Here is a major cattle venture funded by European institutional investors in the Australian outback.
From the company website:
Founded in 2009, SLM Partners was established to channel investment capital towards land management systems that are profitable and sustainable. Our first project focuses on beef cattle production on grazing land in Australia.The fund acquired 2 properties covering 44,000 hectares near Cunnamulla, Queensland at the end of 2012. Since acquisition, 98km of water pipes and 23 new water points have been installed, to provide reliable drinking water for cattle throughout the property. 580km of single-wire electric fences have been erected, creating more than 200 paddocks. Two new cattle yards have been built. A herd of approximately 4,000 cattle has been run since the middle of 2013, despite rainfall well below the historical average.
With the right management, raising cattle on pastures offers the lowest-cost method of beef production. These systems make the most of what nature provides for free – sunlight, rainfall, soils and the photosynthetic power of plants – rather than relying on purchased grains. There is a growing scientific evidence of the health benefits of grass-fed meat, which is leading to increased consumer demand.
The SLM Australia Livestock Fund acquires properties and implements a management process known as ‘holistic planned grazing’. This involves dividing land into smaller paddocks, putting cattle in large herds, and moving them frequently across the property. It provides a decision-making framework that allows managers to vary the size of herds and the frequency of herd movements according to seasonal conditions. The land benefits from concentrated animal impact, and then long periods of rest, which mimics the behaviour of grazing animals in natural grassland ecosystems.
The goals of the fund are to increase carrying capacity and to reduce the costs of production, thereby building a profitable, sustainable cattle operation. The grazing process is also expected to increase soil carbon, improve water cycles, and enhance biodiversity.
As the CEO explains:
“Our pitch to investors is pretty simple – top quartile returns in ranching and/or farming are nominally pretty attractive, but what kills them is the unreliability/volatility. In ecological terms this is essentially a lack of resilience in the eco-system. Lacking resilience the land is all to easily buffeted by droughts or floods or heat or cold or any of the other myriad things the reality of nature sends our way.
So let’s focus our efforts on increasing this resilience (decreasing volatility) and so shift the investment down and left on the risk/return curve. We now get to a situation where the “average” returns from a decently run grazing enterprise, significantly de-risked due to enhanced eco-system resilience, compare more than favourably with other possible investments on a similar risk profile. Throw in some solid productivity gains from a bit of wire and water and some decent grazing management and things start to get interesting.”