a thesis for animal farm

A Summary and Analysis of George Orwell’s Animal Farm

By Dr Oliver Tearle (Loughborough University)

Animal Farm is, after Nineteen Eighty-Four , George Orwell’s most famous book. Published in 1945, the novella (at under 100 pages, it’s too short to be called a full-blown ‘novel’) tells the story of how a group of animals on a farm overthrow the farmer who puts them to work, and set up an equal society where all animals work and share the fruits of their labours.

However, as time goes on, it becomes clear that the society the animals have constructed is not equal at all. It’s well-known that the novella is an allegory for Communist Russia under Josef Stalin, who was leader of the Soviet Union when Orwell wrote the book. Before we dig deeper into the context and meaning of Animal Farm with some words of analysis, it might be worth refreshing our memories with a brief summary of the novella’s plot.

Animal Farm: plot summary

The novella opens with an old pig, named Major, addressing his fellow animals on Manor Farm. Major criticises Mr Jones, the farmer who owns Manor Farm, because he controls the animals, takes their produce (the hens’ eggs, the cows’ milk), but gives them little in return. Major tells the other animals that man, who walks on two feet unlike the animals who walk on four, is their enemy.

They sing a rousing song in favour of animals, ‘Beasts of England’. Old Major dies a few days later, but the other animals have been inspired by his message.

Two pigs in particular, Snowball and Napoleon, rouse the other animals to take action against Mr Jones and seize the farm for themselves. They draw up seven commandments which all animals should abide by: among other things, these commandments forbid an animal to kill another animal, and include the mantra ‘four legs good, two legs bad’, because animals (who walk on four legs) are their friends while their two-legged human overlords are evil. (We have analysed this famous slogan here .)

The animals lead a rebellion against Mr Jones, whom they drive from the farm. They rename Manor Farm ‘Animal Farm’, and set about running things themselves, along the lines laid out in their seven commandments, where every animal is equal. But before long, it becomes clear that the pigs – especially Napoleon and Snowball – consider themselves special, requiring special treatment, as the leaders of the animals.

Nevertheless, when Mr Jones and some of the other farmers lead a raid to try to reclaim the farm, the animals work together to defend the farm and see off the men. A young farmhand is knocked unconscious, and initially feared dead.

Things begin to fall apart: Napoleon’s windmill, which he has instructed the animals to build, is vandalised and he accuses Snowball of sabotaging it. Snowball is banished from the farm. During winter, many of the animals are on the brink of starvation.

Napoleon engineers it so that when Mr Whymper, a man from a neighbouring farm with whom the pigs have started to trade (so the animals can acquire the materials they need to build the windmill), visits the farm, he overhears the animals giving a positive account of life on Animal Farm.

Without consulting the hens first, Napoleon organises a deal with Mr Whymper which involves giving him many of the hens’ eggs. They rebel against him, but he starves them into submission, although not before nine hens have died. Napoleon then announces that Snowball has been visiting the farm at night and destroying things.

Napoleon also claims that Snowball has been in league with Mr Jones all the time, and that even at the Battle of the Cowshed (as the animals are now referring to the farmers’ unsuccessful raid on the farm) Snowball was trying to sabotage the fight so that Jones won.

The animals are sceptical about this, because they all saw Snowball bravely fighting alongside them. Napoleon declares he has discovered ‘secret documents’ which prove Snowball was in league with their enemy.

Life on Animal Farm becomes harder for the animals, and Boxer, while labouring hard to complete the windmill, falls and injures his lung. The pigs arrange for him to be taken away and treated, but when the van arrives and takes him away, they realise too late that the van belongs to a man who slaughters horses, and that Napoleon has arranged for Boxer to be taken away to the knacker’s yard and killed.

Squealer lies to the animals, though, and when he announces Boxer’s death two days later, he pretends that the van had been bought by a veterinary surgeon who hadn’t yet painted over the old sign on the side of the van. The pigs take to wearing green ribbons and order in another crate of whisky for them to drink; they don’t share this with the other animals.

A few years pass, and some of the animals die, Napoleon and Squealer get fatter, and none of the animals is allowed to retire, as previously promised. The farm gets bigger and richer, but the luxuries the animals had been promised never materialised: they are told that the real pleasure is derived from hard work and frugal living.

