Harvesting is still done by hand
On the left bank (above) is Afghanistan–on the right bank Tajikistan
And the end product in the market!
Bad journalism and poor science
The Guardian recently published two articles concerning the cancer risks of mobile phone use. The first was entitled, The inconvenient truth about cancer and mobile phones. The second, published one-week later, was headed, Mobile phones and cancer – the full picture.
In the first article the two journalists highlighted a recent study that found that mobile phones caused cancer in rats. They wrote,
The study concluded that there is “clear evidence” that radiation from mobile phones causes cancer, specifically, a heart tissue cancer in rats that is too rare to be explained as random occurrence.
The journalists continued,
Not one major news organisation in the US or Europe reported this scientific news. But then, news coverage of mobile phone safety has long reflected the outlook of the wireless industry. For a quarter of a century now, the industry has been orchestrating a global PR campaign aimed at misleading not only journalists, but also consumers and policymakers about the actual science concerning mobile phone radiation. Indeed, big wireless has borrowed the very same strategy and tactics big tobacco and big oil pioneered to deceive the public about the risks of smoking and climate change, respectively. And like their tobacco and oil counterparts, wireless industry CEOs lied to the public even after their own scientists privately warned that their products could be dangerous, especially to children.
The story was picked up by other media, both in the UK and in the US, and spread rapidly across social media.
The second article in The Guardian, written by Dr David Robert Grimes, a physicist, cancer researcher, and science writer based at Queen’s University Belfast and the University of Oxford, completely refuted the first article.
He argues that the study cited in the first article is flawed, and accuses the journalists of cherry-picking and misrepresentation, saying they had ignored data that contradicts their hypothesis and retained only evidence that fitted the desired story. He writes that, this is antithetical to science, where the totality of evidence must be assessed in concert.
He continues,
Since the early 1990s, mobile phone usage worldwide has grown at an exponential rate. If phones are linked to cancer, we’d expect to see a marked uptick in cancer with uptake. Yet we do not. American mobile phone penetration increased from almost nothing in 1992 to practically 100% by 2008 and there is zero indication glioma (cancer) rates have increased, a finding replicated by numerous other studies.
And adds,
The scientific evidence points to a conclusion totally at odds with what the authors postulate. The analogy to industry bamboozling the public to ignore findings doesn’t hold if there is no strong scientific consensus from which to deflect, rendering it cynical or ignorant to equivocate the twain. This is not a case of an industry trying to distract from an inescapable scientific conclusion – the reality is there is nothing of substance from which to deflect.
All this might sound familiar to those of you who are in the business of producing and supplying sugar to an increasingly reticent public. In most people’s minds sugar has now been identified as “the cause” of obesity. This has become an almost irrefutable fact, despite there being little—or no—scientific evidence that a sugar calorie is more fattening than any other calorie. Meanwhile, the sugar industry has been accused of lying to the public and conspiring to conceal the harmful nature of their product.
In his article Dr Grimes argues that the fact that cancer rates have not increased in line with mobile phone use suggests that there is no link between the two. There is no correlation. As far as sugar is concerned, per capita sugar consumption has been falling while obesity has been increasing. This is an inverse correlation.
I will leave the final words to Dr Grimes whose strong criticism of the first article may strike a cord to those of you in the sugar industry.
As enthralling as (the) narrative might be, it is strewn with rudimentary errors and dubious inferences. As a physicist working in cancer research, I found the authors’ penchant for amplifying claims far beyond that which the evidence allows troubling. And as a scientist deeply invested in public understanding of science, I’ve seen first-hand the damage that scaremongering can do to societal health. While it is tempting to rage into the void, perhaps this episode can serve as a case study in how public understanding of science can be mangled, and what warning signs we might look out for.
Photos under creative commons from Pixabay
Food connects us to nature
In his 2006 book The Omnivore’s Dilemma, Michael Pollan asked the question, “Where does your food come from?” He wrote,
“Imagine if we had a food system that actually produced wholesome food. Imagine if it produced that food in a way that restored the land. Imagine if we could eat every meal knowing these few simple things: What it is we’re eating. Where it came from. How it found its way to our table. And what it really cost. If that was the reality, then every meal would have the potential to be a perfect meal.”
