Dairy cow investors lose millions in lease scheme

While the details of the case have yet to fully emerge, it is estimated that up to 5 000 cows worth R50 million have been stolen.

Twenty-two cases of stock theft have been opened as well as civil cases for breach of contract. “We estimate that up to 5 000 cows worth about R50 million could have gone through the farm over the last three to five years. We have no physical proof at this stage. The case is unfolding and could be the biggest case of stock theft SA has ever seen,” said Bruce Taynton, a former Creighton farmer from KwaZulu-Natal.

In March, Taynton leased 215 cows and pregnant heifers worth R2,5 million to the farmer on a five-year lease. “We sold our farm in Creighton and leased the cows as an investment. Four months down the track, we were notified that the farmer had gone belly up and lost our cows. It has been terrible on all the investors,” said Taynton.

Leasing out dairy cattle is growing in popularity as a passive way to earn an income. The lessor (investor) will receive a monthly fee for his cattle, while the lessee earns income from the milk, the calves that are born and the salvage value at culling. Contracts differ, but generally the cattle must remain on a specified property and, when cows are culled or sold, the lessor must be informed of this and given replacement animals of similar type, value and age of lactation.

Taynton has recovered 30 cows from the farm but it was not certain what had become of the others. “They could have been taken to abattoirs or illicitly sold to other farmers in the area,” said Taynton.

The number of cows that have gone missing seemed to indicate that a complex scheme was in play. The lessors’ cow tags were replaced, which disguised the origin of the animals. Thus when lessors went to visit the lessee, it was not easy to identify the animals. This would make it easier to move cattle without raising lessors’ suspicions.

A range of investors have been burned, including three elderly ladies, a number of KZN midlands farmers as well as an investor from Botswana.

KZN Milk Producers Organisation president Tom Turner said the investors worked through a broker and did thorough due diligence tests before handing over their cows. “This guy checked out. The problem is this is not the first time, nor the last time, it will happen,” Turner said.

Gerrie du Preez, a cattle broker who had personally invested in the farm, said no one knew the numbers involved. “We can’t distinguish between fact and fiction at this stage,” said Du Preez.

A farmer in the Eastern Cape who leases in cattle, but did not want his name associated with the Koppies debacle, said the case would impact on the entire leasing industry. “I am very sorry about this. People will wonder if they are doing the right thing by leasing out their cows,” he said.