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.