An investment idea with legs, but will it take off?

Nic Cicutti examines the dangerous world of ostrich farming, which can leave investors well plucked

Their meat is said to be lean and flavoursome. Sadly, ostriches have left only a sour taste for many savers who may have lost up pounds 50m in a range of schemes promising huge returns from farming these mighty African birds.

The attractions of ostrich farming were the unbeatable returns of up to 100 per cent or more offered on a flutter of up to pounds 17,700. As thousands of unhappy punters have discovered, if an offer is too good to be true, it should be left well alone.

Earlier this week, the Securities and Investments Board, the City's top financial regulator, announced that it was seeking a court order to have investors' money returned to them by World Ostrich Farms, one of the companies in this field.

The SIB argues that the activities of World Ostrich Farms involve carrying out an unauthorised investment business. This, because savers were invited to take part in a collective investment business.

The regulator's approach refers to the fact that if an ostrich is farmed alongside other birds in a field, it is no longer an individual investment but a pooled one and is therefore unauthorised.

However, even before the SIB's intervention, World Ostrich Farms was already in liquidation. The liquidator, accountant Stephen Conn, hopes to pay back investors in about three months' time at a rate of about 50p per pound invested.

At the same time, another firm, Ostrich Farming Corporation (OFC), is fighting a legal battle against the Department of Trade and Industry's attempt to dissolve it. OFC, also under investigation by the Serious Fraud Squad, has taken millions of pounds from savers by guaranteeing annual returns of more than 50 per cent.

The rapid popularity of ostrich farming investments was based on two simple premises. Firstly, that unlike many other kinds of meat, it is far healthier and tastier to eat. It is low in cholesterol and fat, high in protein. The healthy-eating proposition acquired even greater significance at a time of mounting concern over BSE-affected cattle.

The second argument is that at a time of increasing popularity of ostrich meat, those who invested in farmed animals were riding on a sure-fire winner.

If an investor bought a pair of breeding birds, priced at up to pounds 17,700 each, he or she would actually end up owning an asset capable of producing a score of chicks each year or more. Even after livery and hatching charges of pounds 250 a bird, ostriches can sell at up to pounds 500 each at slaughter, generating substantial profits for their owners.

Because of the nature of the investment, ostrich farming was in effect unregulated. Nor did the only ostrich breeding association feel it necessary until recently to consider a code of conduct for farms offering savers the chance to invest in the birds.

The problems of ostrich farming were underplayed, such as whether there is ever likely to be such a significant demand for the meat and what happens if, in the rush to meet that demand, the market for ostriches became heavily oversubscribed. There was also the question of whether the ostriches ever existed.

Although some farms offer investors the chance to own specific birds, with small microchips being implanted in order to allow the identity of ownership, other investors have discovered that their birds have been more elusive.

In the case of the OFC, the birds were said to be in Belgium. However, the DTI's investigation into the OFC has found that while birds were purchased from a reputable firm in Belgium, they were bought by two other companies, Wall Street and Wall Street Corporation, acting as middlemen.

The second company then sold the ostriches on to OFC at a substantially higher price. The DTI's inspectors claim that the purchase of these birds from the Wall Street companies delivered no apparent benefits to OFC and investors.

Despite the tribulations of the two most prominent ostrich investment companies, there are plenty of seemingly legitimate others to fill the gap. Their promises of staggering returns will have been boosted by British Airways' recent announcement that it may offer ostrich meat on some of its flights.

Despite all the promises, savers should beware. This is one investment, which like ostriches themselves, is highly unlikely to take off.

Suggested Topics
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
Arts and Entertainment
Robert De Niro, Martin Scorsese and DiCaprio, at an awards show in 2010
filmsDe Niro, DiCaprio and Pitt to star
News
i100
News
In this photo illustration a school student eats a hamburger as part of his lunch which was brought from a fast food shop near his school, on October 5, 2005 in London, England. The British government has announced plans to remove junk food from school lunches. From September 2006, food that is high in fat, sugar or salt will be banned from meals and removed from vending machines in schools across England. The move comes in response to a campaign by celebrity TV chef Jamie Oliver to improve school meals.
science
Sport
England captain Wayne Rooney during training
FOOTBALLNew captain vows side will deliver against Norway for small crowd
Life and Style
Red or dead: An actor portrays Hungarian countess Elizabeth Báthory, rumoured to have bathed in blood to keep youthful
health
News
peopleJustin Bieber charged with assault and dangerous driving after crashing quad bike into a minivan
News
peopleHis band Survivor was due to resume touring this month
News
people'It can last and it's terrifying'
Life and Style
fashionModel of the moment shoots for first time with catwalk veteran
Sport
Radamel Falcao poses with his United shirt
FOOTBALLRadamel Falcao's journey from teenage debutant in Colombia to Manchester United's star signing
Life and Style
fashionAngelina Jolie's wedding dressed revealed
Finacial products from our partners
Property search
Money is slipping through our fingers: the UK is falling behind other countries in the amount we put away

