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Does money grow on trees?

Investment | Commodities

By Justin Modray, published 18 August 2010.
Helpful? 110

Are schemes that encourage you to buy trees that produce biofuel a great investment opportunity or rip-off?

There’s no doubt that alternative sources of energy will become increasingly big business over the next 100 years.

If we accept that fossil fuels will one day run dry and that universal adoption of nuclear energy is not a reality then it seems pretty obvious that other energy sources such as fuel derived from crops (biofuel), solar and wind energy will need to plug the shortfall between demand and supply.

So, on the surface, there should be some good long term investment opportunities if you choose carefully.

I’ve been getting a few emails recently encouraging me to invest in so-called ‘green oil’ and ‘miracle trees’ with the prospect of astounding returns. My initial reaction to such emails is always ‘scam’ followed by a quick tap on the delete button. But I thought I’d take a closer look at a couple of examples to see whether they really are too good to be true.

Moringa – the miracle tree
This email, from Taylor Langton Associates, projects a 517.81% return over five years by investing in Moringa Trees – described as a ‘miracle crop’.

I downloaded a brochure and while it’s more pre-occupied with pretty pictures and selling the story rather than useful investment information, I managed to glean the following:

Taylor Langton Associates is an agent for Insight Group PLC, an African based company whose chairman, Alfonso Revilla, is a lawyer currently studying to become a litigator. You invest $US 1,500 per hectare via Insight Group to buy farm land in Mozambique, Africa (plus unspecified legal costs).  You then pay a one-off fee of $970 per hectare to plant your crop and 18 months later a fee of $530 per hectare to harvest and sell your first crop (the seeds, which are primarily used for biofuel) at an estimated price of $690 per hectare. No information on how the 517.81% projected return is calculated.

The Moringa tree is a potential source of biofuel and apparently does grow quickly while offering a decent yield per hectare. But buying a plot of farmland in Mozambique through an African investment company sounds mightily risky to me.  I’d definitely avoid this investment.

The Green Oil Programme
This scheme, offered via Graham Stuart & Associates, invests in Jatropha trees (currently in Cambodia and Thailand), again with a view to selling the seeds for biofuel production.

You buy trees at £1.25 each (minimum £3,125 investment) and then receive 60% of your tree’s annual revenue for the first 10 years followed by 30% of its revenue thereafter, with an expected tree life of 35 years. Projected returns are quoted as 9.8% in year 1, 19.7% in year 2, 29.5% in years 3-10 and 14.8% a year thereafter. The figures are based on a yield of 1.5 litre of oil per tree per year but other assumptions, such as oil price, are not detailed – a major omission.

The proposition has simplicity in its favour; all fees are incorporated within the percentage of revenue you receive, but I’d still view it as very high risk with far too little information provided to make a sensible investment decision.


Whenever you’re presented with an investment that looks too good to be true, always ask yourself "why is the salesman/company selling this to me rather than investing their life’s savings and borrowing heavily to invest themselves?" After all, if it’s that good why bother sharing the opportunity with anyone else?

The answer’s simple – it’s either a scam or there’s more risk involved than the salesman would like to admit.

My biggest concern with these investments is that you’re investing in trees you’ll probably never see in person via companies you’ve never heard of. It involves a lot of trust and if things go wrong you’ll have no protection as the investments are not authorised or regulated by the Financial Services Authority - you’re on your own. If these schemes turn out to be less than genuine, or simply go wrong, I wouldn’t fancy your chances or getting any money back.

I’ve little doubt about the potential for biofuels (and farming in general) longer term, but buying your own trees in a developing country is an incredibly high risk way to bet on this. Even assuming an investment is genuine there’s a lot that could go wrong. The countries concerned may have political risk and/or a less than robust land ownership system. What happens if a foreign government or locals decide to claim your land? Bad weather/disease wipes out your crop? Or the investment/management company goes bust?

And as for selling on your trees if you need your cash back – good luck!

The price of biofuel is determined by the price of oil (it’s basically a substitute), so your investment return will depend heavily on oil prices. While likely to rise longer term they may continue to be erratic shorter term, further adding to investment risk.

If you want to invest in biofuels and other sources of alternative energy then probably more sensible (and safer) to do so via investment funds run by well established, reputable, companies – e.g. the Blackrock New Energy Investment Trust. But remember that even these funds are still pretty high risk and could lose your hard earned money, so tread very carefully.

