Cow Contracts

Buying cattle as a financial investment.

French investors searching for secure returns during the economic downturn are increasingly turning to alternative forms of speculation – such as the purchase of cattle. The Times’s Steven Erlanger explained:

The French, known for their mistrust of banks, are not just stuffing money into mattresses in these anxious days of recession and minuscule interest rates. They are also putting their cash into cows.

For Pierre Marguerit [who runs a cattle investment firm in the south-east of France] cows make a safe, secure investment, allowing for long-term growth from a renewable resource. The cow contracts are hardly new, but go back to Richard the Lionheart; the French word for livestock, “cheptel,” is the root for “capital.”

These are not exactly cash cows. But investment in Mr. Marguerit’s Holsteins will bring a 4 to 5 percent return a year after taxes, he said, based on “natural growth” — the sale of their offspring. That compares to an interest rate now of 0.75 percent on the basic French bank account.

According to Erlanger:

A typical couple will buy 10 to 20 dairy cows for about $1,700 each and can decide to sell the offspring each year or keep them as additional “capital.”

Pierre Marguerit said his business increased by 40 percent last year, and has “practically doubled” in 2009. Erlanger remarked:

At the moment, there are about 37,000 cows under contract in France at some 880 farms, according to the French Association for Investment in Cattle. But the potential market is huge, Mr. Marguerit insists, perhaps as many as one million head in France and six million in Europe as a whole.