In 2016, when Penguin published a tenth anniversary edition of his book, New Food Economy interviewed the celebrated author, asking him whether he thought his book had had an effect on the way food is produced and marketed, and how much had changed in the previous decade. His answer to both questions was “not much”. He did however concede that the market (in the US at least) for organic and local product has been growing strongly, and that the alternative food economy (as he called it) is gradually being co-opted by the main food economy. He told New Food Economy,
“One of the good things about having a handful of large companies dominate the food landscape is that monopolies can sometimes move quickly to change the system. When you persuade McDonald’s or Walmart or KFC to change what they do, you can rapidly drive a lot of change throughout the food system. Ultimately, I think many of the values that seem alternative now—cage-free eggs, for example—will be mainstream very soon. I think you’ll have major fast food chains switching to organic at some point as a marketing matter—and it’ll work, and others will follow suit.”
He added,
“This is how change comes to America, right? We tend to make progress by co-opting challenges, rather than by revolution and replacement. There is no question that you’ll see this alternative food economy gradually co-opted.”
This is certainly something that we have seen over the past few years: sustainability has gone mainstream in terms of both the environment and human and animal rights. However the biggest challenge is still to come: to get (wealthy) consumers to pay for it. As Michael Pollan told New Food Economy in 2016,
“Still, the alternatives we’re talking about will probably never be as cheap as conventional food, partly because those low prices didn’t reflect the true cost of product. We pay for conventional food in other ways: in public health, in damage to the environment, in taxpayer subsidies. As we reform the system, I think we’re going to see that the low cost was illusory. You can’t really produce food that cheaply, without charging the real cost to the environment or the public health.
That, I think, is the big challenge of the food movement: to democratize sustainably and ethically produced food.”
Describing his relationship with nature, there is one thing that Michael Pollan wrote in The Omnivore’s Dilemma that I particularly liked,
“The single greatest lesson (my) garden teaches is that our relationship to the planet need not be zero-sum, and that as long as the sun still shines and people still can plan and plant, think and do, we can, if we bother to try, find ways to provide for ourselves without diminishing the world. ”
I was thinking of this when I picked up a copy of Mr Pollan’s recently published How to Change Your Mind: The New Science of Psychedelics. This surprising new book describes the history of psychedelic drugs, such as LSD and psilocybin (from magic mushrooms), and looks at the new research being done around the effects of these drugs. Mr Pollan uses himself as a guinea pig, starting with some dried up magic mushrooms. Under their influence he rediscovers a connectivity with nature that he lost as a child. He writes,
“I stepped outside, feeling unsteady on my feet, legs a little rubbery. The garden was thumming with activity, dragonflies tracing complicated patterns in the air, the seed heads of plume poppies rattling like snakes as I brushed by, the phlox perfuming the air with its sweet, heavy scent, and the air so palpably dense it had to be forded. The word and sense of “poignance” flooded over me during the walk through the garden.”
For many city dwellers (and I count myself in that category), our main—and sometimes only—connection to nature is through the food that we eat. It is no surprise that we need to maintain that connection. But to do that we have to know where our food comes from, and that its production doesn’t inflict damage on the environment, or cruelty to animals or our fellow human beings. Food is not only our connection to our agricultural past, but also to our environmental future.
My favourite quote from How to Change Your Mind is from Huston Smith. Michael Pollan writes,
“Huston Smith, the scholar of religion, once described a spiritually “realized being” as simply a person with “an acute sense of the astonishing mystery of everything.”
The author argues that when we treat nature and the environment as an object to be studied—and mastered—we are losing sight of the fact that we are in, and connected to, nature. We have no choice in the matter: everything we do that alters nature alters us in turn.
In his book Michael Pollard interviews Paul Stamets, a world expert on mushrooms and advocate of medicinal fungi.
“Mushrooms have taught me the interconnectedness of all life-forms and the molecular matrix that we share…. I no longer feel that I am in this envelope of a human life called Paul Stamets. I am part of the stream of molecules that are flowing through nature. I am given a voice, given consciousness for a time, but I feel that I am part of this continuum of stardust into which I am born and to which I will return at the end of this life.”
Whether or not you need psychedelic drugs to feel this connectivity is another matter—and perhaps the subject of another blog.
All images from Pixabay under creative commons
Factfullness: Sugar and Obesity
“We find simple ideas very attractive. We enjoy the moment of insight, we enjoy feeling we really understand or know something. And it is easy to take off down the slippery slope, from one attention grabbing simple idea to a feeling that this idea beautifully explains, or is the beautiful solution for, lots of other things. The world becomes simple. All problems have a simple cause—something we must always be completely against.
