‘Mombe Mari seeks to revitalise cattle industry’

SILVERBACK Asset Management company recently launched an innovative ‘cattle bank’ project — Mombe Mari Unit Trust — with partners Fabwell Farming which seeks to contribute towards re-building Zimbabwe’s cattle industry and providing investment opportunities for those seeking to preserve value. The Financial Gazette’s Paul Nyakazeya (PN) speaks to its chief executive Shaun ‘Ted’ Edwards (SE) and below are excerpts of the interview:

Silverback Asset Management chief executive, Shaun Edwards

PN: You have launched the Mombe Mari Unit Trust, what is the idea behind this?
SE: Historically, in Africa, cattle are viewed as a store of wealth for farmers and individual owners. The idea behind the launch of Mombe Mari Unit Trust is essentially no different. Firstly, the Trust seeks to attract investors who are looking for capital preservation whilst earning real returns on their investments. Secondly, the Trust provides an opportunity to deploy capital back into the cattle industry for the development of genetically improved breeding herds. There is not only a need to increase the national herd, but more importantly a need to increase the quality of the national herd. Governmentʼs Livestock Recovery and Growth Plan, as part of the Agriculture and Food Systems Transformation Strategy, targets a US$8,2 billion agricultural economy by 2025, beef exports being key to this initiative. Silverback Asset Management, through the Mombe Mari Unit Trust, plans to contribute to this.
PN: How does it function?
SE: Silverback Asset Management Company has title to approximately 5 300 head of cattle. The decision was made to “unitise” 60 percent of this asset (approx. 3 250 head) into a unit trust and to attract investment by offering the opportunity to invest in units equivalent to kgs of live cattle. The Mombe Mari Unit Trust has 13 000 units available for investment, at 100kg per unit, representing 1,3 million kgs of live cattle. Investors can invest in units at the current weighted average CC Sales auction price, set at a valuation point every two weeks, as publicised on the Silverback website (www.silverback.co.zw). They will be issued with an investment certificate. The investment will earn interest up to eight percent per annum, payable in kgs of live cattle, representing fractions of units. The minimum investment is one unit. The investments are redeemable after an initial holding period of three months.
PN: Who qualifies for this investment and at what stage does the investor decide to sell their shares?
SE: Any institutional, corporate or individual investor, provided they meet the KYC specifications (as determined in the subscription form) qualify for this investment. The investor is eligible to sell their investment at any time after an initial three-month holding period.

The herd is currently comprised of 680 calves, 950 steers, 975 heifers, 425 bulling heifers, 2 220 breeding cows, 124 bulls.

PN: You are backing this investment with live cattle; how big is your herd and where is it concentrated?
SE: The current herd under management numbers approximately 5 300 head and is due to grow by 20 percent in the next two months with the beginning of the calving season in Matabeleland. The herd is currently located on ranches in Gwanda, Kezi and Norton.
PN: What is the composition of your herd; how many bulls do you have and can you explain the genetics?
SE: The herd is currently comprised of 680 calves, 950 steers, 975 heifers, 425 bulling heifers, 2 220 breeding cows, 124 bulls. The genetic composition is predominantly Tuli and Bonsmara. There are commercial cross breeds being mated to Simmental bulls as well as Brahman being cross bred with Tuli bulls. The Norton operation has the largest registered Tuli breeding stud in Zimbabwe.
PN: The beef industry has experienced turbulence for many decades now; what is your contribution to the rebuilding of the national herd and reviving the beef exports?
SE: As mentioned before, the ultimate goal of the Trust is to contribute to the rebuilding of the national herd both in terms of numbers and also in terms of quality genetics. Silverback will seek to partner cattle breeders who meet certain set criteria for establishing a sound base to deploy capital into businesses with growth prospects. The industry, in collaboration with the Department of Veterinary Services, needs to demonstrate acceptable bio security protocols and practices throughout the supply chain to the international community as a prerequisite to reviving exports. This will form part of the criteria Silverback will enforce in establishing the partnerships with selected cattle breeders.

The Mombe Mari Unit Trust has 13 000 units available for investment, at 100kg per unit, representing 1,3 million kgs of live cattle.

PN: Among the myriad challenges that the beef industry has been facing is recurrence of deadly diseases; what measures and controls have you put in place to protect your cattle?
SE: The element of disease is always going to be prevalent in the cattle industry. Foot-and-mouth outbreaks have been around for many years now. The Department of Veterinary Services monitors this very closely and laws are in place to restrict the free movement of cattle within and across our borders. Silverback’s mitigation strategy is to geographically spread the herd in different regions of Zimbabwe. In addition, localised disease prevention is managed through very strict regular dipping and vaccination programmes conducted on all ranches.
PN: At what stage would you say you are ready to contribute towards resumption of beef exports? Do you have timelines for this?
SE: Silverback and Fabwell Farming will work closely with the Ministry of Agriculture and Department of Veterinary Services to establish a framework within which we can work towards the resumption of exports. It involves all players along the value chain.
PN: Do you have enough land to successfully realise the potential of your cattle project?
SE: At present between the three locations, Fabwell has the ability and is working to double the carrying capacity of the existing land under management. This involves the eradication of bush encroachment, allowing available surface and underground water to contribute to the re-establishment of vast grazing areas. An increase in the herd size allows for further units to be availed to the Trust, which in turn allows for further investment and deployment of capital. A key criteria in partnering breeders in the future will be land availability and security to support the growth of individual herds.

Mombe Mari Unit Trust is providing an investment opportunity to the investing community as well as contributing to the future growth of the cattle industry.

PN: How are you dealing with the water challenges that are blighting most farms?
SE: All existing ranches are supplied with water from local dam infrastructures as well as solar-powered borehole water. In addition, water is pumped some 12km from the Umzingwane river to the ranch in Gwanda.
PN: Livestock is one of the key drivers of the government’s aspirations towards having a US$8,2 billion agriculture economy by 2025. How do you position yourselves for this and what needs to be done to ensure that livestock truly anchor this aspiration?
SE: We believe the creation of the Mombe Mari Unit Trust is the first of its kind. As mentioned, the main objectives of the Trust are two-fold, providing an investment opportunity to the investing community as well as contributing to the future growth of the cattle industry. Silverback can contribute to the revival of the national herd and the improvements in quality genetics through smart partnerships, sharing of knowledge and targeting players who do not have access to capital but potentially meet other important criteria. Establishing a quality national herd is one pre-requisite to the revival of beef exports and the generation of export earnings are key in meeting the government’s aspirations.