Food Fight

Posted: Apr 01, 2012 12:01 AM

Over on Twitter, I got into a food fight with a person that thinks there is an evil food cabal out to undermine all of America. I couldn’t disagree more. Big corporations aren’t destroying the foods they want to eat, it’s big government.

Some background. I traded hogs($HE_F) on the floor of the CME($CME). That’s makes me a big industrial food guy right? Actually, all the guys in the pits hated Smithfield ($SFD). They competed with us. But, it doesn’t make me a small food guy either.

When a friend was trying to start a company, Tallgrass Beef, he walked into the cattle and hog pits on the floor of the CME($CME) and raised the money to start the company. Why did we invest? First, we saw an untapped market potential. Second, we all ate the beef and it was really good. Ironically, in the financial crisis of 2008, and since corn prices have hit industrial beef manufacturers margin, Tallgrass has performed beautifully. They are immune to corn prices, since it’s grass fed and finished. The rise in regular beef prices has made Tallgrass premium price look not so premium.

The lack of traction for Tallgrass isn’t because of anything but unfocused management, a huge educational mountain to climb, and the lack of large dollars it takes to build a national brand.

There is a small movement in America that is advocating regulation to turn our entire market into slow food and non genetically modified seeds. I am against that movement. Why?

Because it is taking away choice.

We ought to be free to choose. Not everyone puts the same value on organic vs mass produced food. Not everyone has the same taste. Not everyone can afford it. The other day I was at an organic food market. Dried navy beans were over $5 a pound. They may be the greatest navy beans in the world but I bought some mass produced ones for right around a $1 at a supermarket. Navy beans don’t really matter to me. But, to someone else they might. Each of us has a choice.

The government regulates away our choice. The FDA has come down hard on raw milk producers. They regulate who can say organic and who can’t. It’s not about the food, it’s about the lobbying. Tallgrass Beef is not organic. The reason why is there is a non native noxious weed in Kansas that they have to spray for. Because they spray for one stupid weed that came over with the pioneers, the pasture isn’t organic. But the beef has no growth hormone, no chemicals, and only eats grass. The only fertilizer that grass sees comes out of the back of a cow. Seems pretty organic to me.

All these slow food fanatics need to remember it’s a choice. Instead of worrying about supply, educate the demand curve. If they are right, and persuasive enough, the suppliers at the other end will change. Did you happen to notice that McDonald’s ($MCD) and other fast food places won’t accept pork from farms that use gestation pens. Why would big business do that when the costs of production surely will go up with the changes? Demand from their customers. They wouldn’t change unless they heard from their consumers.

McDonald’s is extremely close to their customer. So is Walmart ($WMT) and Costco($COST). Walmart is the largest retailer of organic food in the nation. Why? Because their customers are demanding it. It has nothing to do with imputing a value of “good” or “bad”. If the demand wasn’t there, Walmart and Costco wouldn’t be supplying it.

Ironically, Monsanto provides the lion’s share of heirloom seeds, along with the genetically modified (GMO) seeds. In another ironic twist, GMO seeds use a lot less chemicals than they used to. They are actually better for the environment.

The slow food advocates vilify what they see is the evil cabal of consolidation among big food processors. Cargill, Del Monte, ADM($ADM), Hormel($HRL), Smithfield, Tyson($TYS) and others. However, those food processors offer us economies of scope and scale so that we all can afford to eat. America feeds the world. It’s hard to do that without large scale production. Imagine the ads, “You can feed this starving child for $100 per day.”, instead of the $5 or $10 it takes today.

My personal experience with slow food advocates is they don’t want to take on the government, the real root of the problem. They want to go after corporations. I think this is because they want to dictate to the market what’s best, and will use the government to do it. They either don’t trust consumers intelligence, trust the free market, or know that their position is so untenable that unless big government were behind it they wouldn’t get things their way. Instead of being libertarian in their approach, they are pawns of the big government loving Democratic party. Since they see the corporations as tools of the Republicans, they go the other way.

What can we do?

First, no values judgements. What’s good for me might not be good for you. Everyone has different tastes and budgets. If you want to only buy food from megacenters, that’s your choice and I wouldn’t limit it. If you only want to research and find small producers, that’s cool too. Choice is the key.

Second, end all the infernal subsidies for farming. We pay farmers to produce, and not produce. End ethanol subsidies. They cause huge economic imbalances in the marketplace. Let the market decide.

The government regulates how much you can plant, and what you can plant. End all those regulations too. Let farmers manage their own land. If they think the corn market is going to be better this year, let them plant more corn. Get government out of the farming business.

Have really transparent labeling and educate consumers. Don’t shock them, educate them. Let’s put some science where the emotion is. Already, they have found that organic fruits and vegetables don’t have any more vitamins or minerals than conventional farmed food. If they taste better, it’s a matter of individual opinion.

Allow for alternative foods to hit the market. Why isn’t there a raw milk cheese industry in the US? Why can’t we get some of the sausages and beautiful variety meats available in Europe. It’s not killing anyone over there.

The internet is there. It’s a great resource. It’s a great truth detector. If you want to change the world, it’s a lot easier now than it ever has been. Just don’t try to impart your values and your beliefs on everyone else just because you think it’s better for me. Instead, campaign for a level playing field, get big government out of it, and then use science to win the hearts and minds of consumers.

Consumers have the wallets. No one is forcing them to shop anywhere. They have the power. Not the producers.

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