Bees and berries part of a new investment buzz
The investment horizon for the blueberry bushes is eight years, the beehives 10 years and the solar panels 20 years
If you always wanted to farm but don't want to give up city life, an app from financial services group Fedgroup enables you to invest in sustainable agriculture without leaving your couch.
Launched in July 2018, the Fedgroup Impact Farming portfolio, which offers investments in blueberry bushes, beehives and solar panels on sustainable farms, has attracted R200m from investors, says Suraj Lallchand, director of Fedgroup Ventures.
Half of this amount has been from an estimated 11,500 retail investors and the balance from about 10 institutional investors, he says.
The average annual return has met Lallchand's expectations. He says the beehives have attracted between 5%-6%, and the blueberry bushes and solar panels 8%-10%.
While the app says the blueberry bushes will receive 12% a year, the beehives 14% and the solar panels 10%, the company says that is over the lifespan of the assets and is calculated on the internal rate of return, a measure of an investment's expected future rate of return.
The investment horizon for the blueberry bushes is eight years, the beehives 10 years and the solar panels 20 years.
"We are confident that we will reach the expected return of 10%-15% over the time period of the investment as the asset production matures," Lallchand says.
Though investors are "doing good with their investments or money", and most risks are contemplated and mitigated, occurrences such as some weather phenomena, legislative changes and demand for produce are unmitigated, he says.
"Investors take the risks and rewards associated with the assets," he says.
There is currently no secondary market for investors to trade their assets. Lallchand says the assets are medium- to long-term investments, but that if an investor has liquidity problems, Fedgroup will repurchase the asset for an undisclosed price.
Depending on the type of asset, the farmer normally gets about one to two times the return given to the investor. This is calculated on the basis of operating and maintaining these assets, Lallchand says.
Demand from investors has been robust - of the original 130,000 blueberry bushes on offer, 28,000 are left, while the beehives and solar panels have sold out.
Lallchand expects the remaining blueberry bushes to be sold in the next two months.
The original plan was for 100,000 beehives, he says, especially with the increasing demand for unadulterated honey, which has no additives.
Only 6,500 beehives have been sold, and while one can build many beehives, beekeepers need to wait for the bees to swarm the hive. "You can't rush nature, it has to grow organically."
The app currently works with two blueberry farms, one of 30ha in Naboomspruit in the North West and another of 60ha in Worcester in the Western Cape. There are two farms with beehives in the Eastern Cape.
About 25,000 solar panels have been installed and purchased on the app and new panels are becoming available.
There are 30 landlords with solar panel sites in Cape Town, Port Elizabeth, Johannesburg and Durban, and more landlords are becoming amenable to having the panels installed on the roofs of their commercial buildings.
Lallchand says the increase in electricity prices and load-shedding makes the installation of urban solar farms more attractive, not just for the landlords but because it places less strain on the grid.
According to a press statement, investments start at R300 for a blueberry bush, R4,000 for a beehive and R5,000 for a solar panel. The cost of insurance and maintenance, as well as the harvest and sale of the produce, are included in the purchase price.
*The writer owns 14 blueberry bushes and one beehive bought through the Fedgroup app
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