Tuesday, November 12, 2013

The currency that never goes out of style

I had a disturbing experience the other day.  I tried to exchange some of my hard earned Canadian dollars for U.S. dollars, and lost a couple of hundred dollars in the process.  Either the value of the Canadian dollar had gone down, or the value of the U.S. dollar had gone up; whatever the cause I lost money.

This experience highlights an ever growing concern with  how our society functions: the value of our money.  It really is quite a fragile thing.  Money is only as good as the economy that produces it, and more and more the North American economy is losing its competitive edge in the World.  There are several knowledgeable individuals who predict that China's economy will outpace the U.S. economy by the end of this decade; they certainly have history on their side to back up that assertion.  The 17th century was dominated by the Spaniards, the 18th by the French, the 19th by the British, the 20th by the U.S.A.  The world is due for an economic shift, and more than likely century 21 will go to the Chinese.  There may be a day when the monetary standard for the world is the Renminbi not the Dollar; in that day people across the world, but especially in North America, will be looking for a more secure means of protecting the value of their investments.

There has been a trend in the U.S. that bears mentioning as we consider the future of the world economy.  Ever since the industrial revolution, agriculture in North America has been in a state of flux; farmers are becoming fewer in number and older in age while output has increased dramatically.  In 2007, less than 2% of Americans lived on farms, and only 1% claimed farming as their primary source of income; compare that to roughly 12% in 1950.  In 1969, roughly 15% of farmers were 65 years and older; in 2002 the figure was 25%.  I have seen other figures that show similar trends.  Despite these trends, over the same time period food production in the United States has increased over 250%.  I don't know of too many corporations, or entire industries for that matter, that can decrease their labor force from 12% of the population to less than 2% and still increase production by more than triple.  Much of this has been due to advances in mechanization, genetic improvements in crop strains, and improved farming techniques.  Todays tractors and combines are so advanced that they literally drive themselves through the use of GPS.  For the past 2 years the U.S. has experienced the worst drought since the dust bowl, yet corn and wheat production were barely phased due to the widespread use of drought resistant, high yielding strains.

The result of all these advancements is a food supply that is readily available, inexpensive, and relatively safe.  In 2011, Americans spent less than 10% of their income on food and drink.  Compare this to 23% in Mexico, 31% in Russia, and 41% in Kenya.  In countries in the throes of economic ruin (think Zimbabwe and Somalia) the percentage can be even higher (think 80% to 100%).  Ironically, the simultaneous condition of an increase in food production with a decrease in farmers has caused a large percentage of the consuming public to eschew advancements in agriculture for trending methods such as 'Organic', 'All Natural' and 'Hormone/Antibiotic Free'.  People feel less connected to their food than ever before, but they don't know how to reconnect so clever marketers have developed feel good schemes to ease their anxiety.

All of these figures and trends illustrate some important points for consideration.  The world is experiencing an economic shift; the times they are a-changing.  Our current food production system has outpaced itself to the point that it is cost prohibitive for new producers to enter the industry, and the average Joe is too far removed from agriculture to even know where to begin anyways.  If there were ever a major disruption in food production, or if the value of our currency every took a serious hit, the relative value of a steady food supply would skyrocket.  Even if the global food supply remains constant, localized conditions such as natural disasters can disrupt the food supply sufficiently to increase the value of food and water significantly.  Any savvy investor will tell you that the key to coming out ahead in a state of economic flux is to buy low and sell high.  Though in most instances an ordinary person would not consider selling food that he or she bought on the cheap, there may never be a better time to invest in something so inexpensive at a point in time where its value is likely to rise so dramatically.

Now is the time to invest in food.  In a world where the population continues to grow, and the acres of arable land continue to shrink, food may very well be the currency of a not too distant future.  I'm not talking about investing in futures markets, or hedging on fat steers or pork bellies, I'm talking about investing in a supply of non-perishable food that can be stored and accessed as needed.  I'm talking about investing in agricultural knowledge, starting with the basics of gardening and possibly even animal production.  I'm talking about investing in nutritional knowledge with a heavy dose of reality.  Organic farming and heirloom crops have their place, especially when we consider that most gardeners and hobby farmers cannot afford to buy equipment that drives itself and crops that blossom even in the midst of a dearth.  However, the future of food production is not in its past; we won't be able to feed the world by reverting to agricultural techniques from the 1800s.  Abstaining from conventionally grown food because it came from GMOs or was grown with the use of pesticides, hormones or antibiotics has no real, measurable health benefits that I'm aware of.  Technology has made food cheaper, but has also made the production of food a very foreign concept to most people in Western society.  Now is the time to capitalize on that fact by investing in something that you can eat, regardless of how the stock market behaves.  Now is the time to buy food.


  1. Like a breath of fresh air! Love this, and I wish more people understood this.

  2. Spot on! In my company, most people have worked here for over 20 years with most of them about to retire. We are having a really difficult time finding suitable replacements for them. I read a statistic when I was applying for jobs that said that last year there were over 9,000 ag jobs not filled due to lack of applicants. I also spoke to a rep from DuPont Pioneer that told me that approx. 75% of there workforce will retire in the next five to ten years. We need more and younger people to take an interest in food. Where they get it, how it is grown, and how they can help to improve the system.