14 September 2014

Using E10 and Commodity ETFs to Destroy Animal Farming


I've always been a meat eater. Meat tastes good. I also love milk and cheese. But I've always been guilty of the industrial slaughter of animals that occurs in order to produce these goods. When I speak to people about this topic, there is a tendency to rationalise. For example, people say it is natural to kill animals. Even animals themselves kill each other. When I respond by saying that it is also natural for humans to kill humans (as humans have done often during human history) people criticize me for thinking too much about it. In other words, there is a tendency to just stick with the status quo, and if something just doesn't seem right, rationalise it away.

Animal cruelty takes place in an animal farm. If you care about animal welfare, you must study the business model of the animal farm and do everything in your power to disrupt it.

How do you disrupt a business? There are three ways: (1) increase costs, (2) reduce revenue, and (3) increase volatility of costs and revenue.

If costs rise and revenue reduces, the animal farm becomes unprofitable and will shut down. If the volatility of costs and revenue is high, e.g. if the price of feed fluctuates too much, then animal farms are less likely to start up due to unacceptable risk.

Many vegans already try to increase costs and reduce the revenue of animal farms by switching from meat to plant-based food. For example, if instead of eating beef you eat vegetables, the revenue of the animal farm decreases and furthermore because the land that is set aside to make vegetables to sell to the consumer is used for this purpose rather than being used to sell feed to animal farms, then the price of feed will go up.

That is simple enough, but there are two more ways I think we can disrupt the animal farm. One is to use ethanol blend petrol in our cars (E10 for most cars or E85 or E100 if the car is compatible). Proof that this works can be found in American renewable policy that forced petrol to be blended with ethanol. This causes the demand for ethanol to rise significantly, which in turn meant that corn being grown on farms was being sent to cars rather than to animal farms. Animal farmers then had to pay higher prices for feed. This resulted in much higher meat prices (see Ethanol Helps Boost Meat Prices - NPR).

With regards to increasing volatility in agricultural prices, this is where I recommend buying agriculture ETFs as part of your investment portfolio. Not only can it save animals' lives, agriculture investments can make you rich. For example, in Australia, you can buy the Betashares Agriculture ETF. These investments don't actually buy agricultural products like corn and soy and store them. That would be far too difficult. Rather, when you buy these investments, a team of financial experts buy and sell futures contracts for corn, soy, wheat, and rice. Buy doing so, your investment will approximate the prices of the underlying crops. When fund managers buy and sell agricultural derivatives on the market on your behalf, you are contributing to more speculation in these markets, which has the potential to increases prices and, more importantly, to increase price volatility, which makes the business of animal farms much riskier.

The bottom line is that we should be switching from meat products to plant products. This applies not just to what we put in our bodies, e.g. switching from cows milk to almond milk. This should apply to what we put in our cars and our investment funds.


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