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Readers' Comments (21) - To post a comment please register or login .

Comment by shifty at 12:16pm on 08 Apr 2011:

This is a very narrow minded, stereotypical and 1-dimensional point of view, I have been a client of Insight group for 3 years and they have ALWAYS delievered what they promised.

You have clearly looked at the Moringa project in minimal depth and have overlooked many important factors -

1. The contract guarantees the sale of ALL the seeds and the price at which the seeds are purchased in an offtake agreement.

2. The project is approved by 3 independant FSA regulated SIPP providers and is soon to be taken on by many more.

3. The success of the bio fuels industry has absolutely no bearing on the success of the investment; the returns are generated through the sale of the seeds - what happens to the seeds after sale is neither here nor there.

3. Full UK investor protection is given with Insights investment projects, London based solicitors, escrow accounts and fidelity insurance comes as standard.

4. Mozambique is more politically stable than alot of overseas investment hot spots, including Brazil, Morroco and Romania. It has been in a state of multi-party democracy for the last 17 years and has experienced positive rates of GDP growth whilst the rest of the world was knee deep in recession.

These are just a few reasons why your view is completely unfair, clearly you are poorly educated on investments of this kind - I suggest you do your homework young man!

Comment by justin at 10:28am on 15 Apr 2011:

I think your views are rather biased to say the least - you don't happen to work for Insight Group do you?

A contract guaranteeing the sale of seeds is only as robust as the counterparty agreeing to buy the seeds. If they renege the contract then I'd imagine investors might have a problem?

The fact an unregulated investment is held in a regulated SIPP makes absolutely no difference to investor protection - there is no FSA protection on unregulated investments. Nor should a SIPP provider's acceptance of an investment be seen as some sort of validation of its worth - there are quite a few unregulated overseas property investments being peddled via SIPPs that I wouldn't touch with a barge pole.

If the price of oil were in the dumps (looks unlikely at the moment) then the counterparty buying the seeds would probably go out of business if the agreed purchase price becomes uneconomic (or are they paying investors such a low price (vs market price) this is unlikely to be a risk?). So, in my view, the oil price is important.

It's good to hear the Insight Group uses escrow accounts and fidelity insurance (assuming they are structured to provide adequate protection), but as an investor it's still no replacement for a UK Government backed investment compensation scheme.

Yes, in recent times Mozambique has been more stable than some other parts of the World, but I'd still rank it as higher risk in the greater scheme of things - especially where land ownership investments are concerned.

I really do hope your investment (or business if you work for Insight Group) works out. But in my view this type of investment remains high risk and I'd be failing in my aims for this website if I didn't highlight this to readers.

Comment by shifty at 5:43pm on 26 Apr 2011:

To answer your question, no, I do not work for Insight Group (although, if I would probably be an asset to them if I did.) For your information, I am a fairly seasoned investor with extensive experience in offshore investment, namely South America and Africa.

I scrutinised the Moringa project just as much as you did before I invested, if not more. Yes, my views are biased......biased towards the facts and the truth of the matter, I can assure you that I conducted a thorough due dilligence process before jumping in.

Renege of the contract (off-take agreement) is most certainly a risk factor, however, it is a fairly small risk - the terms of that agreement are far too swayed in the counterparty's favor.

I am not suggesting that holding it in an FSA regulated SIPP will give you FSA protection as we both know that is an impossibility with this type of investment but you would be wrong to think that SIPP providers allow their clients to invest willy nilly into offshore projects such as Insight's Moringa plantation, quite the opposite infact, MOST SIPP providers are fairly careful about what they do and dont approve.

I notice that you view the Moringa project as a bio-fuel investment, you're wrong, it isnt, bio-fuel is just one of the seeds uses. The seeds purchased in the off-take agreement are to be used for various products including bio-fuel, cosmetics and lubricants etc. It is, however, completely irrelevant what the seeds are used for after the sale - the returns are already generated by that time.

Oil prices are, again, completely irrelevant as the seeds are sold at 69 cents per kilo which is far below market value (if you were to look into moringa seed prices online, you can expect to pay between $2 and $4 per kilo.)

I notice you have an opinion on Mozambique, but based on what knowledge and experience I might ask? As far as i understood, you're a uk based financial advisor, what qualifies you to advise on this type of investment?

