Cattle are Wealth

How to beat the Stock Market

Cattle are Wealth

We often forget that cattle used to be considered a form of wealth. Livestock was currency before there was currency. They are mobile value. You can move a cow from one place to another. You can steal a cow, and its value. In fact the word cattle derives from the same latin root for capital. In agrarian societies livestock was crucial for survival and held an important place in both the diet and the culture of the people. I often think that they hold more value for people than just food resources. There is pride in a beautiful herd of cows, or sheep, goats, yaks, llamas, or any other group of animals. People valued them for their beauty and for what they can do for the environment.

Our current ideas of wealth are very abstract but they have their roots in cattle culture. The stock market was once a place to buy and sell livestock. Wall street just happened to be the place where the livestock market was held for early American colonists. A “bull” market is a rise in stock prices. All of these abstract concepts have their roots in agriculture and the value that livestock represent.

Photo by Daniel Lloyd Blunk-Fernández on Unsplash

What is wealth? In our money based economy richness is usually defined as having abundant cash right now and wealth is about financial stability in the future. I think this concept of future abundance is the key to understanding wealth and to understanding cattle. The human shift from a hunting culture to a pastoral culture was a trade off for the immediate to a future of greater abundance. Humans recognized the potential for growth within a herd of animals and that by not taking an animal now they might have more in the future. This was a major step forward. This is because wealth always has the ability to increase in value over time. In our modern economy it is measured in interest rates and percentages. It is easy to see that a fund that grows at 8% a year is better than one that grows at 5%. Modern wealth generation is as simple as that.

Cattle will also increase every year. This simple aspect of biology is how they can be considered wealth generating. Honestly they are pretty good at it and oftentimes they can beat the market. I first got into raising cattle with the deal of a lifetime. I bought two cows from another farmer who was moving out of the area and needed to downsize their herd. They didn’t need to get market price for them and they just wanted a good home. So, we got two Dexter momma cows who each had a heifer calf at their side and they were pregnant with heifer calves. This was an instant starter herd. I bought this amazing set for $500 a piece, $1000 total.

Anyone who knows cattle values knows this is a great deal. This original investment was sizable for us at the time, but now after 10 years I keep a herd of about 15 mommas (I never bought another cow). Even if I use the original value per cow at $500 (which is extremely low market value) I have increased my investment to $7,500, and honestly the value is closer to $30,000. The staggering growth rate of 650% over ten years. This easily beats most of the stock market which averages around 8% growth a year. This is not investment advice but honestly cattle look like a great buy on paper.

And this doesn’t include all of the products that the herd has produced. Which is like living off the interest. The meat and milk we have harvested from the herd is very valuable. I eat all of the best grass fed beef and raw milk I can consume and I still have more to share. Honestly I eat like a king.

Of course this is a very simplified breakdown of their worth. I also have costs associated with raising cattle. I buy hay and there have been infrastructure investments over time. The book-keeping gets complicated because some hay goes to the oxen, some to the dairy cows and the remainder goes to the main herd. At the same time the math always seems to work out in our favor. Cattle continue to seem like a great investment, and their value is still increasing. Every year calves are born and I decide whether to grow the herd or maintain the equilibrium. With the cows, the steers, the heifers, and a bull I range between 30-40 head and that seems about right for our land. Keep in mind that I buy hay. If I was making hay that would change the accounting. This small herd produces so much food that I can easily sell the excess and they pay for themselves.

Now I probably couldn’t make a living from only this small herd. We have other enterprises on the farm that round out the total income, but I consider the cattle to be the most wealth generating. They are the long term investment that pays dividends in the future. I always say that our chicken enterprise is for cash flow and the cattle are for wealth generation. Especially our broiler operation. Each bird is ready for market in 8 to 10 weeks whereas a steer from conception to slaughter could be three years. The chickens cash flow well but they have a high cost of goods sold. We buy a lot of really expensive chicken feed for our flocks. We spend way more on chicken feed than we do hay. For the cows their feed just grows right out of the ground like magic.

The last unseen value in cattle is what they can do for the landscape. Grass needs cows. They have coevolved for millenia. Since we have started doing management intensive grazing we have seen an increase in grass growth, species composition, water holding capacity, and most other markers of ecosystem health every single year. When managed properly they make the land better than it was. The single most important wealth that the cattle generate is the soil beneath our feet. They are banking carbon in the soil for future generations and that wealth is inflation, recession, and politician proof. Cattle are the true wealth, and when I am with my herd I feel like a king.