Up until early 2024, Murray Roos was instrumental in a project designed to revolutionize global capital markets via the London Stock Exchange’s upcoming digital assets platform. Now, the 48-year-old former trader is harnessing technology to innovate within a more traditional sector—the historic livestock auctions in the UK.

Roos left his role as head of capital markets at LSE in March and relocated to a 200-acre farm in East Sussex, a purchase made during the latter stages of the Covid-19 lockdown.

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Set in a picturesque landscape dotted with hills, woodlands, and tranquil ponds, the farm serves as a creative space for Roos to teach his children about the natural food cycle, emphasizing that meat doesn’t simply appear in plastic packaging.

The livestock includes chickens, pigs, and sheep, along with vegetable patches. The farm hosts around 300 cows at any given time, which have since become Roos’ main focus after leaving LSE, fueling his ambition to assist farmers in migrating from conventional physical livestock auctions to his online marketplace, LiveStockEx.

“I’ve always preferred to tackle challenges from the ground up. Instead of acquiring bread, I like to bake it,” Roos explains, highlighting his family’s agricultural heritage in South Africa and Zimbabwe.

A brief stint of raising chickens in Wimbledon came to an abrupt end owing to urban foxes.

Initially, managing the farm was a secondary endeavor for Roos—who co-led Citigroup Inc’s equities and securities services until early 2020. He hired a manager to handle everyday operations while he maintained his busy career.

The LSEG was on track to implement blockchain technology, historically linked with Bitcoin, to optimize the trading of traditional assets as the UK’s capital markets sought to adapt post-Brexit.

Developments in the UK livestock market piqued Roos’ interest due to the sector’s complexities, which includes 44,000 cattle farmers and annual auction transactions involving approximately 1.26 million cows.

His farm manager, similar to many in the UK, transports cattle for sale to the nearest auction roughly 40 miles (64 kilometers) away in Ashford, Kent.

“As a finance professional,” Roos remarks, “I would ask him, ‘What’s our profit margin, what are you selling them for?’ His frustratingly ambiguous answer was always, ‘we’ll see what we can get.’”

Roos acquired his farm in the waning months of the Covid-19 lockdown. Image: Ayesha Kazim/Bloomberg

According to Roos, farmers lack clarity regarding the number of interested buyers at each auction or their bid amounts.

When bidding starts, farmers contend with the auctioneer’s pricing until someone agrees to meet the seller’s expectations. On days when the offers fall short, livestock may be transported back to the farm or farmers might reluctantly accept a lower bid to avoid the inconvenience.

Payments are traditionally made via checks, leading to substantial transaction costs. Roos cites a recent sale invoice of £8,120 ($10,285), which was subject to a £450 commission and £137 in fees, totaling nearly 7% deducted from his earnings.

Recalling his first auction experience, Roos likens it to entering a trading pit in 1995, where individuals were easily recognizable, reminiscent of his early days in open outcry trading in equities.

“It was visual: there’s Goldman Sachs, there’s AJ Bell, there’s the broker, and the major investment bank,” he reflects.

In this scenario, Roos’ farm is similar to a small buyside portfolio manager “receiving unfair treatment.”

A New Perspective

Roos believes he has discovered a solution that benefits not only his own farm but also thousands of others. Alongside co-founder and software engineer Srikrishna Murali, he envisions LiveStockEx as a digital marketplace where farmers can list the cows they intend to sell, complete with passports from the British Cattle Movement Service and a quality index score from LiveStockEx based on breed, age, and weight.

Buyers—including abattoirs, larger farms, and meat processors—can utilize the platform to place bids on various groups of cattle.

Transactions can be completed swiftly, enabling direct transportation of livestock to their new locations. This method aims to improve efficiency, promote eco-friendliness, and reduce the risk of disease associated with herd mixing at auctions.

LiveStockEx ensures prompt payments, providing funds to sellers upon animal delivery. In cases of non-delivery, the platform serves as an intermediary, charging fees to the at-fault party.

The platform operates on a commission model around 1% to 2% of the sale price, while also notifying the UK’s Department for Environment Food and Rural Affairs about sales, minimizing the risk of penalties for farmers who fail to meet the 36-hour reporting deadline for cattle movements.

