MRE Futures, To Not Starve

The Meal, Ready-to-Eat – commonly known as the MRE – is a self-contained, individual field ration in lightweight packaging bought by the United States military for its service members for use in combat or other field conditions where organized food facilities are not available. While MREs should be kept cool, they do not need to be refrigerated. .. MREs have also been distributed to civilians during natural disasters. .. Each meal provides about 1200 Calories. They .. have a minimum shelf life of three years. .. MREs must be able to withstand parachute drops from 380 metres, and non-parachute drops of 30 metres. (more)

Someday, a global crisis, or perhaps a severe regional one, may block 10-100% of the normal food supply for up to several years. This last week I attended a workshop set up by ALLFED, a group exploring new food sources for such situations. It seems that few people need to starve, even if we lose 100% of food for five years! And feeding everyone could go a long way toward keeping such a crisis from escalating into a worse catastrophic or existential risk. But for this to work, the right people, with the means and will to act, need to be aware of the right options at the right time. And early preparation, before a crisis, may go a long way toward making this feasible. How can we make this happen?

In this post I will outline a plan I worked out at this workshop, a plan intended to simultaneously achieve several related goals:

  1. Support deals for food insurance expressed in terms that ordinary people might understand and trust.
  2. Create incentives for food producers, before and during a crisis, to find good local ways to make and deliver food.
  3. Create incentives for researchers to find new food sources, develop working processes, and demonstrate their feasibility.
  4. Share information about the likelihood and severity of food crises in particular times, places, and conditions.

My idea starts with a new kind of MRE, one inspired by but not the same as the familiar military MRE. This new MRE would also be ready to eat without cooking, and also have minimum requirements for calories (after digesting), nutrients, lack of toxins, shelf life, and robustness to shocks. But, and this is key, suppliers would be free to meet these requirements using a wide range of exotic food options, including bacteria, bugs, and rats. (Or more conventional food made in unusual ways, like sugar from corn stalks or cows eating tree leaves.) It is this wide flexibility that could actually make it feasible to feed most everyone in a crisis. MREs might be graded for taste quality, perhaps assigned to three different taste quality levels by credentialed food tasters.

As an individual, you might want access to a source of MREs in a crisis. So you, or your family, firm, club, city, or nation, may want to buy or arrange for insurance which guarantees access to MREs in a crisis. A plausible insurance deal might promise access to so many MREs of a certain quality level per per time period, delivered at standard periodic times to a standard location “near” you. That is, rather than deliver MREs to your door on demand, you might have to show up at a certain more central location once a week or month to pick up your next batch of MREs.

The availability of these MREs might be triggered by a publicly observable event, like a statistical average of ordinary food prices over some area exceeding a threshold. Or, more flexibly, standard MRE insurance might always give one the right to buy, at a pre-declared high price and at standard places and times, a certain number of MREs per time period.  Those who fear not having enough cash to pay this pre-declared MRE price in a crisis might separately arrange for straight financial insurance, which pays cash tied either to a publicly triggered event, or to a market MRE price. Or the two approaches could be combined, so that MRE are available at a standard price during certain public events.

The organizations that offer insurance need ways to ensure customers that they can actually deliver on their promises to offer MREs at the stated times, places, and prices, given relevant public events. In addition, they want to minimize the prices they pay for these supplies of MREs, and encourage suppliers to search for low cost ways to make MREs.

This is where futures markets could help. In a futures market for wheat, people promise to deliver, or to take delivery, of certain quantities of certain types of wheat at particular standard times and places. Those who want to ensure a future supply of wheat against risks of changing prices can buy these futures, and those who grow wheat can ensure a future revenue for their wheat by selling futures. Most traders in futures markets are just speculating, and so arrange to leave the market before they’d have to make or take delivery. But the threat of making or taking delivery disciplines the prices that they pay. Those who fail to make or take delivery as promised face large financial and other penalties.

Analogously, those who offer MRE insurance could use MRE futures markets to ensure an MRE supply, and convince clients that they have ensured a supply. Yes, compared to the terms of the insurance offered by insurance organizations, the futures markets may offer fewer standard times, places, quality levels, and triggering public events. (Though the lab but not field tested tech of combinatorial markets make feasible far more combinations.) Even so, customers might find it easy to believe that, if necessary, an organization that has bought futures for a few standard times and places could actually take delivery of these futures contracts, store the MREs for short periods, and deliver them to the more numerous times and places specified in their insurance deals.

