I have become a farmer. No, I haven’t ditched the online world or the business of research and writing. But, thanks to a simple app, I am now the owner of a veritable hedge of blueberry bushes. I’ve never seen them in the purple flesh, so to speak, but I know they are being looked after by experts, and every few months I earn a few rand from their produce.
My adventure in agriculture is in reality an adventure in investment. It was made possible by a concept called “impact investment”, designed to generate social and environmental benefit along with financial returns. It is in some ways a sub-category of “sustainable investment”, which refers to responsible investing that takes into account environmental and social impact.
An independent financial services organisation called Fedgroup has extended the concept to the farming sector, and calls it “impact farming”.
It has carefully selected categories of product that make a positive impact on the environment, that are relatively easy to manage and track if one has the right expertise on board, and that provide a regular return to investors. The three “assets” one can purchase through its app, for now, are a blueberry bush on a “smart blueberry farm”, a solar panel on an “urban solar farm” or a beehive on a “sustainable honey farm”.
Fedgroup vets the farmers according to track records, existing contracts with suppliers and ability to scale up, and has set up the app as a platform for owners, farmers and buyers to come together. One monitors returns on the app, and can cash these in as they reach specific thresholds – or just watch the investment grow.
My first return from a blueberry bush, which costs R300 to buy and own, was a handsome two rand and 64 cents. If that sounds discouraging, it’s because it is only a small part of the big picture of impact investment. Over time, the return grows, and eventually pays for itself. My approach was to buy a new bush every few months, and reinvest the income. My next pay-out was R37,42, still small, but an indication of exponential growth over time. The third payment, at R62,65, confirmed this trend.
Read more on the next page about how the app provides a teaching in both patience and investment strategy.
The app provides a timeline of returns from all these assets, teaching both patience and investment strategy.
As Fedgroup CEO Grant Field explained at the time: “Returns are not guaranteed, but it’s not speculative. These are financial models on which we spent a lot of time. It’s not a policy; you own an asset. You own a bush, and get returns from that bush. We’ve serialised every bush, every panel, so everyone has it specifically allocated. In theory, you could visit your investment.”
The farms on which one’s bushes and beehives are located are identified in the app, as are the sites of the solar panels.
“If you look at what’s happened in the rest of the investment landscape, equities, property, you name it, there have been such huge losses in the market, but these raw assets have really been performing really nicely,” he said in an interview this month. “We had a one-in-57 year frost event on our blueberries, just as Covid-19 hit, but our forecasting models were conservative, so we still are ahead of the projections on pretty much everything.”
With the first three assets proving themselves, Fedgroup is preparing to expand its horizons.
“We’ve got a lot more work to do,” says Field. “Those first three assets were around testing the concept but also testing the app, testing the interface with people. We didn’t want to upset that broker market; they are very important in terms of the work that they’re doing with other products like insurance. But we’ve got a lot more lined up that we’re trying to enter, and Covid-19 has been a temporary distraction. The next big release will be exciting.”
However, the big innovation for this sector lies not in the product set, but in the way that the assets are managed. Fedgroup is turning to the kind of emerging technologies that underpin the fourth industrial revolution, such as machine learning and the Internet of Things (IoT).
Read more on the next page about the IoT systems used to manage the assets.
It uses a system called Azurite which, among other, harnesses machine learning to understand customer behaviour and the Internet of Things to monitor assets.
“Our future business is not based on technology, but technology is critical to our business,” says Field. “It enables us to deliver our product in ways that are more efficient and better than most. It is important to not fall in love with the technology you are currently using but to keep your finger on the pulse to find new ways of doing things more efficiently and effectively.”
Azurite runs all aspects of the business, including its website, applications, customer relations and business processes.
“From the same system, we get reporting, analytics, gamification, dash-boarding and a whole host of other features that enable us to service our clients better and faster. We believe that our display of data is unique. Every critical number in the organisation is available for everyone to see every 15 minutes. The value of that is priceless.”
But price is exactly where the system has its biggest impact.
“We wanted to create a product where people from all walks of life could place a low value or affordable amount into an ecosystem and make good returns,” says Field. “We needed a highly automated system that did not need people to run it. By using Azurite, we could ensure that each investment went straight to the borrowers or farmers. If there were system fees, it would take between 1 and 3 % of the investment. By having this system, we could ensure that each investment did not cost clients’ money to run the system.”
Beehives and blueberry bushes still need feet and hands on the ground to maintain and optimise. But increasingly, sustainable investments like solar panels almost run themselves.
“We use the IoT functionality to ensure that our solar panels are performing properly as it constantly measures what is going on,” says Field. “Evolving technology takes care of evolving needs, thus bringing sustainable value to clients.”
- Arthur Goldstuck is founder of World Wide Worx and editor-in-chief of Gadget.co.za. Follow him on Twitter on @art2gee and on YouTube.