Up until early 2024, Murray Roos was central to a project focused on revolutionizing global capital markets via the London Stock Exchange’s upcoming digital assets platform. Now, the 48-year-old former trader is directing his technological expertise toward a more traditional sector — the UK’s long-standing livestock auctions.
Roos stepped down as the LSE’s head of capital markets in March and relocated to a 200-acre farm in East Sussex, which he acquired during the final months of the Covid-19 pandemic lockdown.
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Nestled among rolling hills with woodlands and tranquil ponds, the farm serves as a practical space for Roos to teach his children about the food chain, demonstrating that meat’s journey does not start in neat plastic trays.
The property is home to chickens, pigs, sheep, and vegetable patches. At any given moment, around 300 cows inhabit the farm, which has become Roos’ passion since departing the LSE, forming the foundation of his goal to help farmers shift from traditional in-person livestock auctions to his online trading platform, LiveStockEx.
“I’ve always enjoyed approaching things from first principles. Instead of buying bread, I prefer to bake it,” Roos remarks, drawing on his family’s agricultural heritage in South Africa and Zimbabwe.
A brief foray into raising chickens in Wimbledon was cut short by troublesome urban foxes.
Initially, managing the farm was a secondary endeavor for Roos—who had co-led Citigroup Inc’s equities and securities services until early 2020. To balance his demanding role, he hired a manager to oversee day-to-day operations.
The LSEG was gearing up to adopt blockchain technology, typically associated with Bitcoin, to enable quicker and cheaper trading of traditional assets in response to the UK capital markets’ need for relevance post-Brexit.
Roos soon became fascinated with the intricacies of the UK livestock market, which comprises 44,000 cattle farmers and records annual auction sales of 1.26 million cows.
His farm manager, like numerous counterparts across the UK, transports animals destined for sale to the nearest livestock auction approximately 40 miles (64 kilometers) away in Ashford, Kent.
“As a finance person,” Roos shares, “I would ask him, ‘What’s our margin, how much are you selling them for?’ His frustratingly vague response was, ‘we’ll get what we get.’”
Roos acquired his farm during the last phase of the Covid-19 lockdown. Image: Ayesha Kazim/Bloomberg
According to Roos, farmers often lack clarity about the daily attendance and bids at auctions.
Once bidding starts, farmers must compete with the auctioneer’s pricing until satisfying the seller’s expectations. On less favorable days, if bids don’t meet expectations, the livestock may be loaded back onto the truck to return home, or sellers may reluctantly accept lower offers to avoid the hassle.
The traditional payment method involves checks, which can significantly increase transaction costs. Roos cites a recent sale invoice for £8,120 ($10,285) that incurred a £450 commission plus £137 in fees, resulting in nearly 7% being deducted from his earnings.
Reflecting on his first auction experience, Roos compares it to stepping into a trading pit in 1995, where identities were easily assigned, recalling his early days in the equities market defined by open outcry trading.
“You could visualize it: there’s Goldman Sachs, there’s AJ Bell, there’s the broker, and the big bad investment bank,” he explains.
In this analogy, Roos’ farm resembles a small buy-side portfolio manager “receiving a raw deal.”
A Fresh Perspective
Roos believes he has identified a solution not only for his farm but also for many others. With his software engineer co-founder Srikrishna Murali, he envisions LiveStockEx as a digital platform where farmers can register cows for sale, complete with passports from the British Cattle Movement Service and a quality index score provided by LiveStockEx based on breed, age, and weight.
Prospective buyers—including abattoirs, larger farms, and meat producers—can access the platform to place bids on different batches of cows.
Transactions can be completed with just a few clicks, allowing for direct transportation to new locations. This method is anticipated to be more efficient, environmentally friendly, and to reduce disease risks associated with herd mixing typical of auctions.
LiveStockEx processes instant payments, releasing funds to the seller upon the animals’ delivery. If delivery fails, the platform mediates and imposes fees on the party at fault.
It operates on a commission basis of around 1% to 2% of the sale price, and it also notifies the UK’s Department for Environment Food and Rural Affairs of sales, minimizing the chance of farmers incurring penalties for not meeting the 36-hour reporting requirement for cattle movements.