MRE futures markets could also ensure firms who explore innovative ways to make MREs of a demand for their product. By selling futures to deliver MREs at the standard times and places, they might fund their research, development, and production. When it came time to actually deliver MREs, they might make side deals with local insurance organizations to avoid any extra storage and transport costs of actually transferring MREs according to the futures contract details.

To encourage innovation, and to convince everyone that the system actually works, some patron, perhaps a foundation or government, could make a habit of periodically but randomly announcing large buy orders for MRE futures at certain times and places in the near future. They actually take delivery of the MREs, and then auction them off to whomever shows up there then to taste the MREs at a big social event. In this way ordinary people can sometimes hold and taste the MREs, and we can all see that there is a system capable of producing and delivering at least modest quantities on short notice. The firms who supply these MREs will of course have to set up real processes to actually deliver them, and be paid big premiums for their efforts.

These new MREs may not meet current regulatory requirements for food, and it may not be easy to adapt them to meet such requirements. Such requirements should be relaxed in a crisis, via a new crisis regulatory regime. It would be better to set that regime up ahead of time, instead of trying to negotiate it during a crisis. Such a new regulatory regime could be tested during these periodic random big MRE orders. Regulators could test the delivered MREs and only let people eat the ones that pasts their tests. Firms that had passed tests at previous events might be pre-approved for delivering MREs to future events, at least if they didn’t change their product too much. And during a real crisis, such firms could be pre-approved to rapidly increase production and delivery of their product. This offers an added incentive for firms to participate in these tests.

MRE futures markets might also help the world to coordinate expectations about which kinds of food crises might appear when under what circumstances. Special conditional futures contracts could be created, where one only promises to deliver MREs given certain world events or policies. If the event doesn’t happen, you don’t have to deliver. The relative prices of future contracts for different events and policies would reveal speculator expectations about how the chance and severity of food crises depend on such events and policies.

And that’s my big idea. Yes it will cost real resources, and I of course hope we never have to use it in a real crisis. But it seems to me far preferable to most of us starving to death. Far preferable.

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  • Frederic Bush

    Can you describe some scenarios where people in wealthy countries would want this product while society still retains enough structure for people to make it and acquire it? It seems like a lot of the cases where there is a complete breakdown in food production also involve a complete breakdown in law and order and the logistical ability to create and deliver a complicated product.

    • Robert Koslover

      Yes, I think you’ve hit the nail on the head here.

    • Or worse, there *isn’t* a breakdown in law & order – see Ireland, the Ukraine, China, or North Korea.

      (I suppose this might work in conjunction with refuge shelter tickets: you would be buying various grades of MRE for consumption inside the shelter.)

    • I know everyone loves Mad Max movies where all social order has broken down, but social structures really do often last a long time in a crisis.

      • Frederic Bush

        Well, if the rule of law prevails and the government is not intentionally starving us (thanks Gwern), why isn’t the government ensuring that emergency food rations reach us?

      • Paul Rain

        The government would first act by making sure that any food that was collectively held by a corporation as part of some ridiculous insurance model was stolen and distributed universally.

      • Governments can be and create the insurance organizations that I’m talking about.

      • Frederic Bush

        I think it makes a lot of sense for governments to investigate weird food sources (and in fact they have — ) but I don’t see how structuring it as insurance is an improvement over existing methods of funding.

      • Frederic Bush

        If you take the insurance aspect away, this sounds somewhat like what we currently do for vaccines, and that system seems to work (?).

      • When governments do these things, they are often called “social insurance”.

      • Robert Koslover

        There are times I find your faith in governments disturbing.

      • This post is purposely being agnostic about whether the insurance is private or public. Isn’t okay to sometimes NOT take a position on the usual govt vs private debate?

