Your Cash Might be Safer in French (live) Stock

Forget banks, bonds or bitcoin your money might well be a lot safer in … stock, live stock that is or select herds of French cattle to be precise.

Cashcow  - investment of the future? (Credit flickr James Guppy)

Cashcow – investment of the future? (Credit flickr James Guppy)

According to l’Association Française d’Investissement en Cheptel (AFIC) the French Association of Livestock Investment, cattle herds are offering a return of 4 – 5% a year. A cow currently costs a farmer an average 1,630 euros so renting can be an attractive proposition for any large scale cattle farm.

The average return promised by AFIC is more profitable than the traditional French savings vehicle the Livret A which virtually every self-respecting Frenchman, woman and child holds. (“Livret A” is a tax-free instant access savings account available to all, regardless of age, nationality or tax residency, which can be opened at birth and maintained throughout life. The rate of interest currently just 1.25% a year, is regulated by government according to French bank Crédit Agricole).

The AFIC scheme is simple says Victoria Masson writing recently in Le Figaro:  “The prospective investor opts to acquire one or more cows. AFIC, which acts on behalf of groups of would-be stockowners hands over the investor details to its partner Société Élevage et Patrimoine S.A (Livestock and Heritage), which is responsible for financial oversight of the investment. This firm’s business is renting out cattle herds to farmers, who in turn accept responsibility for care, raising and use in normal farming activities.

Élevage et Patrimoine presently has a some 30,000 head of cattle rented out to French farmers. These are divided among 800 breeders. France had a total of 3,678,000 head of cattle in 2011 according to France Agrimer, the national agricultural and marine association.

Watch this promotional video for France’s famous Salers breed:

For an investor, the scheme is a good way of diversifying investments at a time of financial uncertainty, explains Pierre Marguerit, CEO of Livestock and Heritage.

The newspaper article quotes one investor, Jean-Claude Janes who says he is pleased he launched into livestock herds in 1982, when he purchased an investment in a few cows through the system. “I live in the provinces, I came across these adverts and thought it would be a good way of building up extra savings for retirement. Later we were told that we can pass on these investments to our heirs ..  which has made for an even sounder investment,” he said.

Marguerit Pierre and Jean-Claude Janes told the reporter they both agreed on one point: the scheme is a low risk investment. A cow costs 1630 euros. “There is no risk. Cows are a food commodity. We will always need milk or meat, “says Jean-Claude Janes.

In addition, the breeder has an obligation to take out an insurance policy in case of the loss of a cow. To generate a return for an investor the farmer uses the sale of male livestock. If an animal dies, the insurance policy ensures it is replaced. The system is run as a mutual operation so investors do not physically get to see their cows, “Your cows are like electronic market equity today, you do not know actually where they are except that in this case you know a farmer is making use of them.”

There are two options for an investor. The “Annual Product” means adult animals are sold each year to generate cash to pay investors. The “Herd Growth” option allows an investor to add to his stock from excess heifers in the pool. In this way the investor builds up a portfolio of live animals. Thus starting with say a purchase of 10 animals, the livestock holding of an investor under this scheme would double in 21 years.

Milking the herd for your retirement Why not?

Milking the herd for your retirement Why not?

On the breeder’s side, the system allows a farmer rapidly to increase his livestock at a low capital outlay. Overhead is reduced because he does not have to find funding to purchase the herd. He also gets to keep the milk and the males in the herd. The females are shared between the farmer and the investor. The cream at the top of the milking urn? The investor also enjoys a tax benefit.

AFIC sets out its case for individuals planning for their old age to diversify retirement investments here.

Story: Ken Pottinger


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