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
Saturday 18 May 1996
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.
30 August 2014 12:00 AM
The UK has slipped to 11th in the latest European league table of savers. Rob Griffin checks out the best options
22 August 2014 10:30 PM
Caroline Flint, the shadow energy secretary, says a Labour government would create a new energy regulator
22 August 2014 10:30 PM
16 August 2014 12:00 AM
16 August 2014 12:00 AM
08 August 2014 11:30 PM
08 August 2014 11:30 PM
01 August 2014 07:30 PM
The new product marks a shift towards 'clear, straightforward and standardised' banking products, says Simon Read
01 August 2014 07:30 PM
- 2 Saudis risk new Muslim division with proposal to move Mohamed’s tomb
- 3 A teacher speaks out: 'I'm effectively being forced out of a career that I wanted to love'
- 4 Cee Lo Green: It is only rape if the victim is conscious
Rotherham child sex abuse scandal: Labour Home Office to be probed over what Tony Blair's government knew - and when
What do immigrants really think of Britain? Polish immigrant's Reddit post goes viral
Ashya King: Parents of five-year-old boy refused permission to visit him in hospital and denied bail at Spanish court
With Douglas Carswell joining Ukip, my party has taken another giant step forward
When elitism grips the top of British society to this extent, there is only one answer: abolish private schools
Ashya King: 'Cruel NHS has not given us the treatment we need', says father of five-year-old with brain tumour who fled to Spain
iJobs Money & Business
£30000 - £45000 per annum + benefits+bonus+package: Harrington Starr: Front-Of...
£700 per day: Harrington Starr: Quantitative Developer C++, Python, STL, R, PD...
£700 per day: Harrington Starr: Java/Calypso Developer Java, Calypso, J2EE, J...
£500 per day: Harrington Starr: SQL Developer SQL, C#, Stored Procedures, MDX...
Day In a Page
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize
A three-bedroom red-brick cottage with outbuildings and pretty gardens, £200,000
This three-bedroom flat within a former textile factory spans the corner of the fourth floor and has a balcony