Then, one day, the animals see Squealer up on his hind legs, walking on two legs like a human instead of on four like an animal.

The other pigs follow; and Clover and Benjamin discover that the seven commandments written on the barn wall have been rubbed off, to be replace by one single commandment: ‘All animals are equal, but some animals are more equal than others.’ The pigs start installing radio and a telephone in the farmhouse, and subscribe to newspapers.

Finally, the pigs invite humans into the farm to drink with them, and announce a new partnership between the pigs and humans. Napoleon announces to his human guests that the name of the farm is reverting from Animal Farm to the original name, Manor Farm.

The other animals from the farm, observing this through the window, can no longer tell which are the pigs and which are the men, because Napoleon and the other pigs are behaving so much like men now.

Things have gone full circle: the pigs are no different from Mr Jones (indeed, are worse).

Animal Farm: analysis

First, a very brief history lesson, by way of context for Animal Farm . In 1917, the Tsar of Russia, Nicholas II, was overthrown by Communist revolutionaries.

These revolutionaries replaced the aristocratic rule which had been a feature of Russian society for centuries with a new political system: Communism, whereby everyone was equal. Everyone works, but everyone benefits equally from the results of that work. Josef Stalin became leader of Communist Russia, or the Soviet Union, in the early 1920s.

However, it soon became apparent that Stalin’s Communist regime wasn’t working: huge swathes of the population were working hard, but didn’t have enough food to survive. They were starving to death.

But Stalin and his politicians, who themselves were well-off, did nothing to combat this problem, and indeed actively contributed to it. But they told the people that things were much better since the Russian Revolution and the overthrow of the Tsar, than things had been before, under Nicholas II. The parallels with Orwell’s Animal Farm are crystal-clear.

Animal Farm is an allegory for the Russian Revolution and the formation of a Communist regime in Russia (as the Soviet Union). We offer a fuller definition of allegory in a separate post, but the key thing is that, although it was subtitled A Fairy Story , Orwell’s novella is far from being a straightforward tale for children. It’s also political allegory, and even satire.

The cleverness of Orwell’s approach is that he manages to infuse his story with this political meaning while also telling an engaging tale about greed, corruption, and ‘society’ in a more general sense.

One of the commonest techniques used in both Stalinist Russia and in Animal Farm is what’s known as ‘gaslighting’ (meaning to manipulate someone by psychological means so they begin to doubt their own sanity; the term is derived from the film adaptation of Gaslight , a play by Patrick Hamilton).

For instance, when Napoleon and the other pigs take to eating their meals and sleeping in the beds in the house at Animal Farm, Clover is convinced this goes against one of the seven commandments the animals drew up at the beginning of their revolution.

But one of the pigs has altered the commandment (‘No animal shall sleep in a bed’), adding the words ‘ with sheets ’ to the end of it. Napoleon and the other pigs have rewritten history, but they then convince Clover that she is the one who is mistaken, and that she’s misremembered what the wording of the commandment was.

Another example of this technique – which is a prominent feature of many totalitarian regimes, namely keep the masses ignorant as they’re easier to manipulate that way – is when Napoleon claims that Snowball has been in league with Mr Jones all along. When the animals question this, based on all of the evidence to the contrary, Napoleon and Squealer declare they have ‘secret documents’ which prove it.

But the other animals can’t read them, so they have to take his word for it. Squealer’s lie about the van that comes to take Boxer away (he claims it’s going to the vet, but it’s clear that Boxer is really being taken away to be slaughtered) is another such example.

Communist propaganda

Much as Stalin did in Communist Russia, Napoleon actively rewrites history , and manages to convince the animals that certain things never happened or that they are mistaken about something. This is a feature that has become more and more prominent in political society, even in non-totalitarian ones: witness our modern era of ‘fake news’ and media spin where it becomes difficult to ascertain what is true any more.

The pigs also convince the other animals that they deserve to eat the apples themselves because they work so hard to keep things running, and that they will have an extra hour in bed in the mornings. In other words, they begin to become the very thing they sought to overthrow: they become like man.

They also undo the mantra that ‘all animals are equal’, since the pigs clearly think they’re not like the other animals and deserve special treatment. Whenever the other animals question them, one question always succeeds in putting an end to further questioning: do they want to see Jones back running the farm? As the obvious answer is ‘no’, the pigs continue to get away with doing what they want.