Comment by thetruth at 10:26am on 23 Jun 2011:

Interesting article here

Comment by IFA10 at 12:46pm on 22 Jul 2011:

That article is not relevant to the subject matter,

Comment by InTheKnow at 3:25pm on 02 Aug 2011:

Interesting comments shifty. I challenge you on how you have been a client of Insights for 3 years when they have not been trading for that perod of time.

Comment by williams79 at 5:36pm on 03 Aug 2011:

Intheknow, I have been a client with insight group since 2010. I believe that your point is made through the fact they have only been registred in the UK since March last year? however they have been established since 2005, now before you say I must work for them or anything. just like many forums advise people to do. I asked for accounts as well as registration details, all Uk figures are avalible on the companies house, with some searching the south african side tracks back. Their accounts last year as on companies house show around 1.5 M GBP.I have been very happy with the service and products offered and look forward to my first return in the next coming months. I would certainly recommend them.

Comment by InTheKnow at 9:58am on 04 Aug 2011:

What is their company registration number as there is no such company as Insight Group Plc on Companies House? Also, I know a previous Marbella employee and they have confirmed what you are saying is not correct. Also, what is the situation with Platinum Management Associates Ltd who were the Agricultural Managers who have now dissolved their company?

Comment by williams79 at 1:36pm on 05 Aug 2011:

When i started investing they had only just registred in the UK under Insight Commodities, since then i have seen their accounts which i downloaded from the comapnies house. what part is your friend is saying is incorrect? I personally can not complain(so far) about the service i have recieved and the contract and accounts have all gone through my accountant (friend for 20 years). I understand there is a risk investing in these type of investments however i am a firm believer in sometimes you just got to take risk, to get the best returns heck im happy i do not have money in the stock markets, they are regulated and look how they are going :) I spose its the waiting game to see if i get my return. With regards to the platinum management associates dissolving in the UK - I also questioned this but after doing some research you will notice they are orginally an african based comapny hence why they are the management team on the african project, they dissolved their UK arm as its not need, however are registered across africa for different projects they are currently involved. I have done every bit of research that i would do with any company and compared to some of the other companies offering me IPOs, carbon credits etc this was by far the most repatable company.

Comment by InTheKnow at 4:50pm on 05 Aug 2011:

To be honest I would rather talk privately than on an open forum. Would you be happy to discuss if I provide you with personal e-mail details?

Comment by IFA10 at 11:29am on 09 Aug 2011:

IN THE KNOW.. i am also interested in talking to you, i have invested in this company after extensive research, the UK company has fairly good books and the African side of the company does indeed trace back to 2005. You say you have a friend who has worked there, could you shed some light so us investors can be at ease. Regards.

Comment by InTheKnow at 9:36pm on 23 Aug 2011:

I took the opportunity to read the accounts for myself and all I can say is I would urge anyone to do the same. Over 30k in the bank in no way resembles a company showing 1.5m turnover. I've also spoken to a colleague who reside in SA and no trace back for this company. Caveat emptor!!

Comment by InTheKnow at 9:37pm on 23 Aug 2011:

I took the opportunity to read the accounts for myself and all I can say is I would urge anyone to do the same. Over 30k in the bank in no way resembles a company showing 1.5m turnover. I've also spoken to a colleague who reside in SA and no trace back for this company. Caveat emptor!!

Comment by oncebitten at 10:10pm on 23 Oct 2011:

I am very interested in what has been discussed here - last post was in Aug - as a prospective investor with Insight I would like to hear what the outcome was. I am willing to give my private contact details to discuss this privately. Best wishes

Comment by IFA10 at 9:03am on 31 Oct 2011:


Comment by Pazos73 at 10:42am on 03 Dec 2011:

I was persuaded to invest in this earlier in the year. I purchased 2 hectares worth (total investment nearly 7000USD in 3 phases). I already paid the initial costs and the planting costs (nearly 6000USD), and I'm now being asked for the final "trade payment" of just over 1000USD.
I don't know why I didn't get more suspicious initially - just too naive I guess - but I am now. Do I understand there are people who are experienced investors who still vouch for this, or is it definitely a scam?
My options are either (1) not to make the final payment, and thereby definitely say goodbye to the 6000 I have already paid, or (2) pay a further 1000, possibly to a fraud, but keep alive the chance that I might get a return if it does turn out to be genuine

Please don't just say I shouldn't have invested in something so risky - I know that now. I need advice on what to do in my current situation. Is there a chance it's genuine, or should I just cut my losses for the sake of saving the final 1000USD??

