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BW Businessworld

Fowl Players

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The smell of paint fills the room of a bygone Victorian-style government building, the headquarters of the deputy superintendent of police (DSP) of Perundurai town, in Tamil Nadu’s Erode district. An angry crowd surrounds the building, demanding immediate redress. It has gathered to file a complaint against a person in whose business many had invested. The business: emu farming. Amounts invested:

Rs 50,000 to several lakh. The business proposition: raise emus and sell their eggs back to the promoter and, in return, receive a monthly income. The dream: tap into a large market for emu eggs and emu meat to make a fast buck. Current situation: monthly income stopped after a few months and farmers have been left to care for hundreds of flightless birds.

From the looks of it, it was just another Ponzi scheme — named after American conman Charles Ponzi — which promised investors big returns based on a constant flow of new investors. A few investors who received high returns reinvested the money in the business, which was then used to lure another set of investors. “Not one person knew where the birds came from and what they were being used for,” says K. Gunasekaran, DSP of Perundarai.

The companies that were involved in the scam, namely Susee, Suvi, Queen, Nidhi, N.S. Agro, Baby, T.V.S. Emu and Alamu, have had their farms confiscated by the Tamil Nadu government. The government now plans to sell the assets of these companies and pay back investors.

Tamil Nadu is not the only state where people have been duped with promises of quick returns. Travel north to Punjab, Haryana and Rajasthan, and you hear similar stories. The emu, a cousin of the ostrich, has been the cause of several people losing their hard-earned money.

Take, for instance, the case of Mandeep Singh who, along with his partner, started Shubham Emu Farm in Haryana’s Sonepat district a couple of years ago with an investment of nearly Rs 30 lakh. “We have recovered a part of the money that we initially invested but the problem is that with new farms reaching saturation point, there is no end market for the emus and no new customers,” says Singh.

CAGED IN: Emu farmers such as Mandeep Singh from Haryana (top) and V. Masila Mani in Tamil Nadu feel broadening the market in India will help people like them

The ‘end market’ he is referring to is the market for meat, which Singh initially thought was huge. “People in India are used to chicken; no one wants emu meat,” he explains.

Says Vinod Chaudhary, who runs an emu farm in Rajasthan: “There are no volumes in bird culling. Whatever eggs we have sold have been to new farms.” But with farmers realising that there isn’t much of a market for emus, there has been a fall in the price of eggs as well. “With the fall in demand, prices have also depreciated. The eggs that we sold at Rs 8,000 a pair last year are being sold at Rs 500 at present,” says Choudhary.

Farmers have also seen the prices of the birds plummet. Birds that were bought for Rs 35,000-50,000 a pair some years ago are now being sold for Rs 5,500-15,000 a pair.

However, even as farmers in Punjab, Haryana and Rajasthan are cutting their losses and trying to move out of the business, newer markets are opening up in Uttarakhand, Uttar Pradesh and Himachal Pradesh. In fact, the smarter of the lot who are in the process of shutting shop are selling their birds to unsuspecting farmers in these states for Rs 35,000-40,000 a pair.

How long it will take for the new lot of farmers to realise that they have been duped is anybody’s guess. Meanwhile, they continue to buy mating pairs and raise chicks in the hope that they will sell the meat to restaurants and the oil to pharmaceutical companies.

Behind The Fence

Across the country several people have suffered after investing money in a bird which had no underlying demand. The only assumption of a derivative reward was that some day these birds could be culled for their meat, with the skin being used as leather and the fat sold to pharma companies. But the ancillary industries did not exist and no one thought they were needed in the short run. This resulted in fly-by-night operators making a quick buck and disappearing, leaving behind angry farmers and thousands of flightless birds.

Those who still have the birds are releasing them into the wild as it is expensive to maintain them. The feed alone costs between Rs 25 and Rs 30 per bird per day. Another Rs 100 per day is needed to hire a person to look after the birds. An unnecessarily hasty step, according to S.K. Maini, a member of Hyderabad-based Emu Farmers Welfare Association (EFWA). “Emu is a bird that can be slaughtered and eaten. It defies logic that farmers would release the bird into the wild, given the fact that it makes more sense to just cull the bird,” says Maini.

However, his logic does not wash with farmers stuck with the birds. Take for instance L. Raghavan (name changed), who is a personal assistant in Coimbatore’s police department, but hails from Erode. Raghavan invested Rs 3 lakh in five mating pairs and hired a couple of men to manage the 2,500-sq. ft. shed that houses them. “The emu farmer offered me Rs 15,000 per month as maintenance charges and also gave me the feed for the birds with the promise of buying the eggs in the breeding season,” says Raghavan. But within six months, the money stopped coming, and the birds began laying eggs. Soon, he had a 100 eggs and they began to hatch. Now Raghavan has 80 chicks that are already 3 feet tall and are a drain on his pocket. The farmer who enticed him with the promise of buying back the chicks and the eggs has disappeared. If Raghavan cannot sell the meat, he will probably release the birds.

Kumar Vel, another farmer from Tamil Nadu, says, “These birds were my life. But the scam in Erode has dashed my hopes of taking care of them. I cannot afford to keep them as pets. There is no money in selling the eggs. I have had the birds for seven years and am attached to them. But I have to kill them or sell them.”