  • quanticle

    My question is, why MREs, specifically? Why not regular (nonperishable) food? MREs aren’t designed to solve the problem of not having enough food. MREs are designed to solve the problem of not having enough water to cook “regular” food. And if there’s a situation where people don’t have enough water to cook food for a period of several years, then it seems to me that that’s the problem that we should be focused on solving, rather than trying to patch over the issue by looking for food supplies that don’t require water.

    • I’m just trying to define a useful and measurable unit of generic food. What do you suggest?

      • quanticle

        What about the units of generic food that we already have? Bushels of wheat? Kilograms of rice? I’m sure the UN has standard provisions for its aid programmes.

      • I wanted a unit of food that is nutritionally sufficient for health, but also flexible so that it might be produced in many ways. You can’t feed people by delivering bugs if you’ve promised to deliver wheat.

      • Brian Slesinsky

        It seems like the idea is to promote investment in alternatives to traditional agriculture? Part of the problem would be convincing people in advance that they should buy futures in generic calories, rather than in foods that they are used to eating.

        To make bug futures desirable, I think you’d have to convince a lot of people to eat bugs today – not easy! Generic food futures (which *could* be bugs) aren’t likely to be any more desirable than bug futures.

        Of course, once people are actually starving, alternatives will be considered, but when planning, even survivalists would likely prefer to buy futures (or stock up) in food that they’d like to eat. So it seems like it would be hard to grow the generic food futures market to be anywhere near the size of the grain futures market (for example).

        We might instead look at what food startups are doing today. There is Soylent and similar convenience foods, and there are startups working on meat alternatives. Essentially all food startups are very focused on making their products desirable to today’s consumers. But if these companies succeed in growing the market and lowering costs enough, perhaps they would be accepted as survival food.

      • You, I, and most everyone can understand that we’d rather eat bugs than starve to death. This insurance is for those situations.

      • Thoughts of imminent starvation activate extreme near-mode thinking. From a balanced perspective, “we” grossly overvalue our mere continued existence. (Revealed preferences are necessarily unbalanced.)

        A quick, painless, and unanticipated death is a most underestimated component of the good life.

      • Brian Slesinsky

        Certainly. But that stark decision is not a choice anyone has to make now; it’s one to be made when alternatives are no longer available. It seems like the question now is what survival goods (or insurance) will people buy in advance?

        For example, if grain futures and bug futures are the same price, I suspect almost anyone would buy the grain futures. If the bug futures could be made cheaper, there’s still a question of whether to buy the more expensive option. Survivalists have a wide variety of goods that they could buy to stock up and they won’t necessarily pick the cheapest option.

      • If you are going to buy insurance, you need to make such choices of overall quality vs price ahead of time.

  • Brian Slesinsky

    Emergency systems need to be tested regularly or they lose their value. (In computers, if you don’t test your backups you might as well not have them.) This would suggest storing non-perishable food for years and then actually eating it. There is some food (such as some wine and aged cheese) that is deliberately stored for years to improve its flavor, but storage costs make it a specialty thing. There are also industrial food processes that store food to hedge for variation in harvests.

    In emergency situations, logistics tends to be the bottleneck; homes and retail stores have limited space, particularly in urban areas, resulting in bare shelves in a crisis. We could invest in more storage, but this is an expense that needs to be justified.

    Current business trends are in the opposite direction. Manufacturing supply chains try to replace warehousing with just-in-time delivery to lower latency when responding to changes in consumer tastes. Companies like Amazon strive to shorten delivery times to better appeal to consumers, at the expense of retail businesses providing local storage of commonly used goods.

    • I’m all for waiting to test the food, to check its shelf life. I don’t see why there’d be less shelf space to work with during a food crisis.

      • Brian Slesinsky

        One possible threat scenario would be war. A city or landlocked nation under siege might not be able to rely on external deliveries. Storing five years of food per person requires a lot of storage. On the other hand, it seems unlikely that a siege would last that long, and other supplies might run out first.

        But, perhaps this is not the sort of crisis you’re thinking of? Clarifying the threat scenario might help.

      • This isn’t about storing food, it is about setting up processes to produce food.

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  • Paul Rain

    I think that if you have the future time orientation to want to be prepared for the crisis, you probably aren’t going to take the risk that some organization that may or may not actually intend to provide survival supplies will come through.

    Especially when this organization will obviously have their supplies stolen by the government.

