Unbreachable moat builders

Prime Future 172: the newsletter for innovators in livestock, meat, and dairy

“In order to be successful, a company must have a definite moat, a competitive advantage that allows it to maintain pricing power and better than average profit margins."

"I look for economic castles protected by unbreachable moats."

"What we're trying to do is to find a business with a wide and long-lasting moat around it, surrounded -- protecting a terrific economic castle with an honest lord in charge of the castle."

"But we are trying to figure out why is that castle still standing? And what's going to keep it standing or cause it not to be standing five, 10, 20 years from now? What are the key factors? And how permanent are they?"

Yes, of course, these quotes are all from the GOAT himself, Warren Buffett.

There's a lot of talk about resilience these days. To some, that means climate-resilience, or resilience amidst black swan events like COVID.

I'm increasingly convinced that resilience in production agriculture is about having a path to sustained profits.

I was recently talking with a midsize cattle feeder who has transitioned from small farmer-feeder to midsize cattle feeder. The team is now trying to figure out what the next chapter of growth should/could look like. He made this statement that stuck with me, “we're just trying to figure out how we shift from price taker towards price maker."

That cattle feeder’s comment translated into Buffettese? “We're trying to build a moat."

Although they would likely use different language, the top 1% of producers think this same way. They are looking for ways to continually expand the moat around their business, inch by inch.

I have an obsession with the Acquired podcast, partially because at the end of every episode, after talking through the history of some fantastic business, the hosts apply the seven powers framework to analyze which power(s) that company unlocked in the process of becoming that fantastic business.

The pursuit of the most innovative producers, the most resilient producers, is the continual expansion of their moat. I think the seven powers framework represents the seven levers that can be used to do so.

Is it exhaustive? Probably not. But it's a simple framework, which makes it useful.

Let’s define the 7 powers, look at some examples across animal protein, and get to the So What.

✨ The rest of this edition is available only to premium subscribers. Shoutout to the many premium subscribers making Prime Future a sustainable thing. ✨