• Your life and health are your own responsibility.
• Your decisions to act (or not act) based on information or advice anyone provides you—including me—are your own responsibility.


Real Food Is Not Fungible: How Commoditization Eliminates Nutrition, Impoverishes Farmers, and Destroys The Earth

This article should, by rights, be an entire book: the consequences of agricultural commoditization are profound and far-reaching. By necessity, I am concentrating on a few key points.

Where’s The Real Food?

One of the largest movements in 20th century agriculture was the commoditization of food.

In 1900, 41% of the US workforce was directly employed in agriculture, and each farm produced over five different crops for sale—not counting food consumed on the farm or sold locally, outside the commodity system. Furthermore, 60% of Americans lived in rural areas. (Source: USDA.) This means that the majority of Americans either grew their own food, or had direct access to the producers of the food they ate.

In 2000, just 1.9% of Americans were employed in agriculture, farms produced an average of just over one crop for sale, and less than 1 out of 4 Americans lived in rural areas. The number of farms has fallen 63%, while the average farm size has risen 67%.

All charts above from the USDA Economic Research Service:

The 20th Century Transformation of U.S. Agriculture and Farm Policy
by Carolyn Dimitri, Anne Effland, and Neilson Conklin
Economic Information Bulletin No. (EIB-3) 17 pp, June 2005

In other words, we no longer have direct access to the food we eat. How did this happen?

As usual, the answer is simple: follow the money.

A Silly and Far-Fetched Scenario

Let’s consider a silly and far-fetched scenario for a moment.

The US government decides that Hollywood’s dominance of the world entertainment industry should be encouraged at the creative end as well as the financial end, and offers the following incentive:

“We will pay $100 for every new song of two minutes or longer, recorded in English by an American citizen in America, upon registration with the Copyright Office.”

(Subject to a raft of rules and red tape, of course.)

Right away we can see the problem: there is no incentive to write a song that anyone else wants to hear! The only incentive is to write lots and lots of ‘songs’…and it would probably take about six hours for enterprising programmers to write song-generation programs that put together random chord progressions and random sentences off the Internet, automatically play them with a synthesizer, and send them into the Copyright Office as quickly as they could record the vocals.

In other words, such an incentive would not result in more entertainment: it would result in a tsunami of unlistenable crap.

Commoditization: What Does “Fungible” Mean?

The definition of a commodity is “a good supplied without qualitative differentiation across a market.” This property is called “fungibility”.

Sadly, the term “fungible” has nothing to do with either fungi or dirigibles. A fungible good is capable of mutual substitution: one unit is defined to be just as good as any other.

We can see that fungibility is a necessary property of money. If I loan you 100 dollars, I don’t expect to get the same $100 back I loaned to you…any $100 will do, because dollars are fungible.

Similarly, we can see that fungibility is a necessary property of commodities. If I contract to deliver you 1000 pounds of copper in March of next year, you shouldn’t have to care where the copper comes from.

Fungibility also applies to agricultural commodities: if I contract to deliver 100 bushels of corn in September of next year for a set price, it’s clearly impossible for you to inspect or evaluate corn that I haven’t even grown yet! So certain minimum standards for delivery are defined—and beyond that, all corn is the same.

Like most commodities, grains are mixed without regard to source: the producers sell their corn, whereupon it’s transferred via an elevator to a silo and mingled with all the other corn from the area, and anyone who buys corn simply gets whatever comes out of the elevator first.

We can see that an attempt to make non-fungible creations (songs) into a fungible commodity, as in the silly example above, would result in both an oversupply of unlistenable songs and an economic catastrophe.

Problem #1: Real Food Is Not Fungible

The alert reader will see several problems with this “fungible food” scenario right away. The first problem is that real food is not fungible.

For instance, when we go to buy onions, tomatoes, melons, or other produce, we don’t just choose them at random. We choose the variety that will taste best in our recipe, and from that, we choose the ripest, least damaged, best-looking, best-smelling ones available. We may even reject all the choices as unsuitable and visit a different store…or the farmer’s market.

A grain elevator.

Unfortunately, when a food becomes commoditized, we no longer have that choice. There’s no such thing as artisanal corn syrup, soybean oil, or textured vegetable protein: they’re made from commodity crops, and you’ll get whatever came out of the grain elevator.

Problem #2: Fungibility Begets Mediocrity

The second problem, which is a consequence of the first, is that fungibility begets mediocrity.

Consider: if you are a farmer, and the only standard for corn is that there be as many bushels of it as you contracted to deliver, are you going to care about nutrition? About taste? About pesticide contamination?