Squealer is Napoleon’s propagandist, ensuring that the decisions Napoleon makes are ‘spun’ so that the other animals will accept them and carry on working hard.

And we can draw a pretty clear line between many of the major characters in Animal Farm and key figures of the Russian Revolution and Stalinist Russia. Napoleon, the leader of the animals, is Joseph Stalin; Old Major , whose speech rouses the animals to revolution, partly represents Vladimir Lenin, who spearheaded the Russian Revolution of 1917 (although he is also a representative of Karl Marx , whose ideas inspired the Revolution); Snowball, who falls out with Napoleon and is banished from the farm, represents Leon Trotsky, who was involved in the Revolution but later went to live in exile in Mexico.

Squealer, meanwhile, is based on Molotov (after whom the Molotov cocktail was named); Molotov was Stalin’s protégé, much as Squealer is encouraged by Napoleon to serve as Napoleon’s right-hand (or right-hoof?) man (pig).

Publication

Animal Farm very nearly didn’t make it into print at all. First, not long after Orwell completed the first draft in February 1944, his flat on Mortimer Crescent in London was bombed in June, and he feared the typescript had been destroyed. Orwell later found it in the rubble.

Then, Orwell had difficulty finding a publisher. T. S. Eliot, at Faber and Faber, rejected it because he feared that it was the wrong sort of political message for the time.

The novella was eventually published the following year, in 1945, and its relevance – as political satire, as animal fable, and as one of Orwell’s two great works of fiction – shows no signs of abating.

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Animal Farm

George orwell, ask litcharts ai: the answer to your questions.

Welcome to the LitCharts study guide on George Orwell's Animal Farm . Created by the original team behind SparkNotes, LitCharts are the world's best literature guides.

Animal Farm: Introduction

Animal farm: plot summary, animal farm: detailed summary & analysis, animal farm: themes, animal farm: quotes, animal farm: characters, animal farm: symbols, animal farm: theme wheel, brief biography of george orwell.

Historical Context of Animal Farm

Other books related to animal farm.

• Full Title: Animal Farm
• When Written: 1944-45
• Where Written: England
• When Published: 1945
• Literary Period: Modernism
• Genre: Allegorical Novel
• Setting: A farm somewhere in England in the first half of the 20th century
• Climax: The pigs appear standing upright and the sheep bleat, “Four legs good, two legs better!”
• Antagonist: Napoleon specifically, but the pigs and the dogs as groups are all antagonists.
• Point of View: Third Person

Extra Credit for Animal Farm

Tough Crowd. Though Animal Farm eventually made Orwell famous, three publishers in England and several American publishing houses rejected the novel at first. One of the English editors to reject the novel was the famous poet T.S. Eliot, who was an editor at the Faber & Faber publishing house. One American editor, meanwhile, told Orwell that it was “impossible to sell animal stories in the U.S.A.”

Red Scare. Orwell didn’t just write literature that condemned the Communist state of the USSR. He did everything he could, from writing editorials to compiling lists of men he knew were Soviet spies, to combat the willful blindness of many intellectuals in the West to USSR atrocities.

Home — Essay Samples — Government & Politics — Totalitarianism — Animal Farm Thesis Statement

Animal Farm Thesis Statement

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Published: Mar 13, 2024

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Table of contents

Introduction, the corruption of power, totalitarianism and oppression.

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George Orwell and Animal Farm: A Critical Analysis Essay (Critical Writing)

George Orwell is one of the most celebrated English writers in the 20 th century (George 1). Orwell’s literature is committed to telling the blatant truth about the violation of people’s freedom and the injustices against the common person (Dedria and Hall 479). Such phrases from his works such as “some animals are more equal than others” have become so popular especially in political dialogues and has shaped peoples opinions regarding the kind of society we live in (Kerala 36).

George Orwell was born as Eric Arthur Blair in India in 1903, where his British father worked as a civil servant. He had gone to school like any other normal child and graduated at Eaton. He worked in the Burma police force and later unsuccessfully tired his hand in a few business ventures but failed. He left for Spain where signed to fight in the Civil War.