    • Not all crises are Mad Max worlds where all social institutions fail and each plucky hero must save his own local community. Really.

      • Paul Rain

        Not too worried about my local community (given the determination of all governments in the West to destroy local communities in various ways).

        More worried about saving my family and my friends. Not the rabble who governments would tell SurvivoCorp to give ratpacks to.

  • cwcwcwcwcw

    this is a great idea, but one that–in my opinion–is doomed to non-implementation. You will never be able to get enough humans to put aside enough resources to provide for future catastrophes.

    • This isn’t about saving resources but about setting up processes.

      • cwcwcwcwcw

        I know what you mean and I think it is a really good idea, but my point is, on the scale you are talking, it seems like it would require an enormous amount of money and cooperation between a wide array of governments and business in order to prepare for the future. That doesn’t seem to be how people work.

      • Under whatever theory you have, there must be marginal cases just on the border of being feasible. We might move that border.

      • cwcwcwcwcw

        I just reread (sorry I didn’t read carefully enough at first). I like the concept, but doubt the execution. The countries that are most likely to experience famine and create refugee crises are the ones without any of the the infrastructure to make your idea work. How would this work in south Sudan for instance?

        What if you did something like this on a national level. Big entities like countries and multinational organizations contracted with insurers and food producers to create MREs that they would deliver to areas in famine in order to prevent humanitarian crises?

      • I explicitly mentioned nations as one of the possible insurers.

      • cwcwcwcwcw

        I am just not a very good reader, I guess.

  • Riothamus

    At the conference, was there any consensus about the smallest scale where this would be appropriate?

    As far as regional crises go, the Carribean and Gulf regions seem like a reasonable candidate. Harvey, Katia, an earthquake, and now Irma and Jose are doing a fair job of doing a lot of damage while simultaneously crippling the ability of any neighboring polities to help each other.

    • Follow the link to ALLFED to see lots more details on that.

  • Our elites are beginning to realize that efficient medical care is better produced by government funded medical care rather than through the insurance extraveganza. (Moreover, people increasingly detest private insurers.)

    Why wouldn’t it be more efficient for government to fund research into dealing with food crises, particularly since the main objective relates to the scientific/engineering issue of producing cheap, deliverable food?

    Seems the burden is on you to justify creating a source of profit for the insurers and a source of social tension through differential access to food in emergencies. (Are the uninsured to starve?)

    • My post doesn’t specify govt or not funder, nor does it require unequal insurance.

  • AT Natenshon

    This looks quite interesting and would nicely pair with the efforts in making agriculture more efficient sustainable particularly in urban areas –, maybe something that could be done when excess is produced instead of dropping prices too low during the year. Definitely a thought provoking idea

  • davidmanheim

    Potential flaw; what types of events would lead to near-term mass starvation, but have functioning market mechanisms for enforcing these contracts? Seems like a very unlikely case.

  • sean2070

    I would consider this a basic function of government to operate.

    It won’t work in the private market as the risks is too high that the private sector wouldn’t have probably insured themselves for this event. Its just too small of probability with large tail risks. How would an insurance company really invest today so that they have the resources to deal with this in the future. They can’t.

    The only organization with the ability to do this is the government. Our largest insurer. Question is whether they survive the crisis and have the resources to execute. Most US taxpayers would have no problem funding disaster food to people who were at no fault for causing the disaster.

  • Silent Cal

    I feel weird writing applause-type feedback on OB, because I’ve never seen anyone do it, but the negativity of this comment thread is too much.

    This is cool. First, the whole topic is cool–I hadn’t thought before today of food planning as an existential risk mitigation, and it makes a lot of sense.

    But the insurance scheme is cool too. It’s Robin applying economics knowledge in a novel context, one of Robin’s core competencies. And it’s mainly pulling a policy rope sideways, as much as my fellow commenters want to reduce it to the familiar back-and-forth.


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  • Typo: “annoucning”

    Also, this may just be me, but it took me awhile to get this sentence: “MRE futures markets could also ensure firms who explore innovative ways to make MREs of a demand for their product”, because I read it as “…markets could also ensure firms [do something]” and then as “…markets could also ensure [the creation of] firms”.

    Best, Kate