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“Free From” Foods: Invest in the Revolution

Growing up in the ‘70s and ‘80s was very different from today.

My favorite sandwich was the classic PB&J. (I had one just about every day between the 2nd and 6th grades.) Today, I would be out of luck — most schools in the U.S. don’t allow peanut butter due to the prevalence of life-threatening peanut allergies. I don’t remember any kids with a food allergy while growing up, let alone a life-threatening one. Fast forward to today, and of course we all know food allergies pervade in our schools and society.

Consider that:

  • The Food Allergy Research and Education, Inc. (“FARE”), a non-profit that works on behalf of Americans with food allergies, estimates that 15 million Americans have food allergies.
  • A 2013 study by the Centers for Disease Control (“CDC”) found food allergies among children increased by approximately 50% from 1997 to 2011.
  • What’s more this increase in food allergies places a significant cost on society. Estimates suggest that 150 to 200 people die each year from food allergies.
  • Hospital visits related to food allergies are exploding (as evidenced by the CDC chart below). Finally, FARE estimates the annual economic cost of food allergies exceeds $25 billion.

Free From Graph 1

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What’s behind the rise in food allergies?

 

We don’t have a clear idea about what causes the rise in food allergies. Many industry researchers speculate several factors: change in the foods supply. These include:

  • the introduction of genetically modified seeds (what we call “GMOs” today) in 1996,
  • the “hygiene hypothesis” and
  • exposure to other household/environmental chemicals.

Given the dramatic change in food and agriculture over the last 30 years, it is hard to believe that our changing food supply could not influence food allergies. As Robyn O’Brien asks, “are we allergic to food or what’s been done to it?” Robyn is one of the early pioneers in the Food Revolution and an outspoken critic of GMOs. After her son had received a life-threatening food allergy diagnosis, she dove into food allergy research. Her groundbreaking 2011 Tidal on the food supply generated over 1.1 million views and helped launch the Food Revolution.Free From Graph 2

GMOs skeptics suspected that modified food contributes to food allergies because their introduction coincides closely with the dramatic increase in food allergies. The first GMO crop, Flavr Savr tomato, hit the market in 1994. In 1996, Monsanto introduced Roundup Ready soybeans, followed by corn in 1998. GMO crops became the dominant crops grown in the US (soybeans 93%, corn 73%).

While it remains unclear whether genetic modification of food is dangerous to humans, one thing is certain — the introduction of Roundup Ready crops exploded the use of glyphosate (an ingredient in Roundup herbicide) in farming.

The chart at right, from a 2013 Forbes article on Glyphosate, shows the increase in the use of glyphosate since the introduction of GMOs.

The risk glyphosate poses to humans is undetermined, but an increasing number of studies point to a cancer link as well as the disruption of sex hormones. Given the expansive use of GMOs and glyphosate and their unknown safety, it is no wonder so many people are opting for organic, non-GMO foods.

 

It’s not just what’s in the food; we may be too germ-free

 

Another theory on the increase in food allergies, the “hygiene hypothesis,” theorizes that humans need exposure to a wide array of microorganisms and bacteria during our infant years. Today’s environment might be overly hygienic with the widespread use of hand sanitizers at home, in schools and even at work. By trying to avoid colds and flu, we may kill off both good and bad bacteria exposure we need for a healthy immune system.

Lastly, there may be other chemicals or environmental factors increasing food allergies. Today’s food supply includes a host of preservatives, food additives, flavors and colors derived from chemicals. Additionally, we use a wider array of chemicals, such as household cleaners, skincare and cosmetics than we did 30 years ago. While many of these chemicals undergo research in the short-term to determine safety, we don’t know the long-term impacts they might have on our bodies, DNA or immune system.

 

Investors should capitalize on the “free from” movement

 

Whatever the reason behind the increase in food allergies, investors and food companies should not ignore the growing “free from” population. Fifteen million Americans live with food allergies, and there are an estimated 7.3 million vegetarians and as many as 64 million eating gluten free. What started as a niche population grew into an army of “free from” dieters.

Today, more Americans eat a selective diet because our food supply changed dramatically over the past 30 years. Not only do Americans eat “free from,” but they also increasingly choose non-GMO, organic, antibiotic free, etc. Currently, the U.S. imports much of its organic, non-GMO crops from other countries because the vast majority of US land uses “big agriculture” methods. That is going to change over time — investors need to be aware of the coming sea-change.

Organic is not a fad. Ten years from now much more of it will be grown in the U.S. (either indoors or out). Eventually, regulators will ban glyphosate in the U.S. This will create huge ramifications for Monsanto (and the many ancillary companies serving the herbicide market). These movements started as a trickle but are gaining steam fast — smart investors and managers will adapt to the changing tide.

About Tyler Mayoras

I am a PE investor focused on the food and agriculture industries. I share insights on the food revolution in an article on Financial Poise. You can subscribe to my column to learn more about the trends in food, sustainable agriculture, nutrition, etc.

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