No. You’re not going to care about anything but producing the maximum quantity possible for the least cost, because it doesn’t matter. You can produce the most nutritious corn in the world…but you won’t be paid any more for it than your neighbor who’s just trying to cut costs.

Furthermore, we can see that agricultural price supports make this problem far worse. Think back to the songwriting example above: if you’re absolutely guaranteed to get paid by Uncle Sam as long as your ‘song’ is two minutes or greater, why bother creating anything meaningful? You’ll make far more money by creating unlistenable crap as quickly as you can.

Similarly, if you’re growing a crop (such as corn, wheat, cotton, or soybeans) that receives price supports, you’re not going to care about taste, nutrition, or any other measure of quality—let alone topsoil depletion or groundwater contamination. You’re paid by the bushel, and all that matters is how many bushels you can grow.

Is it any wonder that these “commodity crops” are so devoid of nutrients that products made from them must, by law, be “fortified” with vitamins and minerals in order to avoid massive outbreaks of deficiency disease?

Follow the money. We get what we reward.

Problem #3: Fungibility Impoverishes Farmers And Enriches Middlemen

The next problem I’ll discuss here is a consequence of the first two. It’s less obvious, but more far-reaching: turning a crop into a fungible commodity impoverishes farmers and consumers, while enriching middlemen.

Wagyū beef. To get this much fat inside your own muscles, make sure to feed yourself a similar diet of whole grains!

When selling your goods outside the commodity system, you can receive a better price for goods of better quality. To choose an extreme example, the highest grades and best cuts of Wagyū beef sell for well over $100/pound in Japan. More realistically, grass-finished beef sells for a 1.5-3x premium over feedlot beef, so individual producers can make a living selling quality meats.

However, if you’re forced into the commodity system, where you receive the same price for your crop regardless of quality, that means you can no longer differentiate your crop from anyone else…

…which means that you’re competing directly with everyone else, and your profit margins drop to nearly zero.

Processors and other middlemen benefit dramatically from this arrangement: they use these cheap commodity crops as raw materials to produce a bewildering variety of packaged pseudo-foods, which they differentiate and sell at the markup that used to belong to producers of actual food.

Most products in the snack and breakfast aisles are made from disassembling artificially cheap corn into its constituent parts, adding some artificial flavoring and coloring, and reassembling them into something that costs more per pound than pork, chicken, or hamburger. Cheetos, Fritos, Doritos, Tostitos, Corn Flakes, Corn Pops...

Furthermore, this allows the financial industry to profit by “making the market” (inserting themselves as middlemen in all transactions, e.g. “futures”), taking another slice of income out of the farmer’s remaining profit margin, and increasing prices to us at the supermarket.

All this fun doesn't come for free.

Here’s an illustrative example: since eggs are not completely fungible, an egg farmer—even a giant industrial egg farmer—makes over fifty cents per dollar of eggs sold. A corn farmer makes about four cents per dollar of corn syrup.

Problem #4: Fungibility Causes Environmental Devastation

The final problem I’ll discuss here is the environmental devastation wrought by commodity agriculture.

When commoditization prevents anyone from earning a margin on their crops by differentiating theirs from everyone else’s, and the market is further distorted by artificial incentives to produce as much as possible without regard to quality, we can expect that an unsustainable exploitation of resources will quickly result.

This is, in fact, the case. As I previously wrote in this article:

…Industrial grain production impoverishes our farmers, destroys our soil and our water, and leaves barren land, salt flats, and dead ocean deltas in its wake. It demands unimaginable amounts of fossil fuels to create nitrogen fertilizer, toxic herbicides and pesticides, and giant sowing and harvesting machines, and to transport the grain from the Midwest to where people actually live. It demands giant, river-killing dams to fill irrigation canals. It strip-mines fossil water, pumped from underground aquifiers that took millions of years to fill—all to grow corn, wheat, and soybeans on land best suited for grazing livestock on perennial grasses. And 3-5% of world natural gas production—1-2% of the entire world energy supply—is required just to make ammonium nitrate fertilizer.

In short, industrial agriculture is an unmitigated environmental catastrophe.

(Follow the links for more information about each issue.)

Conclusion: Eat Food, Not Commodities

Unfortunately my silly and far-fetched example above isn’t far-fetched at all: it’s become the foundation of our nation’s food policy.

The problems of industrial agriculture are primarily caused by a combination of commoditization and the broken farm policy that subsidizes it, leading to massive overproduction of corn, wheat, and soybeans that generates profits for middlemen and the financial industry at the direct expense of farmers and the consumer…

We overproduce so much corn that our government has to force us to add it to gasoline in order to get rid of it all—at a net energy loss, and at considerable environmental damage!