Comment by maskfutures at 11:12am on 07 Dec 2011:

Like shifty, I did my due diligence in Insight Group and the Moring investment project in Mozambique. I scrutinized it in everyway I knew I needed to. In the end we decided to make an investment in the project based on several key criteria: the investment model, the company fundamentals (registration, location, history, conversations with different management levels), ethics (this was important to us), sustainability, insurances, legal arrangements (through established UK law firm), etc, etc.

Now all investments involve "risk", but that does not mean they need to be "risky". I'm quite aware of risks involved in investments in African countries, but I'm also aware of the opportunities. Mozambique in particular and the specific location of the plantation were investigated and in the end we opted to invest. It was an informed decision.

Since then (Q4 2010) we have been kept up to date with progress including photos of the plantation taking shape through investor newsletters. Some of these are also published on Platinum's website. It's not all been smooth running but it's certainly developed more or less according to plan. e.g. there was a delay to planting of a few weeks due to heavy local rainfall in Dec 2010.

Today I've spoken with the Associate Director in Cape Town office. He's provided me with details that confirm we will receive our return within next 10 days as it has been cleared. There has been a delay but the explanations were plausible and I was kept informed.

I'd say it's been a good investment considering the returns are double figures after first 12 months. Outlook is promising as it was a 5 year investment model. Now I can't predict the future, nor can Insight nor Platinum. But I'm satisfied to have taken the decision to invest. Our decision based on our risk assessment.

Now the proof is in the pudding, and I look forward to updating this forum when I have received the return on investment within next 10 days or so.

Comment by Maskfutures2 at 2:11pm on 23 Dec 2011:

I'm glad to report that the ROI was paid into our business account today 23 Dec 2011.

Since my last post (7 Dec 2011 above) we received a very professional letter from Platinum Management on 9th Dec titled "2011 Harvest Notification", detailing our individual investment with a summary of how the year had progressed. It covered:

- The Plantation
- The Harvest
- The Results and
- Our Returns based on our specific investments (including plot references of land leased, for which we were provided with the deeds early this year).

Today is the 10th day since that letter by which time we were told the payment would be paid by. They fulfilled their commitment and we received our returns.

Having received a good return for our investment, I believe we made a very worthwhile investment. Now the trees are established and maturing we anticipate a bigger harvest and better returns next year and in successive years (we know there's always the risk of force majeur as with any investment).

It is particularly satisfying because of the social considerations and benefit to local communities that make it a sustainable investment. Insight Group along with Platinum Management have to be credited with creating and managing this project with the foresight and strategic thinking of how it will unfold in a win-win way.


Smart Investor

Comment by Protector at 5:49pm on 27 Dec 2011:

Dear Investors in the Insight Scam

Please ask Insight the following questions:

Why are they not registered with the Mozambican authorities?

Can they provide a copy of any lease agreement for any land in Mozambique?

Can they ask any Mozambican authority to independently take photos of the hectares of Moringa planted in Mozambique and have it independently notarized?

Have any of the Investors received their returns as per the agreement and per the last comment before Christmas? How is it possible to pay out returns if there could not have been a harvest yet?

Think !!!

Comment by crisg1 at 8:19pm on 20 Mar 2012:

I invested in the Moringa Project 18 months ago and Insight undertook to pay the first dividend of 15% by end of November 2011. Nothing paid yet. Furthermore, it is impossible to talk to anyone in Insight at Cape Town. A receptionist answers and she has been programmed to say: "All Managers are currently in a meeting. Give me your details and I will get someone to call you back." But they never do call back. Also, I cannot get hold of Platinum. Does anyone have any info on these Organisations? Thanks.

Comment by rafferty at 3:21pm on 17 Oct 2012:

I couldn't help but notice that the people claiming to be 'satisfied investors' have the same habits with punctuation and problems with spelling - with a tendency to use US rather than British spelling convention. Welcome to the UK to you all.

Suggests that they all either went to the same problem school or there's a spot of glove puppeting going on.

Anyone daft enough to consider putting money into these get-rich-quick schemes should read Justin's very balanced comments over and over until the blood returns to their head.