His experience at the civil war de-motivated his views abut communalism so much that he decided to live a life of voluntary poverty (Dedria and Hall 479) . This was a deliberate effort to “experience want and the suffering of the oppressed.” He wanted to feel how poor people fell to help in shaping his own theories on socialism.

At this time, he had changed his name to P.S. Burton. His first novel Down and out in Paris was published as a response to his life in voluntary poverty. This was soon followed by Burmese Days and several other essays that questioned the capitalist state. His best novel so far is The Road to Wigan Pier which was published in 1937. It highlighted the pathetic life of the poor.

By this time, he had started gaining prominence as a writer and his works were starting to draw attention. He continued his writing with such other publications as Keep Aspidistra Flying and Coming up for Air followed in 1936 and 1939 respectively. His novel The Animal Farm is his most popular. It is a satirical piece that portrays a society that fully embraces totalitarian rules, much to the chagrin of those who want “individual freedom” (Kerala 36).

All of George Orwell’s novels seem to defend one main theme: socialism. Socialism is a means of production whereby everything is owned communally or by the government. Every one has equal opportunities to everything. The kind of socialism that George Orwell’s socialism advocates for has real life significance as it portrays “revolutionary idealism experienced in Russia and other countries which was betrayed by the revolutionaries themselves, who continue to pat lip service to revolutionary ideas” (Pierce para 6).

His novel then Animal Farm brilliantly employs satire in highlighting shameless betrayal by leaders who promised change (Dedria and Sharon 479). Orwell continues to portray authoritarianism as an enemy to individual freedoms.

There were concerted efforts to bring in a revolution that would save the people but always the new leaders upon tasting power, would betray this revolution. The new leaders would start to dictate what the same people whom they were fighting to save would do, or not do. Such betrayal was the end of socialism in the 20 th century. In this light, this paper will analyze one of his prized novels The Animal Farm.

The story begins in Mr. Jones’ farmhouse one night. Old major, a fatherly and respected pig, gathers the animals and informs them that they had endured deplorable conditions for a long period under the leadership of human beings and therefore a rebellion was necessary. Unfortunately, Old Major succumbs to old age. This leaves the other pigs to lead the fights for animal rights (Darell Para 1).

Two pigs, Napoleon and Snowball lead a successful revolution and after Mr. Jones and his family is driven out, Manor Farm is renamed The Animal Farm (para 2). Other farm owners try to attack the Animal Farm but Snowball lead a successful defense in the battle of the Cowshed and gains much worship amongst the animals (para 4). This is the beginning of his downfall. False rumors are spread by Squealer about him and when the conflict heightens he chased off the farm by Napoleons’ guard dogs (para 6).

Squealer is adopted as Napoleons spokes animal, and proposes the construction of a windmill, an idea that Napoleon takes credit for. Unfortunately the windmill is destroyed in a storm but Napoleon blames Snowball and sentences him to death, together with his sympathizers (para 6). Napoleon and the other pigs begin engaging in anti animalism behavior, such as doing business with men and drinking whiskey. To add to this, the food rations to other animals are reduced significantly (para 6).

To concur with his message that new and old leadership is alike; pigs begin to walk on two feet just like humans. They also start claiming, “All animals are equal but some animals are more equal than others.” The novel culminates in the farm being renamed The Animal Farm while napoleon and other pigs initiate friendship with the human owners of the neighboring farm, and they become just like humans (para 8). It portrays the betrayal of the initial comradeship, and the pessimism of revolutionary movements (Hall and Poupard 348).

George Orwell creates characters carefully to fit in the roles that he needs them to play. Some characters play a major role in this novel. Mr. Jones is a tyrant who represents the old corrupt order. In the real world George Orwell model 20 th century dictators such as Stalin in Mr. Jones (Novelguide para 1).

Snowball and Napoleon are the two pigs who lead a successful revolution. They were ambitious of leadership and courageously fought Mr. Jones out of the farm (NovelGuide para 7-12). The pigs are symbolic of the calculating leaders who benefit from tyrannical leadership. They are opportunists who do not spare any chance afforded to them to exploit their advantaged position in the society (Hall and Poupard, 348).