Or all problems have a simple solution—something we must always be for. Everything is simple. There’s just one small issue. We completely misunderstand the world. I call this preference for single causes and single solutions the single perspective instinct.”
So wrote Hans Rosling in his brilliant book, Factfulness: Ten Reasons Why We’re Wrong About the World—And Why Things Are Better Than You Think.
Obesity is one area where we are all looking for a simple solution to a serious problem. One food product, sugar, is singled out as the cause of obesity; reducing sugar consumption, or giving it up altogether, is seen as the simple solution.
Most health scientists admit that obesity is more complex than just excessive sugar consumption. Public Health England demonstrates the complexity of the problem of obesity with this “simple” representation of its causes on its website.
Meanwhile, the US Center for Disease Control writes: “There is no single or simple solution to the obesity epidemic. It’s a complex problem and there has to be a multifaceted approach. Policy makers, state and local organizations, business and community leaders, school, childcare and healthcare professionals, and individuals must work together to create an environment that supports a healthy lifestyle.”
The sugar industry argues that sugar is a calorie like all others, and that obesity is caused by excessive calorie consumption compared to physical activity. But what does the data say about calorie consumption?
In the UK, the Department for Environment, Food and Rural Affairs (DEFRA) has carried out annual surveys of the British diet since 1974. Their data shows that there has been a significant decline in UK daily per capita calorie consumption in the last forty years, from 2,534 in 1974 to 1,990 in 2012. This represents a decrease of 21.5 per cent.
What about sugar: has consumption also fallen? The DEFRA survey showed a 16 per cent decline in the consumption of ‘total sugars’ since 1992. Meanwhile, the Institute of Economic Affairs found that in the period 2002 to 2014, sugar consumption fell 7.4 per cent. Meanwhile, research carried out in 2014 by Czarnikow (a consultancy) found that UK sugar consumption peaked at 53 kg/head in 1957, dropped to 48.5 kg by1970 and has since fallen to 35kg/head.
This chart shows the reality of the situation in the US: obesity has risen while per capita calorific sweetener consumption has fallen.
In his book Mr Rosling warns,
“Being always in favour or always against any particular idea makes you blind to information that doesn’t fit your perspective…Constantly test your favourite ideas for weaknesses. Be humble about the extent of your expertise. Be curious about new information that doesn’t fit, and information from other fields.”
In a later chapter Mr Rosling writes about the human need to attribute blame—to always find a (usually evil) culprit. He calls it “The Blame Instinct” and defines it as, “the instinct to find a clear, simple reason for why something bad has happened.” He continues,
“It seems that it comes very naturally for us to decide that when things go wrong, it must be because of some bad individual with bad intentions. We like to believe that things happen because someone wanted them to, that individuals have power and agency; otherwise, the world feels unpredictable, confusing and frightening.
“This instinct to find a guilty party derails our ability to develop a true, fact based understanding of the world; it steals our focus as we obsess about someone to blame, then blocks our learning because once we have decided who to punch in the face we stop looking for explanations elsewhere.
“This undermines our ability to solve the problem…because we are stuck with over-simplistic finger pointing, which distracts us from the more complex truth, and prevents us from focusing our energy in the right places.
In 2016, the Journal of the American Medical Association published a peer-reviewed article that alleged that the sugar industry had subverted health science during the 1950s and 1960s. The article received wide media attention and reinforced the public’s impression of the sugar industry as “evil”, on par with the tobacco industry.
Ask your friends and neighbours what they think about sugar and they will tell you that the world is getting fatter because sugar consumption is increasing, and that this is all the fault of the evil sugar industry. It is a simple explanation for an exceeding complex issue, with someone (evil) to blame.
I will leave the last word to Hans Gosling,
“If you really want to change the world, you have to understand how it actually works and forget about punching anyone in the face.”
Sugar photos from pixabay under creative commons
Truth in nutrition
An article in New Food Economy this week warns that almost 40% of peer-reviewed dietary research is wrong, and that “we stop treating new nutrition studies like they contain the truth”. The online magazine argues that “Food research has some big problems: questionable data, untrustworthy results, and pervasive bias”.
