E249: Learning the Business of Commercial Ranches with Jeff Smith

<p>Looking to expand your asset classes? Investing in agricultural land sounds pretty interesting. But is it worth investing? In today’s episode, Erik Cabral speaks with Jeff Smith, the co-owner of Colorado Craft Beef. A veteran of the cattle and the food agricultural industry. Jeff offers a wealth of knowledge about the practices, the supply chain, and the economics of beef and other animals.</p> <p><strong>Here are some power takeaways from today’s conversation:</strong></p> <ul> <li>Breaking down the value chain of a steak</li> <li>Seeing something negative and turning it into motivation</li> <li>Commercial ranch from a real estate investment perspective</li> <li>The decision to create their own market and build the brand</li> <li>Being okay with failure</li> <li>Ownership vs. creativity</li> <li>The importance of honesty in business</li> </ul> <p><strong>Episode Highlights:</strong></p> <p><strong>[08:46] Breaking Down the Value of a Steak</strong></p> <p>By the time you get your beef at a grocery store, it has likely gone through six or seven entities from the time it was born to the time it gets to your plate. At Colorado Craft Beef, they get calves from their partner cow/calf producers and finish them before taking them to a partner harvest facility that does 1,500 per year, not 6,000 per day. Their prices have to be a little bit higher than other commercial beef. But they know where the calves have been since they were born.</p> <p><strong>[23:24] A Look at Commercial Ranch From a Real Estate Investment Perspective</strong></p> <p>In the ranching world, selling real estate is considered a cardinal sin because they don't make any more of that. Plus, you can't sell the business because the actual cattle company isn't worth anything. All of it has been plowed into hard assets, which is great. But at some point, you’ve got to be able to pay the bills. That's where some of this disconnect with agriculture comes from – you can be land-rich and cash-poor.</p> <p><strong>Resources Mentioned:</strong><