Squealer is Napoleons manipulative tool in the farm. The dogs are a symbol security only that this security is used negatively. They are also another group of loyalist who are misused by the system to gain advantage over the common person (NovelGuide para 20- 22). However, other characters only play minor roles. Old major represents the good father figure in the society who can be relied upon to give concrete advice. He is respected by other animals who take to his advice without question (NovelGuide para 4).

Boxer and Clover in contrast are dedicated workers who spent all their life serving the society (They are also foolishly gullible in that they believe in all the propaganda spread by Squealer who is a “manipulative and persuasive figure” (Hall and Poupard 348). Just like Squealer, Moses is another manipulative and cunning character in the novel (NovelGuide para 7, 8; 13, 14). Benjamin is an enigmatic character who continues to do his work without care of what is happening (NovelGuide para 17).

The Animal Farm is a classic example of how governments exploit and deny citizens of their basic rights. At the beginning of the novel, the animals are united under the banner of exploitation by Mr. Jones. They manage to fight and install their own leaders in Napoleon.

However, Napoleon turns to be worse that Mr. Jones and “perverts the first commandments he helped make” (Pierce para 7). For example, he reduced food rations for the other animals other than the fellow pigs. Some animals as Boxer worked so hard, believing in their leaders but instead of being rewarded, were exploited for the benefit of the same leaders they served (Grade saver para 15-17). These governments use totalitarian rules, to stay in power and subvert justice.

The pigs lead a revolution against Mr. Jones totalitarian rule, but ends up worse. They not only “end up in Mr. Jones House and position but also in his clothes.” Some critics have used this evidence to explain that The Animal Farm is another successful attempt by the society to kill dissent (Hall & Poupard 349). Propaganda is also used to intimidate those who question the abuse of human rights. Napoleon manipulates information and deceives the animals when he gains full power.

He spreads false accusation against snowball leading to his expulsion from the farm. Squealer, Napoleons spokes animal, is the face of propaganda in this novel. He represents governments’ spokes people who are responsible of spreading rumors that help their government to gain a tighter grip on power (Grade saver para 9-11). As a last result, totalitarians use violence and terror, to silence the rebels. Its effect I that it makes people submit to such government. These who do not are either forcefully exiled or killed.

Such excesses were practiced against Snowball and his sympathizers. Terror can also be propagated through propaganda. Squealer instills fear into anyone who tries to question napoleons unethical conduct, with Mr. Jones return (Grade saver para 12-14). Another major theme highlighted with importance is Education. Unfortunately, it is present in a very negative light. In its essence education is supposed to enlighten people. However in this novel, those in power “manipulate those that are governed” by the use of education.

Take the case of the pigs as an example. They realize the intellectual vulnerability of the other animals and take advantage of it by manipulating the seven commandments to their advantage. Napoleon also uses education negatively when he teaches new pigs his oppressive doctrines (Grade saver para 7, 8). This mis-education cast the other animals deeper into oppression.

In conclusion, George Orwell manages to highlight the fact that the biggest political problem is not capitalism but authoritarian rules. Whether under capitalism of socialism authoritarianism is inevitable this is because of the insatiable nature of human beings. The novel The Animal Farm will continue to be relevant for eons to come it.

It explicitly portrays the “class struggles and exploitation in the human society” (Hall & Poupard, 348). New leaders, like Napoleon, who assume power on the platform of change, abandon the idea as soon as they come to power. Most of them end up being worse of than the ones they replaced. They are just turn coat revolutionaries who take advantage of people’s naïveté to fulfill their selfish personal ambition. Because of the effect his works have achieve he one of the best authors in the 20 th century.

Works Cited

Darrell, Victor. Plot Summary: Animal Farm, by George Orwell. N. d. Web.

Dedria, Bryfonski & Hall, Sharon. Twentieth century literary criticism: George Orwell . Michigan: Book Tower. 1979. Print.

“Grade saver.” Animal Farm Themes . 2010. Web.

Hall, Sharon & Poupard, Dennis. Twentieth Century Literary Criticism. Michigan: Book Tower,1982. Print.

Kerala, Calling. From Eric Blair to George Orwell, Biography. London: Sage, 2003. Print.

“NovelGuide.” Novel Analysis: Animal Farm, Characterization . 2010. Web.

Pearce, Robert . ‘ Orwell, Tolstoy, and ‘Animal Farm’ . The Review of English Studies , 1998. Web.

