Meatless Farms And Farm Innovation

I have been watching valuations of fake meat companies go through the roof.  When valuations go through the roof, there is always a rationale for it.  In this case, it’s either climate change or the fact that there are millions of vegetarians.  Vegetarians survived for eternity without fake meat companies, and for vegetarians that were born into it I don’t think they have a desire for tofu bacon since they never smelled or had a piece of bacon in the first place.

One thing I think the gentry who have never been near a farm discount, farmers are incredibly innovative.  Today, there is innovation in agriculture like crazy.  Why?  Because independent, or corporate farmers own their land.  They are stewards of their land, much better than the government by the way, and want to get as much production out of that land as possible at the least amount of cost. They are in commodity businesses where the farmer doesn’t set the price of the good.

Farm markets have been screwed up since The New Deal.  What most people don’t realize is the New Deal farm policies weren’t put in place for any economic reason.  They were put in place to curry favor among farmers so they would vote Democratic consistently.  It is an economic fact that price supports distort markets.  Since the price support system has been put in place, it’s been heavily lobbied and bastardized.  We not only have price supports, but payments to keep land fallow and the government will buy excess product and remove it from the market.

Of course, because they are subsidizing production via price supports it is almost guaranteed that there will be an excess product produced.  Human incentive works that way.

A great example is peanut farming.  The government pays to subsidize peanut farmers to plant.  Farmers always grow excess peanuts.  The government pays peanut farmers for their excess peanuts to keep them from going to market.  It adds to the cost of every peanut butter jar you buy at the store.  I bet you can’t get one Georgia Republican to vote against the peanut lobby but in the same breath, they will rail against the federal deficit until they are in the majority party.

Fake meat will find a market but I suspect it will be a lot smaller than what the current expectations project.

At the same time, the best policy America could pursue is an end to the farm subsidy programs.  It’s a transfer of wealth from American taxpayers to big corporate farmers at this point.

The other thing that has been exposed by Covid is that if you were obese, you had a higher risk of death.  Why are Americans more obese?  One reason is the food lobby in Washington DC.  The “Food Pyramid” isn’t based on science.  Many of the policies and regulations enacted and enforced by unelected bureaucrats aren’t based on health or science either, but based on which lobbying group is the strongest.

Technology doesn’t just work for vegetarians desiring fake meat products.  It also works for farmers.  Tech has advanced so farmers can be closer to consumers, eliminating middlemen.  Covid has exposed that in spades.  I recall the story of the restauranteur who didn’t want to lose his supply of Kobe beef from a Japanese farmer.  He had spent years cultivating the relationship just so he could purchase this specific high-quality expensive beef.  When Covid hit, he pivoted and started selling the beef direct to consumers just to keep his supply chain open.

Covid also exposed and enabled new technology and services that can deliver last-mile goods directly from point to point.

What would happen if there were no price supports?  That’s an interesting question to ponder.

• Initially, there would be a lot of volatility in farm product markets as the elimination of price supports worked its way through the system.  Consumers and producers would have to tolerate that. Markets will sort all that out quickly.
• The largest innovation will happen at the farm.  Farmers will have to decide what to plant.  Initially, they will probably keep their same crop rotation with row crops of corn and beans.  But, frankly, the US grows so much of that stuff that much of it is stored and kept off the market in silos all over America.  Years ago when my wife and I were investigating buying a farm, we visited some innovative farms in Wisconsin that didn’t plant row crops or tend to them in traditional ways.  Was very interesting to see.  Instead of measuring bushels per acre, those farms measured “calories per acre”.
• US Government regulation will also have to change in order to allow farmers to innovate.  Current regulations are far too innovation prohibitive when it comes to slaughtering animals, or in food production.  I recall the USDA wanting to require US cheesemakers to age their cheese on stainless steel rather than wood for “germ protection”.  Of course, European cheese makers have been aging their cheese on wood for centuries and it seems okay there.  They also use raw unpasteurized milk to produce some fantastic cheese as well but those are illegal in the US.
• Entrepreneurs would continue to innovate and innovate faster to take advantage of the more free market that would exist.  New companies would form and new job opportunities would be created.   Some of them might grow to take on and compete with the entrenched incumbents of American agriculture.

At the end of the day, I think American consumers would be put closer to the producers, eliminating a lot of the middlemen.  That would cause food prices to go down, and the quality of food produced to go up.  Competitive markets would expand choices, and the crops that farmers plant would exhibit higher variance than the ones planted today.

Government spending on farming would also go down.  The power the food lobby has over legislators would also go down.  It would be good for American taxpayers, and it also would be better for the American diet.

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