Jun 11
2
Beware of Ostrich Farming Buy Back Schemes
ostrich farming “buy back schemes” have been very common in start up situations. The discussion on Rogue Sellers raised the warning to be wary when offered such a scheme as to date, not one of these schemes has operated successfully.
As ostrich are introduced to new countries, many of those importing the foundation stock have based their business model on selling stock to other farmers. Why have these schemes failed?
The answer to this question is multi-factorial. It is a combination of inexperience, incorrect information, lack of planning and failure to achieve adequate and reliable levels of production to name but a few reasons. The Sources of Ostrich Farming Revenue illustrated the various processes of the ostrich value chain and illustrated how each process of that production chain is interdependent on the other. A failure at any one stage of that chain affects all in the chain.
The revenue for all is dependent on the final products reaching the markets at the right quality cost effectively as illustrated by the graphic.
These buy back schemes are usually based on selling ostrich eggs, chicks and/or breeders with a promise to buy back the progeny, sometimes as mature breeders and other times as slaughter birds. Often these buyback promises were made to guarantee buyback at the “market price” current at the time of buyback. There was no way for the buyer to be able to budget accurately as the buyback price was completely unknown. This became particularly problematical when breeder markets start to collapse and no meaningful commercial market developed.
Another reason for failure of the buyback scheme has been insufficient training and support for the farmers. The most important consideration when offered such a scheme, establish the terms very clearly. Ensure you understand them very clearly, does it clearly state who pays what expenses and what are the payment terms on buy back. It is not safe to accept “market price current at the time of buyback” as this provides no way to determine proper budgets and is now proven to be a very dangerous practice.
Within mainstream livestock production it is more normal for the farmer to provide labour, land and infrastructure while the supplier provides the livestock, feed and transport to and from the farm. The farmer is paid a fee per animal to cover his costs. The farmer will know the exact date the animals will be removed from the farm and they must achieve the targets set by the supplier in that time. The farmers are provided with the feed and genetics to meet those targets in order to ensure the uniformity of the meat.
When approached to purchase ostrich with a buy-back scheme, examine that scheme with great care and check that there is a full financial cycle in place to support your ostrich farming enterprise should you make that investment into a buy back scheme.
