Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

The Agriculture Revolution Is Coming

Commodities / Agricultural Commodities Mar 07, 2017 - 12:44 PM GMT

By: John_Mauldin

Commodities

BY PATRICK WATSON : Humans have needs, but we need some things more than others.

Back in the 1940s, American psychologist Abraham Maslow famously classified human needs into a hierarchy, often shown as a pyramid.

At the foundation are our physiological needs: air, water, food, etc. Only when these needs are met can we reach upward to more and more refined stages of material, intellectual, emotional, and spiritual fulfillment.


You could say, the very existence of civilization depends on the stability of the bottom layer. It’s thus no accident that a huge part of the economy exists to fill these basic needs.

Even smart people can forget this. One person who doesn’t forget—and has used it to accomplish amazing things—is President Donald Trump.

Presidential Endorsement

Last week at the White House, President Trump and his economic advisors met with a group of manufacturing company executives. They discussed how to create jobs and promote exports.

After some opening remarks, the guests introduced themselves to the president. Here’s an excerpt from the official White House transcript.

FRAZIER: Thank you, Mr. President, it’s good to be here. Ken Frazier from Merck & Co., Inc.

FIELDS: Thank you, Mr. President. Mark Fields, CEO of Ford Motor Company.

MORRISON: Thank you, Mr. President. Denise Morrison from Campbell Soup Company.

THE PRESIDENT: Good soup.

MORRISON: Thank you.

I’m not making this up. President Trump’s first thought, on meeting the head of Campbell Soup, was to tell everyone he likes their soup.

Note also, the president did not respond to Merck’s leader with “Good pills,” or to the Ford CEO with “Good cars.” But Campbell got a “Good soup.”

Thinking of Maslow’s hierarchy, this makes perfect sense.

We know food is a basic human need. Soup is basic food. Trump knew this instinctively. He won the White House by convincing those on the bottom levels of Maslow's pyramid that he could raise them up.

Coincidence? I think not.

Consumers Want Better Quality

Americans increasingly want fresh ingredients and fewer preservatives. As the demand for organic grains has skyrocketed, food companies are filling the gap with imports from as far away as Turkey, Ukraine, and India.

The foreign competition has slashed organic-corn prices by 30% and organic-soybean prices by 20%—a fact US farmers are not happy about.

Imported food (or imported anything, really) is not what the Trump administration wants to see. I've written about this shift toward promoting the local economy in Connecting the Dots (subscribe here for free).

Furthermore, suspicions abound that some of the imported grain isn’t really “organic” as the US government defines it.

Yet another problem: American fruit and vegetable farms depend highly on immigrant labor, much of which is now under pressure to leave the country. It’s not clear if there are enough legal US residents (who are willing to do the work) to replace them.

Looks like an economic conundrum.

Consumers want higher-quality food, but we can’t get the components without importing them, which the government wants to discourage. Labor shortages don’t help. How do we square this circle?

Silicon Valley sees an opportunity.

Automated Food Production

Last August, John Mauldin kindly gave me a Thoughts from the Frontline guest appearance (subscribe here for free). I wrote about the way LED lighting could enable large-scale indoor farming.

It appears to be getting closer. From the February 13 edition of the Wall Street Journal:

In a renovated warehouse by San Francisco Bay, plastic towers sprouting heads of lettuce, arugula, and herbs rise 20 feet to the ceiling, illuminated by multicolored LED lights that give the room a futuristic feel.

A group of tech entrepreneurs and investors including billionaires Jeff Bezos and Eric Schmidt are betting this facility… can redefine how vegetables and fruits are grown for local consumption.

If all goes to plan, the 51,000-square-foot warehouse run by startup Plenty United Inc. will yield as much as 3 million pounds of leafy greens each year. In the coming months, the company plans to begin marketing produce bred for local tables rather than shipping durability.

This is a prototype operation, still a long way from being feasible at scale. But if it works, the economic consequences will be staggering.

Right now, our food often travels thousands of miles before it reaches us. Think of all the ship, train, and truck miles it takes to bring fresh produce to every US grocery store and restaurant.

Now imagine if crops could grow in highly automated, energy-efficient local warehouses. We would have better, fresher produce that costs less and is less damaging to the environment.

Meanwhile, other companies are working on lab-grown meats. A cow is essentially a machine that converts corn and water into protein. There might be more efficient ways to do this, or to create substances indistinguishable from actual beef.

This won’t happen tomorrow or next year. But who knows, 10 years from now, indoor farming and meat production could be commonplace.

Food in the Future

According to Maslow's hierarchy of needs, self-esteem and self-actualization—two things that make us distinctly human and have brought forth art, music, and other forms of culture—can’t exist without the lower levels supporting them.

The ready availability of food is an essential part of allowing us to be fully actualized humans.

Economics is about the ways we manage supply and demand, which means it is really about everything. But it’s first about fulfilling our most basic needs.

The technology-driven switch from subsistence farming to commercial agriculture unfolded over decades. It let people live in cities and enabled the Industrial Revolution, which in time led to all of today’s technology.

The coming change in the way we feed ourselves may be equally significant. It could happen much faster too.

Subscribe to Patrick Watson’s Investment Newsletter, Connecting the Dots

Make better investment decisions by seeing and understanding the forces driving global markets before anyone else. Macroeconomic forecaster Patrick Watson clues you in to the shifting market, economic, and political trends each week in this free newsletter. Subscribe now.

John Mauldin Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in