Wall Street Begins Trading Water Futures as a Commodity
i have written several times about CME water futures contracts. i thought i posted this on HN during this round of news releases, but i guess i didnt.<p>long story short: it is for the almond farmers. but its more complicated. i have been pursuing agtech and SV for small farm ag robotics for 5-6 years now and only have had doors shut on my face.<p>consistently, VCs flock towards agtech opp that are data harvestors. agree that data is crucial for deployment of autonomous systems, ai and robots in the field, but the weird thing was that they were coming up with stuff that farmers didnt need. they were creating entire new categories of data that wasnt necessary before and selling that to farmers who didnt even know that they needed it.<p>there are diff kinds of ag and my focus was on small acreage sub 100 acre farming that needed automation in the field to eliminate labour and bring down labour costs. AI has very little value. but agtech in the past 5-6 years has been collecting and collating so much data. and i knew that it wasnt for the farmers. it was always..ALWAYS for wall street. but i was looking at commodity trading..like hogs, grain, soy and fibre. i was looking at what data they were collecting about water and fertilisers&#x2F;herbicides&#x2F;pesticides...so that they can use that data to sell more inputs to the farmers.<p>and let&#x27;s not forget seed. in 2017, dow and dupont merged. the corteva cropscience was spun off this merger and began trading as a separate company. at the same time, sygenta was sold off to chemchina. and of course, bayer bought out monsanto. this is a consolidation of a handful of companies that have complete control over seeds, pesticides, herbicides, fertilisers, gene patents and biosciences. and now, data. sweet sweet..fat juicy agtech DATA! all you have to do is say AI and then twirl three times chanting &#x27;blockchain blockchain blockchain&#x27; while rubbing the top of your head...VCs will rain wads of cash over you. Data makes the world go round.<p>they consolidated and started investing in agtech and robotics and ag machinery sector(hello, JD!) wanted to join in, but DoJ kept squashing the promised mergers. now..remember, ALL of this is traded in the exchanges ALL OVER THE WORLD. not just wall street. ag has to be &#x27;managed&#x27;. you need data for that. i could go on that tangent, but its not needed now. (example: climate corp was part of monsanto. but bayer didnt get a piece of it. DCVC was monsanto&#x27;s VC arm and has since dissolved.) and then the story of california&#x27;s stolen water from the rio grande and the grandfathering of water rights and the patchwork quilt of various water rights sharing agreement, its a maze and noone really understands that mess. (i can recommend cadillac desert by marc reisner..that was the basis for polanski&#x27;s movie china town starring jack nicolson and later LA confidential starring russell crowe&#x2F;kevin spacey. also recommeded fiction reading..waterknife by paolo bacigalupi)<p>anyways, back to water...we now know how much water all the crops need when agtech is unleashed in..let&#x27;s take ca as an example...salinas&#x27; lettuce field(1+billion) or strawberry fields or almond orchards in central valley. each one of the crops have about a billion dollar ave revenue in a 45 billion dollar california ag revenue. wonderful company owned by the resnicks, for example..(pom, halos, cuties etc) has about $4 billion revenue annually. oh. privately held or as ag co-ops.<p>and then there is the dairy and ranching industry. hay&#x2F;alfafa esp ..which is a good export crop and goes to china in the returning empty shipping containers during our droughts to provide fodder for china&#x27;s fledgling and largely parched dairy industry because they may have cows, but their aquifers have run dry. ca has so many ag revenue streams but so diverse. agtech start ups found out that they can not only collect data and can consildate it and sell it to various publicly traded companies..perhaps they dont(its illegal), but the information can be used for other products. for example, safeway and walmart are publicly traded and strawberry industry&#x27;s data has immense value to them. we are not talking soy and wheat or hogs that is the mid western specialty.<p>but even with the diversity of data, most of it is noise. capturing signal from noise is profitable enough. but consider this..what is common for ALL of ag sector. water. we all need water. be it an one acre boutique farm or a 15000 acre commodity crop growing mid western farm. we need water. and is it any surprise that this can be traded as futures?<p>while its packaged as something to hedge because of the recent spate of wildfires and drought and what not in california, the real reason has always been about how this can be used to trade on wall street. agtech has ALWAYS been about wall street and harvesting of data that can be exploited for speculative trade. it was never about the food. that&#x27;s why i cannot still find a reasonable streamlined solution for labour cost cutting ag robotics for sub 100 acre farms. because we still import most of our food and food growing farms are all really hobby farms. the agtech we need is consumer level and not industrial scale like VC backed agtech.<p>this is going to end very badly.