Storgaard, Claus. Opinion Essays : George Orwell, Socialist, Anarchist or what…? 2004. Web.

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IvyPanda. (2018, August 2). George Orwell and Animal Farm: A Critical Analysis. https://ivypanda.com/essays/george-orwell-and-animal-farm-a-critical-analysis/

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IvyPanda . 2018. "George Orwell and Animal Farm: A Critical Analysis." August 2, 2018. https://ivypanda.com/essays/george-orwell-and-animal-farm-a-critical-analysis/.

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IvyPanda . "George Orwell and Animal Farm: A Critical Analysis." August 2, 2018. https://ivypanda.com/essays/george-orwell-and-animal-farm-a-critical-analysis/.

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The Core Themes and Symbols of George Orwell’s ‘Animal Farm’

This essay about George Orwell’s “Animal Farm” analyzes the novel’s exploration of power, revolution, and societal dynamics through the allegory of farm animals overthrowing their owner. It discusses how power corrupts, the challenges of revolutions, and the use of symbolism to reflect social hierarchies. The narrative focuses on the pigs’ rise to power, contrasting characters like Napoleon and Snowball, and the manipulation of projects like the windmill. The essay emphasizes the novel’s relevance to modern governance and the importance of maintaining democratic principles.

How it works

In George Orwell’s seminal novel, “Animal Farm,” we witness a complex narrative that deftly intertwines significant themes about power, revolution, and human nature through a simple allegory of farm animals overthrowing their human owner. What initially unfolds as a straightforward tale of rebellion reveals itself as a nuanced exploration of societal dynamics and governance.

Central to the narrative of “Animal Farm” is a penetrating examination of how power can corrupt. The animals, upon freeing themselves from Mr. Jones’s rule, aspire to create a society of freedom and equality.

Nevertheless, this ideal is quickly undermined by the pigs, led by the astute Napoleon and the idealistic Snowball. Despite beginning with a commitment to Animalism and collective welfare, the pigs increasingly monopolize authority, gradually abandoning their original ideals. Orwell skillfully portrays this corruption through the evolution of the pigs, demonstrating that power can corrupt those with even the most honorable intentions.

The tale also functions as a reflective commentary on the nature of revolutions and the inherent difficulties in achieving lasting change. The initial rebellion symbolizes a universal desire for liberation from oppression. Yet, Orwell adeptly explores how revolutions can falter, illustrating how those in power can manipulate noble causes for personal gain. The pigs use propaganda, quash opposition, and prioritize their interests, echoing tactics of historical totalitarian regimes, thereby illuminating the perils of revolutionary movements that evolve into autocracies.

Symbolism enriches the narrative, with the farm portraying a miniature societal model, reflecting the broader social hierarchies and power imbalances. The transformation of the pigs into tyrannical leaders serves as a powerful metaphor for the deterioration of revolutionary zeal under the weight of power. Napoleon, a figure of despotic control, utilizes deceit, creates a personality cult, and suppresses freedom, mirroring infamous dictators like Stalin and Mao. Through him, Orwell warns of the catastrophic impact of unbridled power and the suppression of individual freedoms.

In contrast, Snowball embodies the passionate spirit of reform and change. His innovative ideas and commitment to Animalism position him as a beacon of hope. Nevertheless, his expulsion by Napoleon underscores the dangers faced by those who challenge authority in despotic systems, where truth is often the first casualty.

The windmill, which Snowball champions as a project to better the animals’ lives, becomes a tool of coercion under Napoleon, reflecting how political projects can be co-opted to serve the elite at the expense of the workers. Its repeated construction and destruction encapsulate the cycle of manipulation and exploitation for political ends.

“Animal Farm” thus remains a profound literary work, shining a light on the shadowy aspects of power and governance. Its portrayal of the manipulation of ideals and the decay of revolutionary fervor provides a compelling warning of the risks of apathy and the necessity of upholding democratic values. As we reflect on its themes, Orwell’s work continues to urge vigilance and advocacy for equity, justice, and liberty in our societies.