In my book The Sugar Casino, I dedicated a chapter to nutrition and told the story of how two enterprising German journalists carried out a “scientific” study that “proved” that eating chocolate will help you to lose weight. They managed to get the study published in a scientific journal and sent out press releases to all the media. Within a week it was on the front page of all the newspapers. None of those newspapers verified the story or checked on how vigorous and exhaustive the study was; they based their stories entirely on the press release.
I wrote at the time,
Nutrition is an inexact science. It is not possible to isolate the different elements or to establish the causality of any correlation. One test group may lose weight when they eat bananas, but that does not mean that they lose weight because they eat bananas. They could, because they were taking part in the study, have focused more than usual on their health and taken more exercise. Another point is that in the German study the test group that ate chocolate did lose more weight, but the sample size (4 people) was too small to be significant.”
As the New Food Economy wrote in their article, “it is not surprising if you are confused whether coffee causes cancer, or whether butter’s good for you or bad”.
Or whether sugar is a poison that should be regulated like nicotine, or just a calorie that can be part of a healthy diet. (A drunk at a cocktail party recently told me “sugar is toxic”. Sugar isn’t toxic, but alcohol is.)
Aeschylus, the founder of Greek tragedy, wrote “In war, truth is the first casualty.” Perhaps if he were alive today he would replace “war” with “nutrition”.
Julian Baggini touches on nutritional studies, and in particular on the sugar versus fat debate, in his book, A Short History of Truth: Consolations for a Post-Truth World.
He writes,
Hence in the early twenty-first century we find ourselves in a position where we know some truths are hidden by powerful groups to protect their own interests, we are not usually competent enough judges to know which claims about esoteric truths are correct, and we don’t have much confidence in experts to make those judgments for us.
When I read his book last year I found it flawed as I felt the author confused “truth” and “belief”. However I am now not so sure: what may be true for one individual may not be true for another. God may exist for some people, but not for others. Some people believe that the earth is flat or that NASA faked the moon landings.
And on a more mundane level, I may find that when I eat chocolate I lose weight—an individual truth—even though I screen out the fact that I at the same time I start to walk to and from work rather than take the bus. And I may not be able to be convinced otherwise. As Mr Baggini writes,
Reason works best in a blend, which includes not just logic but experience, evidence, judgment, subtlety of thought, and sensibility to ambiguity.
He adds,
“Despite the fact that intelligent people evidently disagree, we are inclined to think that what we believe really is rational and that those who disagree are being blinded by prejudices, ignorance or plain stupidity.”
Perhaps, rather sadly, he is right when he writes,
The relativist argues that there are no bare facts only interpretations of facts, mediated through culture. Nothing is true, period; it is only true for certain people, in certain contexts, or in certain senses. Truth has become personalized, with the individual sovereign over their own interpretation of reality.
So what should we do; who should we believe? In The Sugar Casino I wrote,
There is an old joke about a man who went to see his doctor and asked him what he should do to live to one hundred years old. The doctor replied that he should give up sex, sugar and alcohol and only eat fibrous vegetables mixed with unsweetened porridge.
“If I do that,” asked the man, “will I live to be one hundred?”
“No”, replied the doctor, “but it will seem like it”.
Oscar Wilde once famously said, “Everything in moderation, including moderation.” My grandmother used to say, “A little bit of what you fancy does you good” – and that is my first rule of healthy eating. So eat healthily, enjoy your food and don’t beat yourself up over that occasional slice of cheesecake.
New York conversations
The family at the next table were stocking up enough food from the hotel breakfast buffet to last them for weeks. Admittedly it was a big family, three generations of them, but there wasn’t a square inch of space on their table that wasn’t covered in food. Every time a plate was emptied, the grandmother went back to the buffet to get a refill. None of the family members was overweight, and there was no way that they were going to eat all of the food they had piled onto their table. I guessed that at least half would be thrown away, if not more.
As I finished my coffee a businessman sat down at the table on the other side of me and started to tuck into a plate piled high with fruit: melons, pineapples, huge red strawberries and grapes. I estimated that he had more than a kilo of fruit on his plate. He saw me looking at him and smiled. “I am on a diet,” he explained. “I only have fruit for breakfast now.” I thought about telling him that fruit were carbohydrates and heavy in calories but he had already got up to fetch a pint glass of apple juice.