How to save money: UK is crashing down the European league table for putting money away

The UK has slipped to 11th in the latest European league table of savers. Rob Griffin checks out the best options

Energy firms found guilty of bad practice could have licences revoked under Labour government

Caroline Flint, the shadow energy secretary, says a Labour government would create a new energy regulator

A student's guide to financial survival: You don't have to drown in debt at university

Fresh from A-level delight, the moment does not have to be soured by students resigning themselves to thousands of pounds worth of debt in three years' time. Rob Griffin sees how to pass the university challenge

'Dismal' eurozone data sparks concerns

European Central Bank chief Mario Draghi is under pressure to launch promised stimulus before the EU slides further
Love but not marriage: property is one area where cohabiting couples are in danger of losing out

How couples can protect their financial interests when cohabiting

People who simply live together cannot assume they have the same rights to each other's assets as spouses or civil partners. Michelle McGagh sees how they can protect their financial interests

India could be jewel in the crown for investors

With a new government and an ambitious prime minister, the country offers the prospect of strong returns. But there may be hiccups ahead, warns Simon Read

Child Maintenance Service to replace Child Support Agency - but is it better?

Reforms to the vexed question of child support payments by absent parents mean extra charges for both sides. Neasa Macerlean reports

Barclays's new life insurance heralds a revolution on the high street

The new product marks a shift towards 'clear, straightforward and standardised' banking products, says Simon Read

How to protect your assets if the stock markets begin to head south again

Are you worried about your portfolio? Nick Paler asks fund managers and investment insiders for advice
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Front-Office Developer (C#, .NET, Java,Artificial Intelligence)

    £30000 - £45000 per annum + benefits+bonus+package: Harrington Starr: Front-Of...

    C++ Quant Developer

    £700 per day: Harrington Starr: Quantitative Developer C++, Python, STL, R, PD...

    Java/Calypso Developer

    £700 per day: Harrington Starr: Java/Calypso Developer Java, Calypso, J2EE, J...

    SQL Developer

    £500 per day: Harrington Starr: SQL Developer SQL, C#, Stored Procedures, MDX...

    Day In a Page

    Chief inspector of GPs: ‘Most doctors don’t really know what bad practice can be like for patients’

    Steve Field: ‘Most doctors don’t really know what bad practice can be like for patients’

    The man charged with inspecting doctors explains why he may not be welcome in every surgery
    Stolen youth: Younger blood can reverse many of the effects of ageing

    Stolen youth

    Younger blood can reverse many of the effects of ageing
    Bob Willoughby: Hollywood's first behind the scenes photographer

    Bob Willoughby: The reel deal

    He was the photographer who brought documentary photojournalism to Hollywood, changing the way film stars would be portrayed for ever
    Hollywood heavyweights produce world's most expensive corporate video - for Macau casino

    Hollywood heavyweights produce world's most expensive corporate video - for Macau casino

    Scorsese in the director's chair with De Niro, DiCaprio and Pitt to star
    Angelina Jolie's wedding dress: made by Versace, designed by her children

    Made by Versace, designed by her children

    Angelina Jolie's wedding dressed revealed
    Anyone for pulled chicken?

    Pulling chicks

    Pulled pork has gone from being a US barbecue secret to a regular on supermarket shelves. Now KFC is trying to tempt us with a chicken version
    9 best steam generator irons

    9 best steam generator irons

    To get through your ironing as swiftly as possible, invest in one of these efficient gadgets
    England v Norway: Wayne Rooney admits England must ‘put on a show’ to regain faith

    Rooney admits England must ‘put on a show’ to regain faith

    New captain vows side will deliver for small Wembley crowd
    ‘We knew he was something special:’ Radamel Falcao's journey from teenage debutant to Manchester United's star signing

    ‘We knew he was something special’

    Radamel Falcao's journey from teenage debutant to Manchester United's star signing
    'I’ll tell you what I would not serve - lamb and potatoes': US ambassador hits out at stodgy British food served at diplomatic dinners

    'I’ll tell you what I would not serve - lamb and potatoes'

    US ambassador hits out at stodgy British food
    Radio Times female powerlist: A 'revolution' in TV gender roles

    A 'revolution' in TV gender roles

    Inside the Radio Times female powerlist
    Endgame: James Frey's literary treasure hunt

    James Frey's literary treasure hunt

    Riddling trilogy could net you $3m
    Fitbit: Because the tingle feels so good

    Fitbit: Because the tingle feels so good

    What David Sedaris learnt about the world from his fitness tracker
    Saudis risk new Muslim division with proposal to move Mohamed’s tomb

    Saudis risk new Muslim division with proposal to move Mohamed’s tomb

    Second-holiest site in Islam attracts millions of pilgrims each year
    Alexander Fury: The designer names to look for at fashion week this season

    The big names to look for this fashion week

    This week, designers begin to show their spring 2015 collections in New York