Local is lekker: farming app brings about sweet profits for investors
SA is facing a shortage of pure honey, but one local business has found a way to address the issue while helping bee colonies thrive.
According to the International Diabetes Federation, more than 3.5m South Africans have diabetes, so a honey shortage has health implications for many people.
Fedgroup is tackling the problem by swarming between 500 and 1,000 beehives every month through its Impact Farming initiative. Its app allows users to buy beehives at R4,000 each and make a profit from them.
“The importation of adulterated honey [to which glucose, dextrose, molasses, sugar syrup and other products have been added] at lower prices has affected local producers’ ability to make a sustainable profit,” says Fedgroup CEO Grant Field.
“The demand for honey has also increased as South African consumers have begun to appreciate the healthy benefits of real honey.”
Through Impact Farming, more businesses with locally produced and unadulterated honey have the opportunity to grow. It also helps small businesses get their produce to market at a fair price.
“Most exciting, however, is that the Impact Farming model can be applied to myriad product offerings,” says Field. “They are already working on other innovative opportunities, with underlying assets from some unexpected sources. This allows our clients to choose a product that fits their personal preferences and values.”
Field says investment returns are not guaranteed, but the products have been selected for their market position and the projected increase in demand.
“Beehives produce less in drought years, but again the average production over decades was used to determine your projected returns. Solar panels produce less energy when it is overcast, but weather patterns over the last 20 years were used to calculate our projections. Blueberries are drip fed to conserve water and mitigate drought conditions and are housed under hail-resistant nets. We also have performance guarantees in place with our service providers in the case of solar panels and beehives.”
Using the beehive example, Field says the internal rate of return is the projected income minus the original purchase price of the particular asset.
“If you subtract the purchase price from this income, you arrive at the projected internal rate of return of 14% to 16% per year.”
The Fedgroup app is available for Android and Apple devices.