Posted on December 22, 2014 @ 06:15:00 AM by Paul Meagher
I read a story last night about a dairy farm that is next door to the farm I grew up on. We eventually got out of the dairy business during the "get big or get out" phase but our neighbor (my uncle) stayed in the business in part because he had sons and daughers who were more enthusiastic about the dairy business. My father liked construction and moved more into that field, but always made some side income of the farm to help raise 8 kids.
The neighboring farm in question is located in the middle of rural nowhere so I was impressed to see that our neighbors were breeding some prize winning Holstein cows at a higher level on the international stage than before. They have been breeding prize winning Holsteins for around 15 years now and got into some advanced artificial breeding techniques early on (e.g., insemination, transplants, cloning, etc..). I don't know the details. What I do know is that they have one 4 hr old Holstein cow that they have fully sold off (no more shares in it) that is one of the top showing dairy Holsteins in the world. As it progresses through the ranks in judging competitions, new investors come in and buy out shares in the cow. There are a suprisingly large number of investors involved in this one Holstein cow (between 10 to 15, not sure how many are still in).
They did quote one dollar figure in the article. If you have some prize winning Holstein genetics and sell it as a two year old that shows well in competitions, then that Holstein cow could be worth between 200 and 250 thousand dollars. This might be formatted as a corresponding number or shares available to investors. The owners of the genetics might opt to sell only a fraction of the shares to investors so they might enjoy a larger share of any potential jump in market value beyond 250 thousand dollars.
I also find it interesting that these rural farmers don't spend much time on the internet (they put in long hours in the barn) and don't get to show their cattle as much as they would like to because of their remote rural location. They are nevertheless leaders in the information technology business, but the information they are selling are genetic programs that produce award winning holsteins. While they are very humble and unassuming farmers to talk to, they are gradually honing in on the prize - to be a top-tier supplier of dairy cow genetics to farmers around the world. Their brand/motto is to be "the future of dairy".
I should mention one more detail that might be important in the whole dairy cow investing business. To produce an award winning Holstein cow you want to use the best combination of genetics you can find. My neighbors made a point of complimenting the local dairy farming community for producing high quality Holsteins so it is my theory that they are mixing some of their own genetics with the genetics of top Holstein cattle in the local area. It would be interesting to know more about their artificial selection processes.