The grandmother walked past my table again with what could only be described as a bucket of scrambled eggs. She piled some of them onto her grandchildren’s plates, but they were more interested in the chocolate brownies that she had amassed earlier. The grandmother wasn’t eating anything; she was just making sure that her grandchildren were well looked after. I realised that she was expressing her love through food—and I thought once again how complex our relationship with food really is. Food is life and love, but it is also guilt and self-depravation.
The previous day I had dropped in to meet the editorial team at New Food Economy. The online magazine had recently run a series of articles about farmer suicides in the US. Farmers borrowed heavily the last time crop prices were high, and they had invested that money in new equipment and more land. With crop prices down again, farmers are now unable to meet their interest payments; as a result, farming now has the highest suicide rate of any profession in the US.
We discussed how low food prices mean that producers can’t cover their costs while at the same time they encourage consumers to overeat and throw away a large percentage of what they buy. While high food prices attract most attention from the media, the social and environmental costs of low food prices are always underestimated.
The next day I was talking with a Bloomberg journalist about how low food prices were impacting farmers, but she wasn’t impressed. “Maybe food prices are low in the US”, she told me, “but what about the currency effect? Russian wheat producers are doing just fine, as too are Brazilian soybean farmers. ”
She made another good point about low prices. “Perhaps,” she suggested, “the improvements in seed technology and farming practices—drones and the like—have reduced production costs while at the same time made crops more resistant to poor weather, pests and disease.
“Is it possible,” she asked, “that bad weather and disease has less impact on production now than in the past? It is possible that technology has taken some of the volatility out of the agricultural markets? If it has, then crop prices could stay lower for longer than in the past—especially if the US dollar stays high.”
Technology and innovation were the main subjects of conversation when I met a friend for lunch, but this time we focused on AI—artificial intelligence—and the way that the algorithmic funds (according to him) now dominate the futures markets.
“They are so secretive,” he told me, “none of my contacts know how they work. We all try to guess how they are programmed, and how they might react to, or to create, market moves, but it is impossible. Perhaps they change their trading strategies too quickly, or perhaps they have many variants of a particular trading strategy.”
“What about market fundamentals,” I asked him, “don’t they impact the markets?”
“Yes they do,” he replied. “Supply and demand will always drive medium and long term trends. But there currently aren’t any trends in these range-bound and over-supplied markets. For the moment I am just trying to survive. I call it “death by a thousand cuts”—all these tiny short-term moves just pick away at my equity. Algorithmic funds love these markets. And to be honest, they will probably also love trending markets. Perhaps computers are just better at trading than humans.”
My final business conversation of the trip was with another old friend in the business. I told him about the pessimism that I had encountered and he laughed. “It’s just that phase in the cycle,” he reassured me. “Cycles turn and when this one does farmers and traders will be able to make money again. It will then be the consumers’ turn to complain. The last time food prices increased, everyone blamed traders and speculators; no one blamed the poor weather or the preceding period of low prices that had driven farmers off their fields.
“Give it two years,” he laughed. “Traders and producers will once again be making money—and everyone will hate us. It’s been like that since the beginning of time, so you might as well get used to it!”
Screening out the noise
Traders among you will know how difficult it is to identify fundamental price trends, and to separate them out from market noise. The same applies to consumer trends: how can you differentiate a genuine trend from background noise?
This past week has been a particularly noisy one in terms of consumer food trends.
Back in October 2015 the International Agency for Research on Cancer (IARC)—the cancer agency of the World Health Organization—classified processed meat as a carcinogen and red meat as a probable carcinogen. Their conclusion was based on a review of more than 800 studies. After an initial flurry of headlines, the media largely discounted the warnings, arguing that eating processed meat only raises the average lifetime risk of developing colon cancer from 5% to 6%.
However, the story is back. The Guardian this week published a long read entitled “Yes, bacon really is killing us”, arguing that the nitrates in processed meats are giving us colon cancer. A French MEP has taken up the cause and launched a campaign demanding a ban of nitrites in all meat products across Europe.
The Guardian also published an opinion piece this week entitled, “Why what we eat is crucial to the climate change question”, arguing that “our food – from what we eat to how it is grown – accounts for more carbon emissions than transport…and roughly the same as the production of electricity and heat”.