…and our farm policy has steadily become crazier and more destructive throughout both Democratic and Republican administrations.

While our tax dollars will most likely continue to subsidize the cheap grain-based packaged foods that are making us fat and diabetic, we can always take action at an individual level by buying and eating real, nutritious, delicious food…

…not “commodities”.

Live in freedom, live in beauty, eat like a predator.


Further Reading

This article only begins the discussion of agricultural commoditization. Richard Manning’s “Against The Grain: How Agriculture Has Hijacked Civilization” not only covers these issues in depth—it goes much farther into the consequences of agriculture in general, not just the modern industrialized version. I highly recommend it.

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You Are A Radical, And So Am I: Paleo Reaches The Ominous “Stage 3″

As the Mahatma Gandhi once said:

“First, they ignore you.
Then they laugh at you.
Then they fight you.
Then you win.”

The paleo movement grew slowly for many years in the obscurity of Stage 1, and spent perhaps a year in Stage 2 being mocked as the “caveman diet”. Now, after several years of exponential growth and a stubborn refusal to be co-opted, we have finally achieved Stage 3, “Then they fight you.”

The latest example, of course, is the dismissive baloney pushed by the “experts” hired by US News and World Report, which ranks paleo dead last among 20 different diets—behind such food-free nutritional gimmicks as Slim-Fast and the Volumetrics Diet.

I have my differences with Loren Cordain, but his rebuttal is both comprehensive and devastating. Respect.

Also, the reader votes for “Did this diet work for you?” show that paleo is by far the most successful of the diets, with several thousand “Yes” votes and under 100 “No” votes. The only other diets to win more “Yes” than “No” votes were Weight Watchers and Atkins!

Update: The above is no longer true, as the Birdseed Brigade has apparently decided not only to upvote vegan and vegetarian diets en masse…they’ve decided to downvote all the meat-based diets, including Paleo, Atkins, South Beach, and Zone! (Thus illustrating the difference between our communities: we don’t attempt to silence or censor those who disagree with us.)

Previous to that, we’ve seen the repeated hatchet jobs on grass-fed beef by John Stossel (one in print and one on video), both of which use as their sole source non-peer-reviewed “research” from a scientist sponsored entirely by Elanco—a subsidiary of Eli Lilly that manufactures antibiotics and hormonal growth promoters for feedlot cattle, pigs, and chickens! President Obama’s personal trainer, in a breathtakingly stupid article, has called paleo “the newest nutritional fad”. (Solid rebuttal here.) And the avalanche of anti-paleo articles by “qualified experts” has just begun.

We might expect this sort of offensive from the American Dietetic Association and the American Diabetic Association, because anyone eating any variation on the paleo diet is essentially telling them “All of you have been completely wrong for decades, and your bad advice is killing millions of people each year.” And we might expect this sort of offensive from the PCRM, because they’re just a front for vegans and animal rights activists.

But why such hostility from the mainstream press? The paleo movement doesn’t have the anti-establishment politics of, say, the vegan movement—or, as far as I can tell, any clear politics at all. If anything, it tends towards a casual sort of conservative libertarianism, but that’s probably just because so many paleo bloggers are semi-retired techies. It seems unlikely that “going paleo” is the cause of anyone’s political beliefs.

The answer, of course, lies in the age-old admonition:

“Follow the money.”

Adding Value: The Foundation Of Functional Economies

An economy based entirely on selling the same things back and forth to each other for ever-increasing amounts of money is doomed to eventual collapse. As we found out just a couple years ago, flipping houses isn’t the same as having a manufacturing base and a world that wants to buy what we make.

Stated more generally, an economy is only sustainable to the degree that its participants add value by their actions. Factory workers add value by turning raw materials into clothes and cars and electronics; farmers turn seeds and soil and sunlight into crops; ranchers turn calves and grass into beef; engineers turn ideas into buildable products; truckers move things from where they are to where they’re wanted; cashiers and stockers and managers and janitors turn a locked building full of things into a system by which you can find what you want and exchange money for it; and so on. Added value – cost of design – cost of production = profit.

This is not to be confused with the labor theory of value, which claims that labor has intrinsic value, and indeed, is the only ‘fair’ measure of value. This is hogwash. It’s easy to spend years of effort and not add a single penny of value—because value is determined by the buyer, not the seller. It doesn’t matter how much time I’ve spent making a coat rack if it’s ugly and no one wants to buy it!

Moving ahead: the more value we can add, the more profit we can make. It should be obvious that one way to add value is to transform cheap raw materials into an expensive finished product.

