Why invest in Cattle ranching?

Cattle ranching, is one of nature’s best value creators.

Why? Through a cow, vegetal protein is converted into healthy animal protein just by feeding on grass and water. Animal protein, the end product of cattle ranching, is a valuable commodity as it is a basic ingredient in a healthy diet the world over.

Cattle ranching (an ancient activity) exists worldwide. It is widely recognized and familiar to most: as the majority of people would have consumed its end products - animal protein. What is probably new to common wisdom is that cattle ranching is a low risk operation with a very solid outlook. It has a predictable cost structure and, as a commodity, it has a very stable forward revenue stream. Additionally, cattle ranching is one of the most liquid productive activities along its entire value chain as you can sell from one herd of cattle to a whole herd in little time. This is true virtually anywhere in the world in formal and informal markets.

Cattle ranching involves four distinct phases of production: i) breeding, ii) rearing, iii) fattening and iv) beef processing. Each phase has its required techniques and there are continuous improvements in the operations processes for grass, as well as for herd management. Some producers are fully integrated along the value creation process, while there are others that specialize in one or more of the cattle ranching value chains.

The value creation process of cattle ranching is simple: On healthy natural grass, a head of cattle will ingest grass and water, and via a natural process, grass is converted into protein in the form of milk and beef. The maintenance entails grass optimization techniques via paddock management and rotation and fencing. In terms of the cattle, maintenance includes herding and the provision of required vaccines to prevent disease.

To quote one ranchers wisdom: “ranchers love to talk about their cattle numbers but a real cattle rancher is more interested in the quality of the grass…. if you have good grass, you will always have good cattle, the reverse does not hold true!”

[1] This posting is intended from an investor perspective and not a technical description of cattle ranching
[2] The beef production stage is an industrial process not covered in this blog
[3] La Pradera is an organic cattle ranch located in Santa Cruz, Bolivia as described in a previous posting on this blog
[4] FINKA TOKEN, a Security Token is available for investment at finka.ch