Greenpeace meanwhile has gone on a campaign against meat consumption with a report titled Less is More: Reducing Meat and Dairy for a Healthier Life and Planet. The organisation wants to reduce global meat and dairy consumption by 50 percent by the year 2050. They argue that reducing meat and dairy consumption:
- Fights climate change: a 50 percent reduction in consumption of animal products “will lead to a 64 percent reduction in greenhouse gases relative to a 2050 world that follows current trajectories”.
- Means less deforestation: by eating less meat — particularly beef, which requires 28 times more land to produce than dairy, pork, poultry, and eggs combined — there is less incentive to clear cut forests for grazing and growing animal feed.
- Protects endangered species: animals and the mono-crops required to feed them destroy the habitat for local wild species, particularly for large herbivores. Since 1970, the Earth has lost half of its wildlife but tripled its livestock population.
- Protects water sources: studies suggest “if industrialised countries moved towards a vegetarian diet, the food-related water footprint of humanity could be reduced by around 36 percent.”
- Makes us healthier humans: Greenpeace cites studies linking consumption of animal products to cancer, obesity, diabetes, cardiovascular disease, and more.
And as if meat wasn’t in enough trouble last week, South Africa has been hit by what has been called the world’s worst listeria outbreak; so far it has killed 180 people and affected hundreds of others. The country’s health ministry says the outbreak originates from a Tiger Brands processed meat factory in the northern city of Polokwane, something that the CEO of Tiger Brands denies.
The anti-meat movement is gaining such momentum that even Donald Trump is reported to be swapping his beloved beef burgers for salads.
However, if you are thinking of doing the same and ditching meat for a vegiburger, French media (France 5) broadcast a documentary last week on soybeans and how bad they are bad both for your health and for the environment (in terms of deforestation and agricultural expansion).
Soy products apparently contain oestrogen-like compounds that your body processes much like its own oestrogen. Women who ingest high levels of soy are reported to find changes in their hormone cycles, as soy can suppress hormones associated with ovulation.
But it is not just women that can be affected; soybeans have also been accused of reducing fertility in men. Soy-consuming men were found in one study to have only 65 million sperm in their semen, compared to non-soy-eating participants who averaged 120 million sperm per sample. However, the UK’s Nation Health Service warns that the study behind this has limitations: it was small, and mainly looked at overweight or obese men who had presented to a fertility clinic.
Rather confusingly, the French documentary went on to argue that soy not only has negative effects on human health, it is also bad for animals. This time the problem had nothing to do with hormones, but with the herbicide glyhosate that is sprayed on soybeans. Some argue that the herbicide works its way along the food chain via meat and dairy products, and causes cancer in humans. The documentary tested various dairy products sold in France and found trace elements of glyhosate in all of them, even the organic ones.
If you are getting the stage where you no longer know who to believe or what to eat, New Food Economy last week followed up on an earlier opinion piece arguing that pretty much all nutrition studies are flawed. They argue that food studies tend to be small and speculative; the effects of any given food or food component tend to be small; research designs are often faulty; and researcher bias is somewhere between rife and universal.
There is also a problem with the data. Most studies are conducted by asking people what they eat—and most people lie. All this presents a problem for health professionals looking to reduce obesity and its associated costs.
This is particularly relevant as Public health officials in the UK called last week on food sellers and manufacturers to cut calories in their products by 20% by 2024. Public Health England suggests that food producers have a number of options for meeting the target, including reformulating products, promoting healthy options and reducing portion sizes.
The report notes that children are overeating: obese boys consume up to 500 excess calories a day while girls who are overweight or obese consume up to 290 excess calories a day. On average, adults were found to consume about 200 calories beyond what is necessary in a day.
All that is a lot of noise for just one week. But can we discern any trends through the noise?
- The way food is produced and consumed has moved to centre stage in terms of public concern and media focus. This is likely to continue: anyone involved in agriculture and the agriculture supply chain will remain in the spotlight (so get used to it!)
- The anti-meat lobby is strengthening; plant-based protein looks as if it has much further to run. But having said that we are already seeing some push back with vegetarian (particularly soy-based) diets coming under attack.
- One trend that may be fading is the willingness to blame particular foodstuffs for obesity or other health issues. Consumers are beginning to distrust the studies; there are simply too many of them pushing in too many directions.
But what would a trader do in such a situation? He would endeavour to screen out the daily volatility and look instead at the fundamentals.
The fundamental reality is that people are eating too much and moving too little. The market is slowly making its way in that direction.