While the emu has resulted in the downfall of several farmers, there are a few who continue to harbour hope. V. Rangaswamy, the pioneer of emu farming in Tamil Nadu, managed to create an ecosystem of contract farming by asking local farmers to buy two or three mating pairs from him and then sell back the eggs to him. Rangaswamy culled the birds and sold the meat to local restaurants as exotic meat. To promote its consumption,  he tom-tommed the zero-fat in the meat in hotels.

Rangaswamy managed to sell emu fat to an exporter for Rs 2,500 a kg and also made money by selling the birds in Andhra Pradesh, where there was a vibrant market for emus. But all that was before the scam. Now he has 200 birds, and waits for things to change. “I have been readying a plan to set up a food processing plant. I know I can make it work,” he says.

V. Masila Mani is a 25-year-old textile businessman who also runs a 2,000-bird emu farm spread across 60 acres in Tamil Nadu’s Karur district. He says that for emu farming to be commercially viable someone must set up the infrastructure for collecting the birds, regulating the market and providing the farmers with a food industry linkage. “Our biggest market is Andhra Pradesh. The bird’s by-products do have a business proposition there but we need time for the business to scale up,” says Mani, managing partner of MMT Emu Farms.
The Andhrapreneurs

Andhra Pradesh has close to 2,500 emu farmers — the largest in any state in India. While there are no official estimates for the number of emu farmers in the country, they are expected to be between 5,000 and 8,000. That’s a large number of farmers and an even larger number of birds for a market which as of now is non-existent.

The farmers in the state say that emu oil or fat can be sold to pharma companies and soap factories because of its permeability and moisturising properties. Research is being conducted to ascertain the benefits of emu oil at the Indiana University School of Medicine in the US. But nobody knows how it fits into the Indian context. The meat is expensive and sells at Rs 400 a kg, the fat has no market here, and the leather industry cannot conceive of any use for the bird’s skin.

In spite of all this, the emu farmers in Andhra Pradesh are optimistic. “People need to be educated about the benefits of emu farming and the scam in Tamil Nadu is unfortunate,” says Vijay Kumar, general secretary of EFWA.

In Andhra Pradesh there are plans to set up at least three processing plants. One such plan, from AP Emu Processors, involves setting up a  plant in Vijayawada with an investment of Rs 10 crore. The plant will extract oil from 100 culled birds a day, to be sold in the US. BW was unable to talk to the promoter of AP Emu Processors.

According to EFWA’s Maini, the end market is burgeoning. He argues that in just Hyderabad’s vicinity, at least 25 culling units have been set up. “Each one of these units is at present culling about 15 birds daily. There is a retail market for the meat,” he adds.
TALL ORDER: Kumar Vel from Tamil Nadu says he has to kill his birds or sell them as he cannot afford to keep them as pets (Shanawaaz)

Some farmers too are making attempts to create a market for emu meat in local villages and towns. In Prakasam district, C. Venkat Reddy and his brother Srinivas have brought 2,000 small farmers together to promote emu farming in the region. “The problem with our industry is that we do not have one large player who can champion our cause such as Suguna Chicken or Venkys,” says Reddy, owner of Balaji Farms in Darsi, which houses over 300 emus. He insists emus are low maintenance, resistant to disease and offer a definite alternative income to farmers. The Reddy brothers have been asking emu farmers to hold a meat mela, where they would cull one bird a week to promote consumption within the village or town.
Ecological Risk

Whether such attempts to create a market for emu meat will succeed, only time will tell. Meanwhile, it is estimated that there are close to 2 million emus in India and their ecological impact is yet to be measured.

“The business cannot be commercialised no matter what they do as there is no market anywhere in the world for emu meat, eggs and oil. Therefore, the only option is to immediately stop breeding them and destroy the eggs, keep the animals for their lifespan and then stop. This is not an industry appropriate for India. Even Australia has not been able to make a success of emu farming; so, it definitely will not work here. The farmers will lose all their money no matter what happens, so it should be called to a halt right now,” says Maneka Gandhi, Member of Parliament and environmentalist.

Modus operandi of emu schemes in Tamil Nadu
  • Pay Rs 1 lakh for five breeding pairs in the beginning
  • Get Rs 10,000 as maintenance cost on a monthly basis
  • Pay Rs 5 lakh for spot on waiting list
  • Pay a premium for immediate delivery
  • Investors’ money used to pay monthly maintenance charges to emu owners
  • About 50,000 farmers cough up money in seven multimarketing schemes
  • Free cars given to those who brought in more investors
  • Once enrolled, investor stops getting monthly maintenance

While emus are native to Australia, the Indian emus’ parentage can be traced to Texas, US, where they were raised as pets. They were brought to India in the early 1990s. Emus are herbivorous. According to environmentalists and ecologists, the emus may become naturalised and breed freely in the wild.

However, in the absence of predators, an increased population of emus could become a hazard to farmers as they may destroy crops just the way wild boars and antelopes do in various parts of the country. “The fact that we have killed our tigers and cheetahs means there is no stopping a species that reproduces quickly. Farmers should therefore not release these birds into the wild because this could well be the next environmental hazard,” says Yogesh Gokhale, a fellow at environment think tank Teri (The Energy and Resources Institute).

“Ultimately, it will come to a cull — no one can stop it unless we ask animal lovers and people with large estates and farmhouses to adopt  some birds as pets,” says Gandhi.


(This story was published in Businessworld Issue Dated 03-12-2012)