Emu, the flightless Australian bird which is at the centre of swelling fraudulent investment schemes in Tamil Nadu, last estimated to be at least Rs 500 crore, is slowly finding its way to fresh grounds in north India.
The birds are being moved in large numbers to places like Punjab, Uttar Pradesh, Haryana, Bengal and Orissa. Even places such as Bangalore and rural Maharashtra, where emus are not new, are seeing new farms opening up. New investors are being drawn in to these schemes with the same tried and tested model of “get rich quick” promises. “Every time the ship begins to sink, it moves to a new area. That is how it has survived so many years,” said Anand Rangerej, a Bangalore-based farm owner. Regulators have been silent so far, even after the scam emerged in Tamil Nadu in which several emu farm owners lost their money.
“Either RBI (Reserve Bank of India) or Sebi (Securities and Exchange Board of India) should be responsible for this. Often they take the cover that it was never brought to their notice. It is all over the newspapers. What more notice do you want?” said R Balakrishnan, a former financial services professional and an independent adviser based in Chennai.
An email sent to a Sebi spokesperson seeking comments on action taken did not elicit any response. In the absence of any regulatory action, the emu farming is threatening to become a national investment scam, running into several thousand crores.
In Punjab alone, over 150,000 birds have been sold in the past six months, say farmers. Jaskaran Singh, who runs the Gill Emu farm in Punjab’s Jalalabad, told Business Standard he had 100 adult emus and 400 chicks. Depending on age and size, a pair is available for between Rs 8,000 and Rs 24,000.
Understanding the emu business is not easy because there is no business, say some experienced players in the mainstream poultry business. B Soundararajan, chairman of Suguna Chicken, the country’s largest poultry company with a turnover of Rs 4,200 crore, said: “I have travelled over 40 countries and nowhere I found it was consumed as meat”. Asked whether Emu's fat can be used in edible oil, which is claimed by Emu Farm owners, Soundararajan said animal fat is not used in edible oil in India.
In Erode, Tamil Nadu, where the Emu ponzi scheme was in full swing and was later busted following government raids, emu meat was sold as the most popular meat in Japan.
Balakrishnan agreed: “I don’t think there is a business model. There is no consumption of emu meat to justify a business model. It is some kind of ponzi where they first sell the chicks and when a new guy comes in, buy back the chicks from the old guy and give it to the new one.”
Even the claims on the Emu farm companies websites do not inspire confidence. According to one of them, buying 10 pairs of three-month-old emu birds will cost Rs 150,000. There is a cost of fencing Rs 35,000 (one-time) and a feed cost of Rs 1,20,000
“As per this model project the total one-time investment will be Rs 305,000. Income from this model project will be Rs 300,000 for every year ( Today’s market value per egg is Rs 1,500-1,600. This income will continue for 30 years as emu will lay eggs for more than 30 years,” the website projects.
When an interested customer comes to these farms, he is often promised that the farm will buy back Emus if he wants money back.
A 39-year old farmer, S Selvam, was approached by an emu farm owner for an investment of Rs 6 lakh and he was promised Rs 2.5 lakh return in the first year. He was also told emu meat costs Rs 550 per kg in the market, and each egg is priced at Rs 1,200. However, none of the above seem to have become reality. The result, Selvam is one of the over 25,000 people who have lost their money on the scam in southern part of Tamil Nadu.
Nearly 250 Emu farms are located in the districts of Salem and Erode and these farms have over 15,000 emu birds and these birds life also remains unanswered as the owners of these farms are either in the jail or hiding.
“They thought only about financial returns, but never cross-checked how they could get the returns and now they are paying the price for their mistake”, said S Ganesh, Erode district revenue officer who had conducted investigation in the district of Erode.
According to him, the preliminary estimate is over 25,000 people were cheated by the farm owners and scam already crossed Rs 500 crore.
Farmers are banking big on emu oil as the meat alone is not good enough to give margins. The oil extracted from emu fat is supposed to sell at Rs 300/ 100 ml.
A few companies like AP EMU Processor and Vilayana, a Nabard-funded organisation, are supposed to have set up processing facilities for emu oil. Emu farms figure as one of the “bankable model model projects” listed on the Nabard website under the head Animal Husbandry.
A Nabard official directed queries to Chennai regional office. The Chennai official did not answer calls.
According to the Nabard website, Emu is just one of the running birds from the Ostrich family. Others are Rnea from South America, Cassowary from New Guinea and Kiwi from New Zealand. Thankfully, sightings of farms of these are yet to be reported.