Investing in agriculture
I was invited this week to participate in a Natural Resources Forum on Investing in Agriculture at the London Stock Exchange. Topics ranged along the value chain, from investing in farmland through logistics to consumer trends.
One speaker, an expert on farmland investment, gave three warnings to potential investors:
- All farms are local and local expertise is essential. The quality of the land can vary from one field to another, as too can microclimates in terms of flooding and frost
- Prolonged periods of bad weather can throw off even the most conservative revenue predictions.
- The market for farmland is illiquid; it is easier to buy than to sell.
There was an interesting discussion as to whether farmers would be able to meet the world’s ever increasing demand for calories. Although, as one participant put it, “they aren’t making farmland anymore”, others warned against “Malthusian” arguments that food production is limited. Agricultural yields continue to increase and the world has plenty of under-used land. Besides, with 40% of the US corn crop and 50% of the Brazilian cane crop going to ethanol production, extra calories could relatively easily be drawn back from fuel to food.
It was my task to speak about agricultural commodity merchandising and I highlighted the sector’s three structural challenges:
- Trading margins have disappeared as markets have become transparent and information has become instant
- The growth of algorithmic trading systems have made it more costly to hedge and harder for fundamental traders to predict future price moves
- Agricultural merchandising companies are in danger of losing their social license to operate
I argued that at this point in the commodity cycle there is an oversupply of food, an over supply of freight and infrastructure, and an oversupply of agricultural merchandising companies. I explained that we are currently seeing consolidation all along the supply chain as some players merge and others exit.
We then discussed the way that market power has shifted along the supply chain from producers to food manufacturers (brands) to retailers to consumers. This shift presents a number of challenges in terms of brand vulnerability, but also some opportunities if you can identify a trend earlier enough.
One trend that we discussed was the way Californians are now adding butter to coffee. Who would have predicted a few years back that butter would make such a come back?
In their Investment Outlook for 2018, Credit Suisse identified ten priorities for the millennial generation. Number three on the list (after education and affordable housing) was what Credit Suisse called “sustainable consumables”. The bank defined them as, “consumables produced in a socially and environmentally responsible way, taking into consideration the entire supply chain of goods”.
Credit Suisse highlighted “Beyond animal agriculture” as a major component of this trend. It wrote,
According to the United Nations and the Food & Agriculture Organization (FAO), raising animals for food is the primary cause of species extinction, oceanic dead zones, Amazon deforestation, and antibiotic resistance. Moreover, it has a greater impact on climate change than the entire transport sector. Our modern system of animal agriculture is one of immense inefficiencies, externalities and vulnerabilities unable to sustain the predicted doubling of meat demand by 2050, according to FAO.
With such measurable risks, two parallel and disruptive technologies have emerged: plant-based food and cellular agriculture. Today, plant-based varieties of virtually all animal products such as meat, cheese, milk, eggs and fish are sold worldwide. Investment opportunities in the private sector are abundant, as business creation in the space is growing, brands are gaining importance and acquisitions by large consumer corporates are increasing.
Credit Suisse continues,
To end all forms of malnutrition by 2030 was one of the challenges world leaders laid down when they adopted Sustainable Development Goals at the end of 2015. Nearly 800 million people worldwide remain chronically undernourished, and over 2 billion suffer from micronutrient deficiencies, also known as hidden hunger. Another 2 billion are overweight, with 600 million of these being obese. Meanwhile some 150 million children under 5 years of age are stunted, approximately 50 million children from this same age bracket are undernourished, while some 40 million children are obese. The UN initiated the Scaling Up Nutrition (SUN) movement, now counting 60 countries, bringing together governments, civil society, UN bodies, donors, business and scientists.
Business can contribute and play a significant role in nutrition by addressing food and nutrition across the value chain, providing more affordable, accessible yet sustainable food solutions for many, and we are starting to see initiatives in this direction. Big food companies are already offering products containing important micro nutrients to help combat under-nutrition and deliver on the UN Sustainable Development Goals.
Credit Suisse listed blockchain at number six on its list of key millennial trends, and we are already glimpsing the impact that this technology could have on reducing both risks and costs in the supply chain.
Vertical farming (proximity agriculture) was at number seven on Credit Suisse’s list. The bank defines this as “redeveloping urban space to bring agriculture to cities, using techniques such as growing plants in vertically stacked layers, indoor farming or integrating agriculture into existing structure.”
