The cattle is waiting to be weighted
This is the third post about how I invested in cattle, this time a lighter read with pictures of how the last sale went, if you want to check what breeding cattle is about and the numbers of the past September sale, you can refer to those two posts.
It is a bittersweet day for my investments. On the positive side, I have some cash to invest in the 90 acres land development, my new pet project, and on the other, as of mid April, I do not own one head of cattle. It was pretty cool while it lasted, and one of my financial goals for 2013 was not to get rid of the cattle until the end of April but it was very dry in the ranch and keeping them longer may have meant they lose weight and sell for less in a month than they do today. I consider the goal a pass since I am not selling early to access the cash, all the work on the 90 acres land has been paid for so far and we still have enough for a month or so of payroll on the company account.
Back to the cattle, we had to travel to the ranch to witness the cattle being weighted on a huge cattle scale.
BF’s ranch
We arrived at 7am, which is already considered late, for different reasons on the buyer and seller’s side. If the buyer comes early, the cattle has not had time to eat, and weights less. Just by drinking water in the morning, an animal can put on 15 lbs, resulting for 56 heads on a $750 price difference. The seller wants to start early because with the sun and the stress, the cattle also loses weight, they are locked in a corral waiting to go on the scale one by one, then are put on a truck that leaves with 20 animals.
cattle scale, the animals are weighted and going straight into a truck at the end
Three trucks came this time, to get my 56 heads and 4 from BF. It took approximately two hours to weight them all, after a very big one almost broke the scale and we had to adjust it again. The only way to know for sure that 0 marks 0 properly was for one of us who knew his weight to get on the scale. I had no idea of my weight in pounds, so BF was the designated guinea pig, then to make sure the scale was about right, a couple of the cow boys estimated the weight before the animal got on the scale.
Everyone looked happy with the results, but the animals were a bit thinner than expected. It has been a weird rainy season, and when it rains they get cold and don’t put on weight, and when it stops raining, the grass dries up and they don’t put on weight! It is a skinny race from Brazil because the heavier US/European race would not tolerate the heat from around here.
One by one, they go on the scale then are loaded on the truck
Still, it was once again a very good return. I invested $14933 over an average time of 15 months per animal, and got back $24169, a 61.8% return over the period, 49.44% per year. Since I am getting paid in Guatemalan currency, I am reinvesting $20,000 into the land development and keeping $4,169 for living expenses over the next 4-5 months to avoid paying exchange fees to bring money over here.
The race is brahma and siementhal, both Brazilian race that can live with the heat and humidity.
Luckily, no animal died over that period. I bought them at 9 months old, and 5 from that lot had died. It can be that a cow will lose it before birth, in this case the cow won’t have another one straight away, or that it gets sick, or refuses to drink milk from the udder. In that case the cow boys would give the animal a bottle but few make it to adult age.
So if you are considering raising the cattle from day 1, you will have to account for a 10-15% early mortality rate.
That’s it, moving on to new adventures with the land development now!
What was your latest investment?
This post was featured on the Carnival of Personal Finance My Financial Independence Journey, and Squirrelers, thank you!
The cattle are a fascinating investment. Probably not something I would ever try because I just don’t have the space needed to keep them around for a while.
Love the idea, but a lot of hard work. I would try it at a small scale first to see how it goes. I would guess you may have to have some larger equipment in case one of them died (a tractor to move them around, etc).
It is Guatemala, so the dead body is just left there and by noon the next day, completely eaten by other animals. In case of an epidemic I guess you do have to burn the body to avoid a spread disease.
Farmers to offer some deals where they provide the land and you provide capital, although you have to trust them.
Who was the buyer?
Fascinating! And a very good return that is. Wish you the best with the land development and will follow the updates (of course :)).
thank you Maria! If the land goes half as well it will be a great year..
Hmm. not so sure I agree with my other half!
You have been lucky because none of the cattle died but you would only have had to lose 20% due to drought or disease – easy if it is contagious – or whatver to lower your yield to less than 30% and then you have to take into account the costs of materials, food and your own work. It’s not exactly passive income, is it?
It was passive for me because I was going half with a ranch owner providing land, cowboys, animal care, I just put the money and went for the weighting so I invested less time than stock picking. There are 3 hours of my work in there. The ranch owner made the same return but will have to deduce all payroll and land usage, medicine, etc.
Ah – so the ranch owner made $24k out of no capital but the cost of land, food, medicine and stuff. You still took a risk on them dying though whereas if they had died early, he would have had less food, medicine etc to pay. Livestock must be a risk! Well done anyway.
I’m always fascinated by your investment in cattle, as I have never met anyone who does that. I definitely would like to pursue some “alternative” or out-of-the-norm investments like this someday!
I am sure near you there are farmers offering similar deals, not as good since land can never be as cheap but returns are pretty safe compared to the stock market.
I kept a dozen beef cattle when I lived on a farm near my present city home but they were always so much work and I did not have any cowboys to help me. Chasing them back in to the field in the middle of the night when they were trampling the neighbour’s lawn was never fun and you always had to be on the look out for skunks and coyotes. Running for the gate because the bull was chasing me is another fond memory.
