CHEESE AS AN INVESTMENT

INVESTING IN COMMODITIES IS THE NEWEST SAFE BET

 

-2 Major Reasons investing in a commodity is the new in

-The reports on cheese consumption in Canada and the US show demand is growing

-Invest Internationally, WHY? 5 GOOD REASONS

-Major exporting countries

-Long term performance

 

2 Major Reasons investing in a commodity is the new in

According to Forbes, commodities are a new good and less risky way to invest. First of all because the commodities don’t move in sync with the stock markets. Indeed, if gold and oil can move a lot in a night it takes up a year to show real movement for a commodity, it’s also quite safe in this case since we’re considering cheese for a commodity, as it is a product that’s been becoming more and more popular over the years. In the search of eating better, leading to a healthier lifestyle, people are looking for natural and authentic products. North America lacks authenticity in this special field but we will look over that later.

The second main reason would be investing in commodities shows diversification in a portfolio. In order for a portfolio to truly be diverse and show real economic superiority it has to mix up stocks and commodities. It’s not even taking a risk as said before, commodities are safer. We can take the example of Hillary Clinton who invested in cattle years back and would’ve made by 8 Trillion today if she had kept going with such an investment.

(On the graph, at this time the green dot shows it being the best risk/reward point in time for an investor in the commodity space; equities are expensive, commodities are cheaper)

The reports on cheese consumption in Canada and the US show demand is growing.

Reports show that the consumption of cheese in North America has increased over the last 22 years. Indeed in 2011 Canadians would consume about 12.4 kg of cheese per year, today it reaches up to 13.4kg. The production followed the trend, from about 418M lbs produced to 2.2B lbs produced in the last 30 years. In North America, Canada is the second consumer of cheese after the US. In search for a better and more balanced life, Canadians also value the quality of the food they eat.

Invest Internationally, WHY? 7 good reasons:

• For a good portfolio you must diversify.
• Investing in products, goods, services or stocks in only one country is a bad idea because it doesn’t show diverse choices. Another country might have a better product to offer. In this case investing cheese in France would correspond better to the demand than what North America has to offer. With the increase of social media as the transporter of a healthy balanced life, it has democratized itself to eat local but also exotic real premium Investing in France would be beneficial because of a certain quality warranty.
• Cheese is (even though, it has been on the rise for the last forty years) an emerging market compared to other goods that have been on the Chicago Board of Trade as far as we could remember. (cf. 1970 CBOT) Whereas in Europe, Euronext has been counting cheese as a stock star since its start. There is no counterpart as for the quality and the authenticity of the product, in America.
• International stocks outperform Americans since they represent several countries which is another valuable reason to invest internationally.
• The difference of currencies is an important point to take in account. You could make a bigger profit for example buying a 3-euro cheese (5CAD) in France, and selling it at 13CAD (8EUR) is a 110% profit.
• Investing internationally allows you being present on the international scene and getting exposure worldwide which is always positive.
• It allows long term performances especially with cheese since it’s a commodity that it is more likely to evolve on a long-term rending.

 

Major exporting countries

Major exporting countries are the one whose cheese production are the highest, they correlate. France is therefore one of the first exporting countries in North America. Along with Italy Germany and the Netherlands. It’s located mainly in the European Union, which allows a one-shot investment in the EU (Several countries at once)

 

Long term performance

Historically aligning a portfolio for the long term is always going to make money. Another pleasant point is the satisfaction of not having to stress out on the evolution of the stock or commodity overnight, and the fact that taxes are lower concerning long term investing rather than short time trades. The taxes will depend on the income going from 0% to 20%.

Canadian Regulations

Although the regulations concerning dairy products and cheese, are a bit strict there are easily accessible. The government categorizes it by standards (example: Cream Cheese is in section B.08.034 of the Food and Drug Regulations; Cream cheese is in the section B.08.035 of the FDR and Cold-Pack cheese is in the section B.08.041.7 of the FDR and the list goes on…) Once the category of cheese is identified, it possible to refer to each section of the FDR. The FDR section B.08.030 (1) covers the sources and pasteurization, the storage temperature, and the following sections describes what categories of cheese are acceptable for sale in Canada (determined by the percentage of milk, casein, etc.…)

Importation regulations are defined on the government’s website. There is a form to be completed in order to approve the composition, and set other formalities of transportation, quantity, …

Overall Conclusion

Investing in commodities is a good idea for the investment in itself but also for the results. It can boost a business, here a local business (la Bottega in Ottawa for example) invested in cheese from all over the world and other products and the store has gained in popularity and exposure. Being strictly national or provincial can sometimes limit the possibilities whereas investing internationally, as scaring as it could sound, guarantees much bigger results. It’s all proportional to the investment too.

As exposed before, cheese is a product in demand here and businesses are starting to realize it and make profit.  Restaurant, independent grocery stores, wine stores, could all benefit from an addition like this one.