Bringing this all together, it appears now that there is a clear and increasing convergence of interest between investors, consumers, social welfare and the environment. That’s what you get when you empower consumers!
These issues and others will be discussed at our Commodities Conversations event in London’s Natural History Museum on 6th June 2018. Places are limited so register here.
French toast anyone?
Still, a man hears what he wants to hear. And disregards the rest. Simon & Garfunkel The Boxer 1969
When we had our first baby nearly thirty years ago, we were told to always put her face down in her cot to sleep. Eighteen months later, when we had our second, the nurses at the maternity told us never to put him face down to sleep, but always on his side. Two years later we had our third child; we were firmly told to always put him on his back to sleep, never on his side (because he could roll over), and never face down (because he could suffocate). By the time our fourth child was born we were back to square one. The nurses at the maternity firmly told us to always put him face down to sleep. (I don’t know the current recommendations.)
Marketing can play a role as well. When our first baby was born we bought standard paper nappies (diapers). By the second child we had a choice between boys’ nappies (in a blue box) and girls’ nappies (in a pink box). By our fourth child the nappy company was massively marketing a new breakthrough: “Unisex” nappies!
Food—what is healthy and what isn’t—is subject to even stronger trends (and fads).
I can remember as a young teenager being sent out by my mother to search the local shops for grapefruit. A “study” at that time had found that certain compounds in grapefruit burned body fat; eating it regularly could promote fat loss. My mother, along with half of the UK population, started to eat half a grapefruit before every meal. Within a couple of weeks there wasn’t a single grapefruit left in the country. Supply couldn’t keep up with the sudden spike in demand.
It may be that the water in grapefruit helps you feel full, and then you eat less. But if you’re hoping that grapefruit will melt fat, you’re going to be disappointed.
Back in 2014, two enterprising German journalists carried out a “scientific” study that “proved” that eating chocolate helps you to lose weight. The whole thing was a hoax, but they managed to get the study published in a scientific journal, and sent out press releases to all the media. Within a week it was on the front page of all the newspapers. None of those newspapers verified the story or checked on how vigorous and exhaustive the study was; they based their stories entirely on the press release.
In 1984 the US government published the results of what Time magazine described as “the broadest and most expensive research project in medical history”. The Time story introduced cholesterol to the world and was accompanied by its infamous cover photo of bacon and eggs. The study behind the article is now considered to be seriously flawed, but it led to millions of people around the world changing to a low-fat diet.
Thirty years later, Time put butter on their front cover, telling their readers, “Scientists labeled fat the enemy. Why they were wrong.” However, the study highlighted in the article also appears to be seriously flawed. The Harvard School of Public Health wrote,
“What the headlines miss is that in a meta-analysis such as this, there is no specific comparison (i.e. butter vs. olive oil), so the default comparison becomes butter vs. the rest of the diet. That means butter is being compared to a largely unhealthy mix of refined grains, soda, other sources of sugar, potatoes, and red meat…Here is the most important takeaway from this study not making headlines: Butter, a concentrated source of saturated fat, is still a worse choice than sources of healthy unsaturated fats such as extra virgin olive, soybean, or canola oils.”
An article published last week in the Journal of the American Medical Association (JAMA) adds to the criticism by arguing that many published meta-analyses have combined the findings of studies that differ in important ways, mixing apples and oranges—“and sometimes “apples, lice, and killer whales”—yielding meaningless conclusions.” Far from increasing statistical power, these meta-studies are reducing it or causing real correlations to disappear.
One of the meta-analyses they discuss was the 2014 study examining the connection between saturated fat and coronary artery disease. The authors of that study combined data from vegetarians in Oxford with meat eaters in Sweden, diluting its results with what probably amounts to a big false-negative.
In an article earlier this week, New Food Economy argues, “Journals are mostly interested in studies with new and striking results—results that go against the conventional wisdom, even if that wisdom is correct. Add in the influence of industry and you get a situation where the published research turns one-sided.
New Food Economy went on to explain that according to a US lawsuit filed in early 2016 (that was dismissed), the egg industry funded 29 percent of studies on dietary cholesterol in 1992—but 92 percent in 2013. It seems to be working. Not only is butter back, eggs are too!
Next week: The great butter shortage—how can the food industry cope with sudden demand shifts?