Adding Value: Why Grains (And Soy) Are Profitable

There’s one big reason that industrial food manufacturers like Kraft (Nabisco, Snackwells, General Foods, many more), Con-Agra (Chef Boy-Ar-Dee, Healthy Choice, many more), Pepsico (Frito-Lay, Quaker), Kellogg’s (Kashi, Morningstar Farms, Nutrigrain, more) are huge and profitable.

It’s because grains are cheap, but the “foods” made from them aren’t.

One reason grains are so cheap in the USA, of course, is gigantic subsidies for commodity agriculture that, while advertised as helping farmers, go mostly to agribusinesses like Archer Daniels Midland ($62 billion in sales), Cargill ($108 billion), ConAgra ($12 billion), and Monsanto ($11 billion)—and result in a corn surplus so large that we are forced to turn corn into ethanol and feed it to our cars, at a net energy loss!

“There isn’t one grain of anything in the world that is sold in a free market. Not one! The only place you see a free market is in the speeches of politicians. People who are not in the Midwest do not understand that this is a socialist country.”
-Dwayne Andreas, then-CEO of Archer Daniels Midland

“At least 43 percent of ADM’s annual profits are from products heavily subsidized or protected by the American government. Moreover, every $1 of profits earned by ADM’s corn sweetener operation costs consumers $10.” (Source.)

(And if you’re not clear on just how deeply in control of our government these corporations are, here’s another example: Leaked cables reveal that US diplomats take orders directly from Monsanto.)

That cheapness, however, doesn’t translate to profits for farmers or cheap food at the supermarket. Let’s do some math!

(Note: these are regular prices from the CBOT and my local supermarket, as of today. Supermarket prices will be somewhat cheaper on sale or at Costco.)

A bushel of corn weighs 56 pounds and costs $6.85. That’s 12.2 cents per pound.
A bag of Tostitos contains about 10 cents worth of corn, and costs $4.00.
That’s a 4000% increase.

A bushel of wheat weighs 60 pounds and costs $7.62. That’s 12.7 cents per pound.
A loaf of Wonder Bread contains about 16 cents worth of wheat, and sells for $4.40.
That’s a 2700% increase.

A bushel of soybeans weighs 60 pounds and costs $13.64. That’s 22.7 cents per pound.
A box of “Silk” soy milk contains about 4.5 cents worth of soybeans, and sells for $2.90.
That’s a 6400% increase.

In other words, it’s highly profitable to turn the products of industrial agriculture—cereal grains and soybeans—into highly processed “food”.

The Profit Aisles

It’s not the snack aisle, the cereal aisle, or even the bread aisle...it’s the profit aisle.

Note that the profit for the processors and middlemen comes out of the pockets of the producer and the consumer. Farmers are squeezed by the 12 cents per pound, and consumers are squeezed by the $4.40 per loaf.

In contrast, pork bellies cost $1.20 per pound today.
A pound of bacon costs about $5.
That’s a 400% increase…

…which looks like a lot until you compare it with 2700%-6400% for grains. Also, unlike grain products, bacon must be stored, shipped, and sold under continuous refrigeration—and it has a much shorter shelf life.

It’s clear that it’s far more profitable to sell us processed grain products than meat, eggs, and vegetables…which leaves a lot of money available to spend on persuading us to buy them. Are you starting to understand why grains are encased in colorful packaging, pushed on us as “heart-healthy” by the government, and advertised continually in all forms of media?

And when we purchase grass-fed beef directly from the rancher, eggs from the farmer, and produce from the grower, we are bypassing the entire monumentally profitable system of industrial agriculture—the railroads, grain elevators, antibiotics, growth hormones, plows, combines, chemical fertilizers (the Haber process, by which ammonium nitrate fertilizer is made, uses 3-5% of world natural gas production!), processors, inspectors, fortifiers, manufacturers, distributors, and advertisers that profit so handsomely by turning cheap grains into expensive food-like substances.

Conclusion: You Are A Radical (And So Am I)

Simply by eating a paleo diet, we have made ourselves enemies of the establishment, and will be treated henceforth as dangerous radicals.

This is not a conspiracy theory. By eschewing commodity crops and advocating the consumption of grass-fed meat, pastured eggs, and local produce, we are making several very, very powerful enemies.

  • The medical and nutritional establishments hate paleo, because we’re exposing the fact that they’ve been wrong for decades and have killed millions of people with their bad advice.
  • The agribusinesses and industrial food processors hate paleo, because we’re hurting their business by not buying their highly profitable grain- and soy-based products.
  • The mainstream media hates paleo, because they profit handsomely from advertising those grain- and soy-based products.
  • The government hates paleo, because they’re the enforcement arm of big agribusinesses, industrial food processors, and mainstream media—and because their subsidy programs create mountains of surplus grain that must be consumed somehow.

