The Curious Relationship of Food and Money

by Eric Fry.

Today’s installment of our series, Best of Daily Reckoning, 2012, is all about food — both about how to make money by selling it and about how to “make money” by giving it away.

Here at The Daily Reckoning, we think food is a pretty big deal…and as the Earth’s population explodes, we think it will become an even bigger deal — not just from a socio-economic standpoint, but also from an investment standpoint. In a pinch, the world can do without iPhones and Xboxes. Really, it can. But it can’t do very well without grains, vegetables and fruits.

Chris Mayer, editor of Capital and Crisis, has been a vigilant observer of the agriculture (and water) sector for several years. During the timespan, he has sourced a number of winning investment ideas. But he still thinks there’s plenty of money to be made, as he pointed out in an October 29, 2012 column entitled, “Feed the World, Make Money.”

Interestingly, the US government champions an entirely different way to “make money” by feeding people. The process begins by giving the food away. In a September 24, 2012 column entitled, “In Stamps We Trust: Paving the Road to Prosperity with Food Stamps,” yours truly examined the USDA Food and Nutrition Service’s assertion that, “SNAP [i.e. food stamps] is the only public benefit program which also serves as an economic stimulus.”

Yes, it’s true; this particular government agency agues that increasing the ranks of food-stamp recipients also increases economic activity.

“By generating business at local grocery stores,” the FNS asserts, “new SNAP benefits trigger labor and production demand, ultimately increasing household income and triggering additional spending…Every five percentage point increase in the national participation rate [in food stamp usage] would generate a total of $2.2 billion in economic activity.”

Hmmm…interesting. Too bad “activity” and “growth” are not synonyms.

Eric Fry
for The Daily Reckoning

Eric J. Fry, Agora Financial's Editorial Director, has been a specialist in international equities for nearly two decades. He was a professional portfolio manager for more than 10 years, specializing in international investment strategies and short-selling.  Following his successes in professional money management, Mr. Fry joined the Wall Street-based publishing operations of James Grant, editor of the prestigious Grant's Interest Rate Observer. Working alongside Grant, Mr. Fry produced Grant's International and Apogee Research, institutional research products dedicated to international investment opportunities and short selling. 

Mr. Fry subsequently joined Agora Inc., as Editorial Director. In this role, Mr. Fry  supervises the editorial and research processes of numerous investment letters and services. Mr. Fry also publishes investment insights and commentary under his own byline as Editor of The Daily Reckoning. Mr. Fry authored the first comprehensive guide to investing internationally with American Depository Receipts.  His views and investment insights have appeared in numerous publications including Time, Barron's, Wall Street Journal, International Herald Tribune, Business Week, USA Today, Los Angeles Times and Money.

  • CommonCents

    Double how much they get in the SNAP program. Then let them use them for restaurants(already happening I hear), booze, drugs, cigarettes and guns. We can have economic activity splattered all over the place.

  • Fedup

    I know someone who recently lost his job and is now on the SNAP program. He claims he can now afford luxury food items that he couldn’t when he was working. This is symptomatic of what is wrong with our government. My taxes are going way up in 2013 so people with no job can live life large and enjoy foods I can’t afford.
    This system is going to collapse under it’s own weight and the sooner the better.

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