Interview Wiecher Roast
'Cow on installment is an opportunity for dairy farmer'
Nowadays almost everything can be leased: from cars to telephones and also in the agricultural sector it is a common phenomenon. Including tractors, implements and milking robots. However, leasing a cow is not self-evident, in fact, there is no body that offers cows for lease.
'Actually a missed opportunity', says Wiecher Braad, owner of Braad Livestock in Emmeloord. He came up with a way to still be able to lease cows and came up with the concept: Buy a cow on installment.
How did the concept come about?
"I think I've had the idea in my head for about 5 years, if not longer. It actually started when I sold heifers to a leasing company in Spain years ago. Every time I put it back in the drawer, proverbially, to dust it off after a while. I've had a lot of conversations with different agencies, like investors, but it never really took off. Until a while back, when I decided I really wanted to do something with it. Basically the concept is already being used on a daily basis among dairy farmers and traders."
"Some farmers pay for their purchase a little later, which is actually a similar situation. I just want to do it a bit more professionally and on a bigger scale, that's why I set this up. It's very convenient for a dairy farmer, especially because he has immediate access to the purchase. generates more revenue because he gets more milk in the tank and can pay it off in a certain period. This is different with, for example, the lease of a tractor, which increases the cost price, while this way of paying off also provides extra income."
What does the concept mean?
"It's actually very simple: it is literally buying a cow on installment just like you can do with a car. I just don't call it a lease, firstly because I was told that you are not allowed to lease cows in the Netherlands and secondly because the cow after becomes the property of the dairy farmer for a certain period.With a lease, the leasing company remains the owner, so in that case that is me and I do not want that as a trader.It is more that I have dairy farmers who have spare phosphate and stable space and would like some extra cows the chance to do this, even though their cash flow won't allow it, it's a win-win, I can still sell 30 cows instead of 15, the farmer gets the number he would like purchase despite the fact that he could not pay for them in one go and the dairy farmer benefits directly from his purchase: his milk yield increases."
Wiecher Roast
How do you create security around payments?
"Well, what is security? The buyer signs a contract in which he agrees to collateral in the form of phosphate rights. If the buyer cannot make the payment, for whatever reason, the outstanding amount in phosphate rights will be paid to me The phosphate rights are then sold, which gives me the outstanding amount. Payments are made monthly, with a maximum duration of 2 years. So the debt decreases monthly, as does the value of the collateral. It is true that the buyer the value of the outstanding debt in phosphate rights is not allowed to be traded to third parties. It is plausible that every dairy farmer takes good care of his cattle and since the same cattle provide income, I also see the payment being settled. It is of course annoying when the cow dies before she's paid off, but that's the risk."
Is there much enthusiasm for this concept?
"Since I announced this concept via the internet a week ago, I get interested parties on the phone every day. I also visit interested parties by means of a personal meeting who want further information. 2 requests have already been met. Still, the enthusiasm is still needed. grow more. In other European countries such as Germany, England and Spain, a 'lease cow' is already a well-known concept, I think that is also possible here. I hear enough customers who say that they could use some extra cows, as they have the space, have sufficient phosphate rights and also have sufficient feed, but simply cannot pay for it in one go. Because this offers opportunities, I think the enthusiasm will grow."
To what extent did you have to adapt your own business operations for this concept?
"I've actually had to make very few adjustments. Trading cows is daily business. I currently mainly buy them in East Germany. In addition, I also occasionally give customers deferment of payment, something the concept is actually based on. I want just set it up more professionally, which is why I started working with contracts, installments and collateral. Of course it will be a bit more difficult for myself if the enthusiasm starts to grow."
"I myself also have to pay for the cows, something that can be difficult with very large numbers. I may want to gradually look for some investors, that would be an adjustment within the company. I am now in contact with a financier and I also have This week we also spoke to a number of dairy farmers on the phone who have sold their farms, but want to do something with the money from this sale. Something like this would of course also go under contract."
Jorine Cosse
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