Your ‘lobola’ could be the key to riches – if you invest it

Turns out cattle is more than just a lobola commodity, or meat for the perfect steak.

It seems South Africans are warming up to the idea of investing in “live” stock – and literally watching their investment grow.

Wealth management specialist and SV Capital co-founder Kagiso Tloubatla told The Citizen cattle have long been a symbol of wealth in South Africa – and are more than just a source of meat.

Tloubatla said cattle investment allows investors to put their money towards tangible assets: livestock, which he said are “valued, recognised and understood by investors.”

The expert said both investors and wealth management firms can benefit from the financial security investing in livestock gives.

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‘Tangible assets’

Financial analyst Ayanda Majola CA (SA) said investors can put money towards specific herds of cattle which are nurtured and expertly managed until they’ve matured enough for selling to abattoirs “at prevailing market prices”.

“Once your investment matures, your money [and] profits are paid to your account,” said Majola.

But what if the cattle are stolen or escape from the herd? Majola said the cattle are insured to protect investments.

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Agricultural challenges

While investing in cattle seems to be on the rise, economists are concerned about the implications of capped cattle and beef prices.

Agbiz Chief Economist, Wandile Sihlobo said livestock – which combined with poultry makes up for nearly 50% of the agricultural sector’s value – is currently “under pressure amid relatively muted cattle and beef prices”.

The expert said the red meat industry is faced with a financially constrained consumer market, which leaves no room for price increases.

Sihlobo also said the “tail-end effects” of the foot and mouth disease which interrupted exports continue “weighing down demand as the country cannot access some export markets”.

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EI Niño effects

FNB Agribusiness Head of Marketing, Dawie Maree, cautioned farmers about climate pattern EI Niño which he said could potentially dampen agricultural outlook.

As the hot summer season approaches, Maree urged farmers to take action to avoid veld fires that could be caused by the hot and dry EI Niño weather conditions.

“During the dry season, veld fires can spread quickly, destroying not only farms but also infrastructur,” Maree told The Citizen

He said fire outbreaks have in the past led to increased loss of agricultural production, causing food insecurity for both humans and livestock.

“We have [also] seen equipment being damaged by veld fires, resulting in serious financial challenges for farmers,” said Maree.

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The agribusiness expert shared some possible precautionary measures to help reduce risks:

• Have a fire management plan
• Collaborate with government and other farmers to establish safety procedures and protocols
• Constantly maintain fire equipment
• Maintain adequate firebreaks
• Be sufficiently insured
• Educate local communities about veld fires

Encouraging farmers to take lessons from the past, Maree said the impact of veld fires has been severe, setting farmers back for years.

“Taking a proactive approach and ensuring that risk measures are in place will go a long way,” Maree said.