Cash Cow Investment

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

For Pierre Marguerit, cows make a safe, secure investment, allowing for long-term growth from a renewable resource. Cow contracts are hardly new, but go back to Richard Cœur de Lion (Richard I).  The French word for livestock, “cheptel,” is the root for “capital.”

These are not literally cash cows. However, Mr. Marguerit says his investment in Holsteins will bring a 4 to 5 percent return a year after taxes, based on natural growth, i.e. the sale of their offspring. That compares to the present interest rate of 0.75% on the basic French bank account.

Mr. Marguerit says that last year his business went up by 40 percent, and so far this year, it has practically doubled.  He is the managing director of Élevage et Patrimoine, a cattle investment firm in eastern France, and president of Gestel, which works with farmers and investors.

He says. “People have saved money and don’t want to waste it. Shares have fallen and people feel it. We need somewhere to put our money for a long-term investment, something more secure.”

Currently there are about 37,000 cows under contract in France at some 880 farms, according to AFIC (the French Association for Investment in Cattle). Mr. Marguerite says that the potential market is huge, perhaps as many as one million head of cattle in France and six million in Europe as a whole.

A typical couple will purchase 10 to 20 dairy cows for about €1,200 each and can then decide to sell the offspring each year, or keep them as additional “capital.”

Mr. Marguerit praises the renewed interest amongst the French in natural, organic and lasting things, he said “At this difficult time, it’s a much better investment than property, and much more tangible than the stock market. We (the French) have always romanticized the countryside and imagined ourselves as shrewd peasants at heart. This is part of our “patrimoine” (heritage).

In the steep financial crash, “we’re having a moment of realization — we’re landing hard and people are asking real questions.” Diversify into cows? Why not?

For Richard Durand, who farms some 200 hectares near St. Victor de Cessieu (Dept 38 Isère) the arrangement frees up capital for improvements to his small dairy farm. He provides his 100 Holsteins with the best of everything, including a view of the mountains and the grassy fields where they spend the summer months. Even better, they can have a massage on a large round brush they rub against whenever the urge hits them.

He calls his property “The Farm of the Happy Cows,” and so they seem. Mr. Durand “rents” 37 of his 100 cows, all of whom he knows by name and not just by the numbered tags punched through each ear, like big plastic earrings. He seems particularly fond of Tartine, a brown and white Holstein who likes her head rubbed.

“Until I was 42, I smelled of cows” Mr Durand said, describing how he had to clean their hooves with his fingers and showing off the automated sledge that runs on a track down the middle of his modern barn, sweeping away the excrement and soiled straw of all those happy cows.

Now he restricts himself to making cheese, while others deal with the straw and the twice-a-day milking. He sells his excellent fromage blanc, butter and yogurts in local markets, while most of his 40,000 gallons of milk a week are sold to the local co-operative.

He says that raising cows owned by others gives him more tax deductions and frees as much as 17 percent of his capital for improvements or investments. The animals are good natured but boring, he admits, “They spend eight hours eating, eight hours sleeping and eight hours ruminating.” As for many farmers in France, the day runs from 5:30 a.m. till 7 p.m.

In a little shop attached to his barn, Mr. Durand has a list of French expressions using the cow like “le temps des vaches maigres,” (the time of skinny cows) – a period of belt-tightening.

There are many other signs of coping in this area of France, where many industries are also being hit hard by the recession. Business is brisk at traditional consignment shops, where people bring used or unwanted items. And, now possible under a new law, stores are having floating sales outside of the traditionally rigid sale periods

Web sites bring together local communes who help one another with chores or repairs and buy basic commodities in common; on swap sites, people can work out exchanges for things from clothes to household equipment. Sites connect consumers with farmers, to buy fruits and vegetables in bulk. Another site, Le-Dindon, facilitates the giving away of unwanted items, instead of destroying them.

In Lyon, Jérémie Romand, 28, has come up with his own clever idea… an Internet based business that puts together people who want rides with those who have empty seats, at a guaranteed fare that is paid to the driver only after a customer arrives safely. He says that his company, EnVoiture Simone – a French phrase roughly equivalent to “hit the road, Jack” – is doubling its customers every month.

On average, cars in France carry only 1.2 passengers every trip. “We want to capture the potential of these millions of empty seats in a way that is safe, secure and organized,” says Mr Romand. “Transport is the second-largest household expense in France, after housing and before food.”

He says the crisis has helped his company and been a wake-up call to everyone “The French now want to know how to save money in all aspects of life.”