The End of Cheap Food – Investment Watch

by Charles Hugh Smith

Global food production is based on soil and rain. Bots don’t change that.

Of all today’s miracles, the least appreciated is the incredible abundance of low-cost food in the US and other developed countries. The era of cheap food is coming to an end, for a number of mutually reinforcing reasons.

We have become so dependent on diesel fueled industrial scale agriculture that we have forgotten that when it comes to producing food, “every little bit helps”; even small yards or greenhouses can provide significant amounts of food and satisfaction.

Practically all temperate land/microclimate is suitable for the breeding of some plants, herbs, trees and animals. (terroir (it includes everything about a specific site: soil type, climate variations, sun exposure, soil bacteria, everything.)

We have forgotten that cities grew much of the food consumed by residents within the city limits. Small plots of land, rooftop gardens, backyard chicken coops, etc. they can add when they are encouraged rather than discouraged.

Let’s start with how disconnected the vast majority of us are from the production of the cheap food we take for granted. Many people know next to nothing about how food is grown, raised, harvested/slaughtered, processed and packaged.

Highly educated people cannot recognize a green bean plant because they have never seen one. They know nothing about soil or industrial agriculture. They have never seen up close the animals they eat or cared for any of the animals that humans have cared for for their milk, eggs and meat for millennia.

Most of us take for granted the industrial scale of agriculture and the abundance and low cost that results from if it were a kind of birthright rather than a brief period of reckless consumption of resources that cannot be replaced.

Small-scale agriculture is financially difficult because it is competing with global industrial agriculture driven by hydrocarbons and cheap overseas labor.

That said, it is possible to develop a niche product with local consumer and business support. This is the Half-X, Half-Farmer model For years I have written about: If the household has at least one part-time job that pays a decent wage, the household can pursue a less financially rewarding niche in agriculture and ranching. Decline Solutions: Half Farmer, Half-X (July 19, 2014)

Industrial agriculture includes many elements that few fully understand. Shipping fruit thousands of miles by air is a function of 1) absurdly cheap jet fuel and 2) global tourism, which fills planes with passengers who subsidize the air cargo stored beneath their feet.

As global tourism dried up during the Covid lockdown, so did air cargo capacity.

I have to laugh when I read another article about some new agricultural robot that will replace human labor, as if labor is the key cost in industrial agriculture. (Hydrocarbons, fertilizers, transport, compliance costs, land leases and taxes are important costs).

Industrial agriculture’s dependence on soil, freshwater aquifers and rainfall has not been mentioned. Irrigation is the result of rain/snow somewhere upstream.

Once the soil and aquifers are depleted and rainfall becomes erratic, the robot will be tooling around a barren field, regardless of the whiz-bang sensors and other equipment it carries.

Global food production is based on soil and rain. Bots don’t change that. What few of us who depend on industrial agriculture understand is that it depletes soil and drains aquifers by its very nature, and these resources cannot be replaced by technology. Once they’re gone, they’re gone.

The soil can be rebuilt, but it cannot be rebuilt with industrial farming methods: diesel-powered tractors and fertilizers derived from natural gas.

Few people appreciate that dirt is alive, and once it’s dead, it won’t grow much. Anything that can be taken from depleted soil lacks the micronutrients we all need: plants, animals, and humans.

Every organism is linked the Minimum Law: Piling on a nutrient is useless unless all the essential nutrients are available in the right proportions.

Pouring too much nitrogen fertilizer on a plant will not make it bear more fruit unless it has enough calcium, sulfur, magnesium, etc. All you do is dump more nitrogen fertilizer on the field and poison the waterways as the excess nitrogen runs off.

Watering is another miracle that few understand. Over time, the natural salts in the water build up in the irrigated soil and the soil loses its fertility. The drier the climate, the less rain there is to leach salts from the soil. Irrigation is not sustainable in the long term.

Plants need reliable conditions to reach maturity. If a plant or tree lacks water and nutrients, its immune system weakens and it is more vulnerable to disease and insect infestation. Yields plummet if there isn’t enough water and nutrients to sustain the fruit or grain.

Extreme weather wreaks havoc on agriculture, even industrial agriculture. A crop can grow very well and reach maturity, and then a windstorm or heavy rain can destroy the crop in a matter of hours.

Most people assume that there will always be plenty of grains (rice, wheat, corn) without realizing it the vast majority of grains come from a handful of places with the right conditions for industrial agriculture. If any of these few places experience erratic climate change, grain exports will be drastically reduced.

Once the cheap grains are gone, the cheap meat is gone too, because most meat depends on grain feeding.

The scale required to grow a large amount of grain is otherworldly. Much of Iowa, for example, is corn and soybean fields, a significant percentage of which is turned into animal feed.

American tourists ooh and ahh over artisanal goat cheese in France or Italy without any appreciation for the human labor that goes into artisanal food, labor that cannot be replaced by robots.

Industrial agriculture only works with large economies of scale and high utilization rates. The 10 pound bag of chicken thighs is only $25 because tens of millions of chickens are raised in carefully designed factory conditions and slaughtered/cleaned on an industrial scale.

If the utilization rate and scale drop, the entire operation ceases to be economically viable.

Global industrial agriculture depends on the exploitation of low-cost labor and land that has not yet been exhausted. That’s why logging the Amazon is so profitable: hire desperate workers with few other options for cash, remove the soil until it’s infertile, and then move on.

There are many misunderstandings about industrial agriculture and the dependence on cheap hydrocarbons. Many pin their hopes on organic vegetables without realizing that each organic tomato is still 5 teaspoons of diesel and 5 teaspoons of jet fuel if grown on an industrial scale and shipped thousands of miles by air.

Much of the planet is not conducive to high-yield agriculture. The soil is infertile or depleted, and restoring it is a patient investment process of several years or decades that is not profitable on an industrial scale.

As a means of making money, localized production cannot compete with industrial agriculture. But that’s not the goal. The goal is to replace the dependence on industrial agriculture with a much smaller and optimized own production for our locality, and to grow a surplus that helps feed our trusted network of family, friends and neighbors.

As industrial agriculture consumes the last of its soils and aquifers, hydrocarbons and mineral fertilizers are becoming expensive, and as climate change disrupts the more than 50 years of relatively mild and reliable weather we have enjoyed, cheap food will disappear.

Once scale and utilization rates decline, industrial agriculture will no longer be economically or environmentally viable. This dependence on scale and utilization rates is poorly understood. We assume that someone will continue to grow our food on a large scale regardless of any other conditions, but any activity must be economically and environmentally viable or it disappears.

As industrial agriculture declines, food will become much more expensive: even if it doubles, it’s still cheap for what it could cost in the future.

Because of our reliance on industrial agriculture, we have forgotten how productive local (artisanal) food production can be. Small operations aligned with the terroir can produce a surprising amount of food.

The future of sustainable, affordable and nutritious food is in localized production optimized for what grows well without industrial interventions. The satisfaction and well-being that this connection with the land and Nature generates is little appreciated. It is no coincidence that the healthy long-lived people among us, for example, the Blue Zones Okinawans and Greek islanders tend their gardens and animals, and share the bounty of their labor with their families, friends and neighbors.

It’s fun and rewarding to grow food. It could even become important. Those who cannot grow any food would do well to make friends with those who can.

The aim is not to replace industrial agriculture. The goal is to reduce our dependence on unsustainable global systems through the reactivation of localized production.

This essay was first published as a weekly Musings report sent exclusively to subscribers and patrons at the $5/month ($54/year) level and up. Thank you, patrons and subscribers, for supporting my work and my free website.

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