Cattle Contracts with 15% Return -- Anyone Do This?
Has anyone else heard of Agridime? They advertise 15% fixed returns for cattle contracts that are ~1 year duration (one year and one week to be exact). The company's thesis is to purchase cattle that are 1 year old and then raise them until they can be slaughtered. Agridime then packs and distributes the meat DTC via their online store. The idea being they control every step of the process in the meat supply chain except for calving, which per my research is the most high risk (eg. highest death rate) part of raising cattle. In doing so, they are not beholden to the three meat packers which were disrupted during COVID. They sell these "contracts" publicly which they view as their cost of capital to purchase the cattle.
My cousin somehow found these guys and purchased some contracts about 18 months ago. I was pretty skeptical at the time but figured I'd throw down some money and purchase a few contracts (can use credit card). Worst case, I thought I could try to dispute the charge with my CC carrier. Fast forward to today, both my cousin and I were paid in full (principle + interest) and communication from the company was smooth. We are both sitting on the fence debating if we should double down or chalk it up to good luck and cut bait.
The critic in me says this has the building blocks of a great ponzi scheme and there is very little discussion online about people who have actually been paid off (this might be one of the first). After all, ponzi schemes are great investments until they're not. So monkeys, what say you? Has anyone else done this?
**To be VERY clear, I have absolutely zero affiliation with Agridime and not recommending anyone do this. I'm considering purchasing additional contracts and curious if anyone else has done this or if I'm crazy. **
This is pretty cool, I didn't even know it was a thing. Returns expectations seem a bit unrealistic.
If it's too good to be true, it usually isn't
15% "fixed" return is ludicrous - why would they do this instead of getting a traditional small business bank loan for half that interest rate, or finding a few investors who would happily buy in around 8-10%? I think you're right on the money with saying this is a great investment until it's not.
This reminds me a lot of the Celsius "bank accounts" that earned 18%. People were so surprised last year when that all collapsed. I would take your money and run.
I don't disagree. Seems like there would be better sources of capital than people buying these contracts, especially since it's unpredictable.
mortgages now have 6-7% rate. personal and small business loans will have ~15%.
the problem is they have been guaranteeing 15% returns even when borrowing rates were low
Interesting, never heard of it. What if beef prices start to come down? How many head did you all buy?
That's interesting. I've never heard of this but I do remember hearing stories like 10 years ago of my uncle who lost a decent amount of money on a cattle investment.
My rationale - if I've seen Facebook ads for an unknown, speculative investment, run the hell away. Glad to see it worked out for you the first time.
I would not be surprised if OP had some affiliation. I remember posts on Reddit regarding this scam popping up throughout the past few years with a bunch of bots responding that they received checks in the mail.
I've been a member on here for over 8 years and have a certified profile.... I'm certainly not a bot. I guess there is a "trust me" factor to my statement that I have zero affiliation. However, if I did have some sort of affiliation I'm doing a pretty poor job promoting them by stating in my OP (i) I'm still not convinced due to lack of "success" stories and (ii) saying it could be a scam.
But I did just search Reddit and found the posts you're referring to (I think?). There does seem to be some fishy / bot looking posts on there
Reddit Link: https://www.reddit.com/r/alternativeinvesting/comments/v2r6wh/agridime_returns/
got it - sorry i didnt know you were certified. yes, there were a lot more posts on reddit like the one you linked in various forums related to investing and finance.
Would look at the legals, specific questions:
1. Do you 'own' the cow & the beef or are you a secured lender?
a. In which case the 'transformation' of the cow into beef means your security may not be fixed (not an expert in US security, but security over an asset generally needs to be fixed)
b. If you 'own' the cow are you also then selling a forward contract on the beef available from the cow? What if the cow only gives 50x, but the agreement is for 100x, or if it is 100x, and the agreement is only for 50x?
c. If you own the cow and they're feeding and raising it, are you liable for costs against the cow? Can they claim you are in an insolvency scenario?
Depending on the above, if you truly do 'own' the cow, then they aren't incentivised to look after it very well, like if they underfeed your cow and it dies then bad luck (because if you're not paying for feed, why would they look after it?), they don't have to pay you anything. They also own the supply chain, so sure you COULD get 20%, but if beef spikes they could pocket more, and if it is less, then they'd pass that onto you. I'd want to know how much THEY make per cow. Finally if no one actually buys the beef from the website, then presumably you don't get your 20%?
So risks against the principal you're taking:
1. Cow dies
2. Beef prices go down
3. No/less beef sold on website
4. Insolvency/credit risk of counterparty
You're basically financing their working capital, and if you 'own' it there's not much incentive for them to do right by you, I'd want to see more details if you're a secured lender. Half the part of agri stuff is the cost to look after the physical assets.
All very good points +SB
They claim you are protected against loss and your contract is not for "cow #123". Honestly, I must've been in a deep, dark place when I did this because I just looked at my "contract" and laughed at it. Not sure what I was thinking. Guess I got lucky
I posted it below if you're interested in looking.
This piqued my curiosity and it says on the site, the cows are insured so if it dies, it is replaced at no cost. I am tempted to reach out to them and go through the contract. It is interesting.
FYI... I posted the contract below. If you decide to reach out to them, post up your experience. I spoke with them several times but I'm curious if the "story" is the same today as it was last spring.
I guess one way to diligence it would be to order product from their website to different addresses (at different intervals) and see what it looks like. Legit branded product that is consistently packaged/shipped, or if the company is just slapping their own label on someone else's product. However, I suppose there are ways to manipulate that.
If you want exposures to cattle, why not just play the futures market? The above poster laid out some of the uncertainty and risk involved. This seems too opaque although obviously I haven't dug in.
It is super illegal to market "guaranteed returns", that alone should make you run.
Here is a the contract. The more I look back on this, the more I realize what a gamble I took. Glad it worked out for me but I think I'll take the win and move on.
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