the banks and the red tape from the government," Likhanya said.
One of the local farmers who attended the event was Matshete Khuliso from the Tshipise area. She said that she had inherited a farm from her father and had enrolled for a farm-management course at Mashamba College. She was especially interested in learning more about the science of cultivating soil and growing crops. "I want to learn how other farmers are making it in the industry, in terms of what to plant to gain and not to lose," she said.