Roos asserts that this trading platform outperforms established online classified ads as alternatives to auctions, as those lack the detailed functionality of LiveStockEx and do not operate as trading venues.
Roos aims to secure up to £1 million in external funding for the project by the first quarter of 2025.
After discussing his venture with finance friends, he noted, “the equity professionals understood the idea right away,” adding, “they couldn’t believe it wasn’t already up and running.”
However, convincing more than just equity traders will be crucial. The farming industry is steeped in tradition, where auctions—often staged in grandstand environments that convey a sense of theater—play an essential role in that heritage.
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Roos’s target market includes farmers already utilizing technology, such as automated feeding systems using digital tags on cows’ ears. Image: Ayesha Kazim/Bloomberg
As Chris Dodds, the head of the Livestock Auctioneers Association (LAA) and a veteran of 44 years in the field, comments, “It’s the oldest marketing platform in agriculture, continuously challenged over the past two centuries.”
He adds, “In the last 20 years, several companies have come forth claiming they can develop something faster and cheaper.”
Nevertheless, Dodds notes that livestock auctions continue to sell approximately the same percentage of livestock as before the 2001 foot-and-mouth disease outbreak, which led to a long hiatus of in-person auctions. Attempts to shift to video auctions fell short due to buyers’ feedback about the condition of received animals.
According to the latest LAA data, around 11 million animals were sold at livestock auctions in 2023, totaling £2.2 billion.
“Selling livestock online is not a direct threat to our operations,” affirms John Rossiter, head of auctions at the Hobbs Parker Group overseeing Ashford’s livestock market.
Rossiter explains that many customers prefer purchasing livestock after a physical inspection, stating, “Many farmers attend auctions each week without any intention to buy or sell; they appreciate the camaraderie and social interaction.” He characterizes farming as a “solitary existence.”
Moreover, Hobbs Parker’s auctions feature charity-funded medical services, barbers and hairdressers, tool shops, a solicitor’s office, feed suppliers, and a café.
“Some people relish the tradition of this practice,” Roos admits. “However, their interests don’t align with our target demographic.”
“They sell four or five animals for enjoyment; it’s a social event for them,” he adds. “We are focusing on those stressed by high transaction costs—those genuinely in the farming business.”
In addition to cattle, Roos raises pigs, sheep, and grows vegetables. Image: Ayesha Kazim/Bloomberg
Roos seeks to attract farmers like Ben Pike.
“I’m fully supportive,” states Pike, 40, a farmer from nearby Heathfield who sells about 1,000 calves per year. “The current auction system and its associated commission fees are outrageous, not to mention the transportation expenses to auctions and subsequently to another farm, which add unnecessary costs.”
Pike primarily conducts work through private sales and resorts to auctions only as a “last resort,” he notes.
“Everyone we interact with is on the same page, operating in the 21st century,” Pike emphasizes, adopting digital solutions for their accounting, “even those in their 60s and 70s are embracing that shift.”
Roos’ target audience consists of farmers already involved with technology. He showcases an automated feeding system that operates via a digital tag on a cow’s ear—once the cow consumes its allotted rations, the feeder shuts off. Multiple farm management applications can track an animal’s weight using tags, with data easily integrated into the LiveStockEx platform.
Roos is looking to secure up to £1 million ($2.5 million) in external funding for his project by the first quarter of 2025. Image: Ayesha Kazim/Bloomberg
The approach involves providing a free farm management system integrated with the LiveStockEx platform to boost farmer adoption. Early interactions with potential users have received a largely positive response, targeting abattoirs, brokers, and major meat buyers, as noted by Roos.
He is concentrating on cattle in the UK, leveraging the BCMS-passports for easier sourcing, where the market features many sellers but few buyers.
If successful, Roos plans to broaden the initiative to similar agricultural markets within the UK and internationally and even create forward contracts for farmers raising cattle intended for future sales.
However, he has no intention of revisiting blockchain technology. The LSEG initiative he was involved in still hasn’t materialized, although the stock exchange claims that preparatory work is in progress. Roos feels that the technology, often associated with hype, may intimidate many of his potential customers.
He speculates that their response might be: “Woah, that’s too much for me.”
© 2024 Bloomberg
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