FOR those nervous about spending money thousands of miles away in the US feedlots, there’s an opportunity to invest in cattle here in Europe.
With interest rates at record lows and banks tarnished by the financial crisis, some French savers are pumping money into cows.
Gestel is a company in southeastern France that buys and sells cattle and manages some 30,000 animals on behalf of 1,000 investors.
Their sales to investors have doubled in the past year, according to Pierre Marguerit, director.
The company has been in business since the early 1980s.
Typical investors might purchase 10 to 20 dairy cows for about €1,200 each, and can decide to sell the offspring each year, or keep them as additional capital.
Marguerit promotes cows as a low-risk investment, with gains based on the sale of calves — what investors might call organic growth.
Gestel cows of excellent genetic merit are rented out to dairy farmers, and investors are promised a 4% to 5% annual gain, after costs are paid.
The investment survived falling milk prices this year, because cow values were not badly hit in France.
Gestel’s cow lease contracts are nothing new, with monasteries leasing cattle to farmers as far back as the 12th century. Modern French farmers rent up to one third of their cows from Gestel, which is tax deductible and frees up capital for other requirements on the farm.
Every €100 spent by a French dairy farmer on renting cows costs him only €70.63 after tax relief.
Renting cows is particularly useful to a farmer who needs animals immediately in order to fill the milk quota.
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