Roos asserts that the trading platform offers more functionality than existing online classified ads that serve as alternatives to auctions, which lack the detailed features of LiveStockEx and do not function as trading platforms.

Roos aims to secure as much as £1 million in external funding for the venture by the first quarter of 2025.

Upon discussing his initiative with finance peers, Roos found that “equity professionals quickly understood the concept,” noting, “they were astonished it wasn’t up and running yet.”

However, convincing a broader audience beyond equity traders will be essential. The farming community is deeply entrenched in tradition, with auctions—often conducted in settings that evoke a sense of theater—forming a vital part of that heritage.

Roos’s intended market includes farmers already leveraging technology, like automated feeding systems powered by digital tags on cows’ ears. Image: Ayesha Kazim/Bloomberg

As Chris Dodds, who heads the Livestock Auctioneers Association (LAA) and has spent 44 years in the industry, states, “It’s the oldest marketing platform in agriculture, constantly challenged over the last two centuries.”

He adds, “In the last two decades, a number of companies have claimed they could provide faster and cheaper alternatives.”

However, Dodds notes that livestock auctions continue to sell at least the same proportion of livestock as they did before the 2001 foot-and-mouth crisis, which led to an extended period of in-person auction closures. An attempt to transition to video auctions faltered quickly, following buyer complaints about the condition of received animals.

According to the latest data from the LAA, nearly 11 million animals were sold at livestock auctions in 2023, generating a total of £2.2 billion.

“Selling livestock online does not pose a direct threat to our operations,” asserts John Rossiter, head of auctions at the Hobbs Parker Group, which manages the livestock market in Ashford.

Rossiter explains that many people prefer to physically inspect livestock before purchasing, noting, “Many farmers attend auctions weekly without the intention to buy or sell—it’s a social event for them.” He describes farming as a “solitary lifestyle.”

Moreover, Hobbs Parker’s auction environment features charitable medical facilities, barbers, tool shops, a solicitor’s office, feed suppliers, and a café.

“Some people cherish the tradition of this practice,” Roos acknowledges. “However, their preferences do not align with our targeted demographic.”

“They might sell just a few animals for social purposes; for them, it’s an occasion,” he continues. “We are focusing on those troubled by exorbitant transaction fees and engaged in commercial farming.”

In addition to cattle, Roos raises pigs, sheep, and cultivates vegetables. Image: Ayesha Kazim/Bloomberg

Roos aims to draw in farmers like Ben Pike.

“I fully support this,” says Pike, a 40-year-old farmer from nearby Heathfield, who sells around 1,000 calves each year. “The current auction system and associated commission fees are exorbitant; additionally, transportation costs to the auction and then to a new farm create unnecessary expenses.”

Pike primarily conducts his sales privately, resorting to auctions only as a “last resort.”

“Everyone we deal with is functioning in the 21st century,” Pike emphasizes, adopting digital solutions for accounting—“even those in their 60s and 70s are embracing this trend.”

Roos’ target demographic comprises farmers already employing technology in their operations. He highlights an automated feeding system activated by a digital tag on the cow’s ear—once the animal has eaten its designated amount, the feeding ceases. Various farm management apps can also track an animal’s weight via tags, data that Roos can easily incorporate into the LiveStockEx platform.

Roos aims to secure up to £1 million ($2.5 million) in external funding for his venture by the first quarter of 2025. Image: Ayesha Kazim/Bloomberg

The strategy includes offering a complimentary farm management system integrated with the LiveStockEx platform to motivate farmer engagement. Initial feedback from potential users has been largely encouraging, targeting abattoirs, brokers, and major meat buyers, Roos reports.

The launch focuses on cattle in the UK, where the BCMS passports simplify sourcing and where a plethora of sellers confront a scarcity of buyers.

Should this plan prove successful, Roos is eager to expand into similar agricultural markets, both domestically and internationally, and even establish forward contracts for farmers with cattle they intend to sell in the forthcoming months.

However, he is not considering re-engaging with blockchain technology. The LSEG initiative he was involved in has yet to materialize, although the stock exchange claims preparatory work continues. Roos opines that the technology, often surrounded by hype, may intimidate many potential clients.

He speculates their reaction might be, “Whoa, that’s too complex for me.”

© 2024 Bloomberg

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