9) Regarding food, Mahoney emphasized that “the entire system relies on free markets.” That flexibility means that “the big businesses were big enough and sufficiently globally spread that if you had a problem in one particular origin, you would try and make up for it elsewhere.”
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10) Today, too many governments are putting in export restrictions and trying to control agricultural trade flows, “and that exacerbates the problem.”
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11) He emphasizes that the big ag firms today, “they're mostly not sitting around deciding whether the market is going up or the market is going down. They're thinking about how can they best move goods most efficiently. Everything has to be tied to perfection.”
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12) Schroder agreed. “You have to optimize for logistics, quality, price, time, all at the same time, real time, everywhere in the world at the same moment.”
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13) He continued. “The digital age is certainly facilitating [precision ag trading]. We can do that now in real time, with not only huge amounts of historical data, but also the use of all the fancy tools, including AI, to make those types of decisions even better.”
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14) Mahoney noted that digitalization still has a long way to go though. “You're still largely transacting on the telephone, or maybe WhatsApp. In some cases, you're sending and receiving hard copy signed contracts … elements of it that are still pretty archaic.”
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15) Schroder said that “in some ways, agriculture, for all its sophistication, is still behind the curve in terms of digitizing how business gets done. That doesn't mean it's super opaque … I think, especially when it comes to global trade, it's pretty dated.”
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16) Mahoney pointed out that some secretiveness was a competitive edge, but today, “you still have to trade around the asset base, but it's the asset base itself, and the logistics around that and the efficiencies around that, that provide the greater part of the earnings.”
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17) Schroder: “It takes a long time, from farm level through the whole value chain, to embrace new technology. We will still need soil to produce crops in 10 years, but how we do it will be quite different.”
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18) If you’re interested in the future of digital commodities trading, check out and Lux’s investment thesis about the space: luxcapital.com/news/investing
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19) And listen to the whole “Securities” podcast episode “The geopolitics and digital future of agricultural commodities” in your favorite player: anchor.fm/securities/epi