I would have made more money and worked less picking up shifts at the local bakery.
Wow that sounds like quite the experience you had there! Having the cowboys to do all the job made it a complete passive investment, thankfully, I don’t know if I would have been as brave as you otherwise!
I miss the trees and the fields and the barn cats and the fact that it was dark at night but I do not miss those cows.
Talk about an alternative investment! I’m glad to hear everything went well. Cattle is certainly not something I’ve ever considered for myself but it sounds like you had a great experience. Always cool to hear about something different.
yes, it was fun while it lasted! I had never thought about it before, but glad I jumped in.
Wow! I’m glad that it worked out. I can’t believe that a cow can drink 15 pounds of water!
In the morning when they haven’t had water all night they can drink a lot. They stock up for most of the day, unlike us who drink regularly.
Cattle farming and grain farming are really big in the area I live in and farmers can make some pretty good money doing both but what I don’t like about it so much is the overhead cost. With high grain prices and other factors such as the high cost for seed and fuel you really need to know what you are doing or you could lose out big.
the more machines and progress you need, the smaller the returns. my cows were just on grass and one anti parasite shot, so the returns are higher.
I’ve never been too interested in cattle, just beef and milk. 🙂 I think Colorado might be a bit too arid for them anyway. Llamas seem to be a popular choice around here.
My neighbor had llamas in the UK he said that was the best livestock because they have kids at a shorter interval and are less maintenance than cows.
Pauline, you continue to have the coolest investments around. Have you ever thought about scaling up? If you’re getting 40%+ returns im sure you could entice some investors.
no cattle empire just yet :). I made those returns because I don’t own the land, don’t have a payroll, and only have males. Cows do give you a baby every 18 months or so but they sell lower and get really skinny when the give birth. With all that I think it would still be a 2 digit return but much lower.
That is awesome Pauline! I’ve been interested in cattle and farm animals, but don’t have a place for them right now. Do you have any other animal investments?
I don’t see the need for meat or milk getting any lower either!
I have some hens and chicks you can check the post about that here
Your series has certainly made me talk more to cattle owners in our area. It sounds like lots of work for short periods of time and then you just wait for them to get fat and hope they don’t die. Kind of like buying stocks! Great work. I feel like you need a cowboy hat and big belt buckle.
and some boots! They have worked pretty hard when giving the animals shots and then a few guys have pruned the fields and burned so that was another heavy work, my part was just to bring money and share benefits, if you are in it fully it is hard work.
Very good breakdown of a great investment! I like how you size things up, for better or for worse. And, even if the investment didn’t reach its maximum potential, you understand it still did very well. Too often our Eeyore mentality focuses on the last part we couldn’t get.
Thanks for sharing. 🙂
Wow, that’s an awesome return Pauline! That’s also crazy that they can drink water and add 15 pounds to themselves.
we do put on about a pound from the moment we wake up to after breakfast and drinking water and coffee, for a 1,000lbs animal the proportion is bigger. And each time they peed when they were queuing before getting on the scale, I also lost a pound or two on the scale, you can’t tell them to hold it until the truck haha!
Cool breakdown Pauline. I didn’t know about the process and have no desire to invest in cattle. I think it is awesome that you diversify your investments and invest in other things than just companies.
your cattle investment sure seems to have brought in a pretty decent return, despite the possible losses. Looking forward to learn more about your land development projects!
Gotta love that return, Pauline – amazing!
Great return and as always, an interesting investment, but it works so well for you! I’m not sure it would practical for me but I love that you find atypical ways to invest your money and often quite passively. Glad it worked out well for you and hopefully your land development will go as smoothly!
here is to hoping! where humans are involved you can expect more surprises than with animals…
A 49.44% is awesome! I never thought there was so much good money in cattle!
me neither! but they are all males and a bit grown up. cows are less juicy, and I didn’t put the land, food or payroll, that is not very expensive in Guatemala but would be in the US.
So, I’d love to tell you about my latest investment, but I don’t think my recent 401k contribution is nearly as interesting 🙂
That ‘s really nice rate of return, and a cool life experience all wrapped up into one.
I like to read about stock picking, and may follow along if it looks promising, although I haven’t bought a new stock in a long time.
Well done Pauline, nice return on the cattle but it sounds like you were sad to see them go. It’s good you kept back some cash because paying exchange rates and transfer fees makes it worthwhile to do so. I’m glad this has a positive ending for you!
well, who doesn’t love such returns! But I was cash poor so it was a good option to free up cash fast.
Just stumbled onto your blog…wow, what a first read! Fascinating! I’ll have to swing back around later this week, but I have to say the cattle investment, while out there (for me), is a great read about alternative investments.
thank you! glad you liked it.
I have learned a good deal about cows, raising them and selling them. Love that you are always moving forward and are so incredibly reliable. No wonder so many people read your blog.
Greetings! Very helpful advice within this post!
It is the little changes that will make the most important changes.
Thanks for sharing!