Is anyone surprised that a government which spends billions of dollars subsidizing the production of corn, soy, and wheat, would issue nutritional recommendations emphasizing the consumption of corn, soy, and wheat?

And this is why, despite all their rhetoric, the vegans end up on the same team as Monsanto and Pepsico: their interests are aligned.

They're everywhere.

I agree: this does look familiar.

In summary:

  • Expect more hatchet jobs against “paleo” in the media.
  • Expect more statistical manipulation marketed as “science”.
  • Expect outright scientific fraud in support of “hearthealthywholegrains” and in opposition to meat and eggs—particularly grass-fed, pastured, and local meats.
  • Expect more breathless news articles that purposely misinterpret archaeological evidence of a few specks of root starches to imply that Paleolithic humans ate a diet based on cereal grains.
  • Expect subtle attempts to subvert “paleo” by packaging ancestral varieties of grain (e.g. kamut, spelt, amaranth) and obscure fruit extracts (mostly made of apple and grape juice), and selling them back to us in colorful packaging.
  • Expect even more regulations and restrictions that destroy local, sustainable farming by forcing their nutritionally superior products into the commodity system, instead of allowing us as individuals to buy them directly—which, in the case of meat, we already can’t. (The regulations have got even worse since Joel Salatin wrote this woefully true article, “Everything I Want To Do Is Illegal.”)
  • Expect bogus scare stories in the media about the dangers of local meat, eggs, cheese, and produce from small farmers. Expect bogus salmonella scares and fraudulent inspections that claim meaningless or nonexistent bacterial contamination.
  • Expect school lunches to become even more disgusting and empty of nutrition. If you want your child to grow up healthy, expect to help them pack a lunch every day. Expect to be grilled by suspicious administrators who think you’re damaging your child by feeding them real food.
  • Expect friends and co-workers to see and believe this propaganda. Expect that you will have to defend your dietary choices against a steadily increasing chorus of suspicion and hostility.

None of this should discourage any of us from continuing to do what’s right for ourselves, our families, our children, and the Earth. We are healthy, we are happy, we are strong, and we will win because everyone else wants to be as healthy as we are.

Be proud of your health and how you’ve attained it. Do not be pushy, but do not apologize for how you eat and live. And, most importantly, be prepared for the storm.

Live in freedom, live in beauty.


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Why Companies Keep Pay a Secret, and Why You'd Rather Know The Truth

“A new study by researchers at the University of California at Berkeley and Princeton University suggests that if all of our salaries were made known tomorrow, half of us would be made miserable and the other half would be made no happier.”
-Smart Money Magazine, “Why Companies Keep Pay a Secret

The implication is that we’re all better off not knowing the truth.

This, however, is only the employer’s half of the story. This information is indeed of negative value to the organization…but it is of positive value to the workers.

Information, in a free market, causes prices to equalize. However, salaries within an organization are not a free market. The only way to meaningfully increase your salary is by leaving and taking another job, and the only way to meaningfully decrease your salary is by getting fired or laid off.

So there is a free(ish) market in the larger sense of the employment market as a whole, and employees participate in this larger market—while employers would rather restrain them from doing so by withholding information, forcing them to sign non-compete agreements, and so on.

Employers benefit from keeping pay a secret because they can pay some of their employees less than their market value and redirect that profit to themselves. An underpaid employee may quit and get a new job at a better salary, which is indeed a disadvantage to their old employer…but it is an obvious advantage to the employee, who will be much happier at an employer who is not trying to cheat them out of earning their full market value.

In other words, this article is correct in its data, but wrong in its conclusions.

If you’re not convinced, here’s an analogy:

Your Price: $?.??/lb

The article might as well argue that there should be no price tags in supermarkets, that we should each negotiate a price for hamburger with the store the first time we walk in, that we should pay that price (indexed to inflation) for the rest of our lives when shopping with that store—and that none of us should ever be able to find out what anyone else is paying for hamburger.

It should be obvious that such an arrangement benefits the store (who can charge some of their shoppers well over market price) but disadvantages the consumer.

It should also be obvious that while a shopper might be initially dismayed to find out that they were paying substantially more than another shopper under such a system, they would be much happier in the long run to know who was paying what, and to use that information to be able to pay a lower price for hamburger instead of continually wondering whether they were being cheated.

But, of course, the article and study only account for the immediate, short-term effect on the employer.

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