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PapersOwl.com. (2024). The Core Themes and Symbols of George Orwell's 'Animal Farm' . [Online]. Available at: https://papersowl.com/examples/the-core-themes-and-symbols-of-george-orwells-animal-farm/ [Accessed: 15-May-2024]

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'Animal Farm' Themes and Symbols

Political allegory, totalitarianism, corruption of ideals, power of language.

• B.A., English, Rutgers University

George Orwell's Animal Farm is a political allegory about revolution and power. Through the tale of a group of farm animals who overthrow the owner of the farm, Animal Farm explores themes of totalitarianism, the corruption of ideals, and the power of language.

Orwell frames his story as a political allegory; every character represents a figure from the Russian Revolution. Mr. Jones, the original human owner of the farm, represents the ineffective and incompetent Czar Nicholas II. The pigs represent key members of Bolshevik leadership: Napoleon represents Joseph Stalin, Snowball represents Leon Trotsky, and Squealer represents Vyacheslav Molotov. Other animals represent the working classes of Russia: initially passionate about revolution eventually manipulated into supporting a regime that was just as incompetent and arguably more brutal than the previous one.

Orwell argues that any revolution led by a small, conspiratorial group can only degenerate into oppression and tyranny. He makes this argument through the allegory of the farm. The revolution begins with firm principles of equality and justice, and initially, the results are positive, as the animals get to labor for their own direct benefit. However, as Orwell demonstrates, revolutionary leaders can become as corrupt and incompetent as the government they overthrew.

The pigs adopt the human ways they once fiercely opposed (drinking whiskey, sleeping in beds), and they make business deals with farmers that benefit them alone. Meanwhile, the other animals see only negative changes in their lives. They continue to support Napoleon and work harder than ever despite the decline in quality of living. Eventually, the promises of heated stalls and electric light—what they've been working for all along—become fantasy.

Animal Farm suggests that totalitarianism and hypocrisy are endemic to the human condition. Without education and true empowerment of the lower classes, Orwell argues, society will always default to tyranny.

The pigs’ descent into corruption is a key element of the novel. Orwell, a socialist, believed the Russian Revolution had been corrupted by power-seekers like Stalin from the start.

The animals' revolution is initially led by Snowball, the key architect of Animalism; at first, Napoleon is a secondary player, much like Stalin. However, Napoleon plots in secret to seize power and drive Snowball away, undermining Snowball's policies and training the dogs to be his enforcers. The principles of equality and solidarity that inspired the animals become mere tools for Napoleon to seize power. The gradual erosion of these values reflects Orwell’s criticism of Stalin as nothing more than a tyrant hanging onto power through the fiction of a communist revolution.

Orwell doesn’t reserve his vitriol for the leaders, however. The animals representing the people of Russia are depicted as complicit in this corruption through inaction, fear, and ignorance. Their dedication to Napoleon and the imaginary benefits of his leadership enable the pigs to maintain their hold on power, and the ability of the pigs to convince the other animals that their lives were better even as their lives become demonstrably worse is Orwell’s condemnation of the choice to submit to propaganda and magical thinking.

Animal Farm explores how propaganda can be used to control people. From the start of the novel, Orwell depicts the animals being manipulated by common propaganda techniques, including songs, slogans, and ever-changing information. Singing "Beasts of England" evokes an emotional response that reinforces the animals' loyalty to both Animalism and the pigs. The adoption of slogans like Napoleon is always right or four legs good, two legs bad demonstrates their unfamiliarity with the complex philosophical and political concepts underlying the revolution. The constant alteration of the Seven Commandments of Animalism demonstrates how those in control of information can manipulate the rest of a population.

The pigs, who serve as the leaders of the farm, are the only animals with a strong command of language. Snowball is an eloquent speaker who composes the philosophy of Animalism and persuades his fellow beasts with the power of his oratory. Squealer is adept at lying and spinning stories to maintain control. (For example, when the other animals are upset about Boxer’s cruel fate, Squealer quickly composes a fiction to defuse their anger and confuse the issue.) Napoleon, while not as smart or as eloquent as Snowball, is skilled at imposing his own false view on everyone around him, as when he falsely inserts himself into the historical record of the Battle of the Cowshed.

As an allegorical novel, Animal Farm is rife with symbolism. Just as the animals represent individuals or groups from Russian history, the farm itself represents Russia, and the surrounding farms represent the European powers that witnessed the Russian Revolution. Orwell’s choices about which objects, events, or concepts to highlight are not driven by plot as in narrative fiction. Instead, his choices are carefully calibrated to evoke a desired response from the reader.

