Emu Farming
Ponzi Schemes have come out with innovative ideas right throughout the human history but a novel Ponzi scheme in India takes the cake for a totally out of the box idea. Emu Farming has seen a massive boom in the country with hundreds of Emu farms being set up around the country. Most of these farms have been set up using investor money promising returns of as high as 100% a year.
Emus have been marketed as a great poultry opportunity with multiple revenue opportunities from selling of Emu meat, egg and oil. Emus which are flightless birds like ostriches are a native of Australia and the first Emus were imported in India in 1996. However the boom started in 2006 and centered in the state of Tamil Nadu. The Ponzi scheme quickly spread to other southern states of Andhra Pradesh, Karnataka and Maharashtra. Like other Ponzi schemes, credibility was given the to Emu Framing schemes by using popular film icons as brand ambassadors and inviting top political functionaries during events. The Ponzi scheme has finally burst with the original Emu kingpin Susi farm promoters disappearing with the money, leaving investors to nurse huge losses and emu birds left without food. The total losses to investors are somewhere in the region of Rs 500-1000 crore.
Mainstream Media (Times of India) too gets duped and helps in propagating the Ponzi Scheme
Note some of the mainstream media like Times of India have also been duped into promoting this harebrained scheme. Note the following article fails to analyze the returns in details. Most of the returns made by early investor in emu farms was due to unsustainable high prices of emu chicks sold to the second wave of emu farmers. Don’t know why an emu chick would cost Rs 6,000.
Reddy, who also has an incubator, hatched 250 emu chicks last year. Each six-month-old chick was sold for at least ` 6,000 and thereafter they fetch ` 500 more with each passing month. Reddy now has 25 mature emu pairs in his farm.
So what is so special about this ungainly bird? Every part of emu is good for health. Its meat may cost up to Rs 750 a kg as it is cholesterol-free. Oil extracted from the bird’s fat is used in beauty products. Its feathers are used in handicrafts and its skin is tanned for leather. Little wonder several farmers across the State have taken to emu farming.
Another TOI article which extols the virtue of Emu Farming as late as Jan 2012 though doubts have started creeping. Note Times of India is indirectly giving credibility to the Ponzi originator Susi Emu Farms.
It was in 2006 that emu farming came to Erode and neighboring areas, with an eye on exports. Many farmers were lured by the aggressive promotional campaigns. “The emu is not prone to disease and its rearing is easy as it can survive on leaves, fruits and shrubs. It also ensures a steady income,” says V Rajaram, a farmer from Perunthurai, who started rearing the bird a year ago. To popularize its meat, Susi Emu Farms at Perunthurai has recently started a family restaurant with Emu meat as the main fare.
“Agriculture is very labour intensive. Thus many farm laborers are migrating to spinning and textile mills. Also, agricultural products don’t have minimum support prices, so people are looking for alternatives,” said V Rangasamy from Perunthurai. He was talking about why over a 1000 traditional farmers in Western Tamil Nadu have switched to emu rearing. Emus can also survive in any climate and involve less risk. They are immune to bird flu.
The Modus Operandi
One of the first Ponzi organizers was Susi Farms. The company introduced a buy-back scheme that promised lucrative returns on investment in contract emu farming. For an initial investment of Rs. 1.5 lakh, he promised a return of Rs. 3.34 lakhs within two years. Under the scheme, the company provided investors three pairs of chicks on the payment of Rs. 1.5 lakh as caution deposit. It also provided the infrastructure to rear the birds and offered Rs. 6,000 a month for the maintenance of the birds, besides a yearly bonus of Rs. 20,000. Thus, the investor was offered around Rs. 1.44 lac per scheme, the company would take back the birds after two years and return the deposit too.
Soon after, the firm introduced a VIP scheme, taking advantage of the lack of awareness among people about the birds. Under this scheme, the investor had to deposit Rs. 1.5 lakh. But unlike the regular scheme, the firms promised to rear the chicks and pay the investors Rs. 7,000 a month and an annual bonus of Rs. 20,000.
Emus in Tamil Nadu face Starvation after Ponzi Scheme goes Bust
The flightless birds are now staring at another disaster: Thousands of them face mass killing or starvation death after the emu business model burst last week in Erode district. The financial contagion has spilled over to neighbouring districts including Salem, Namakkal and Tirupur, leaving district administrations to figure out the birds’ future.
Shanmugham’s team has been left with some 8,000 emus to look after, following a bust of the emu business in his district. The birds belonged to leading farms like Susi, Queens and Nidhi, and are now living off whatever the district administration can provide them. Guesstimates put the number of birds in different districts in Tamil Nadu at around 40,000.
Other Sources
- http://www.thehindu.com/news/national/article3759135.ece
- http://articles.timesofindia.indiatimes.com/2012-04-21/chennai/31378584_1_emu-farms-salem-farmers
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