Whiskey represents corruption. When Animalism is founded, one of the commandments is ‛No animal shall drink alcohol.’ Slowly, however, Napoleon and the other pigs come to enjoy whiskey and its effects. The commandment is changed to ‛No animal shall drink alcohol to excess’ after Napoleon experiences his first hangover and learns how to moderate his whiskey consumption. When Boxer is sold to the Knacker, Napoleon uses the money to purchase whiskey. With this act, Napoleon fully embodies the human qualities that the animals once revolted against.

The Windmill

The windmill represents the attempt to modernize Russia and the general incompetence of Stalin’s regime. Snowball initially proposes the Windmill as a way of improving the farm’s living conditions; when Snowball is driven off, Napoleon claims it as his own idea, but his mismanagement of the project and the attacks from other landowners mean the project takes far longer to complete than expected. The final product is of inferior quality, much like many of the projects undertaken by the Soviets post-revolution. In the end the Windmill is used to enrich Napoleon and the other pigs at the expense of the other animals.

The Commandments

The Seven Commandments of Animalism, written on the barn wall for all to see, represent the power of propaganda and the malleable nature of history and information when the people are ignorant of the facts. The commandments are altered throughout the novel; each time they are changed indicates that the animals have moved even further away from their original principles.

• 'Animal Farm' Overview
• 'Animal Farm' Quotes Explained
• 'Animal Farm' Characters: Descriptions and Analysis
• 'Animal Farm' Summary
• 'Animal Farm' Quotes
• 'Animal Farm' Vocabulary
• 'Animal Farm' Questions for Study and Discussion
• '1984' Themes, Symbols, and Literary Devices
• '1984' Study Guide
• Top Conservative Novels
• Causes of the Russian Revolution
• Top Books: Modern Russia - The Revolution and After
• Allegory: Definition and Examples
• Bloody Sunday: Prelude to the Russian Revolution of 1917
• A Timeline of the Russian Revolution From 1914 to 1916

15 RELEVANT ANIMAL FARM ESSAY IDEAS

Reading for pleasure allows enjoying the process instead of forcing yourself to make it through. Most of the people who start reading George Orwell's "Animal Farm" share that they are immersed in the novel completely. Even those who tell that books aren't their cup of tea agree that this story is a masterpiece.

Still, choosing the proper "Animal Farm" essay ideas to discuss in an academic paper isn't an easy task. Writing a good essay on this topic can be a challenge. That's because the book itself is rather philosophical - there's a lot of issues to analyze. The narrator covers many aspects related to politics, history, sociology, and psychology, and any area will be a relevant ground for your writing. You may ask how it is possible to highlight those issues if the book is about animals. But, while working on your homework assignment on "Animal Farm," you will discover the meaning of different techniques author uses to deliver his ideas.

As in the case with many other writings, an essay on Orwell's novel aims to make a student analyze the concepts, images, and messages covered in the book. And, if you are going to write a good essay, the first and major step remains the same - you have to choose and formulate a relevant topic. But how to find a perfect one? In this article, we will go through some issues that may be used by students of Literature specialties. We hope that our ideas will inspire you and help to come up with a judgment of a topic you need.

Recall the Background

First, let us recall the basics of the book's plot so that everyone will get the point without reading the entire piece.

It all starts when an aged boar who represents the farm's major calls a meeting. It suggests that the pets are nothing but garner Jones's slaves that have no rights of freedom, and the man gains the advantage of using them for his own purposes. The boar calls for a revolution to fight for rights, and in three days, it kicks the bucket. The pets get rid of Jones's easily and occupy his lands - the Animal Farm is founded.

There is another character, a pig named Snowball, which is presented in a book as an idealist. For it, being free means being polite and educated. That is why Snowball tries to teach the animals things that people can do - reading and thinking logically. Snowball believes that everyone should respect each other and be equal.

And, Boxer - a horse that is the strongest animal on the farm. With Snowball, these two get along well at first. But that's until the smart Snowball offers to build a windmill and provide all animals with electricity. The opposition traits it as an endeavor and scare off Snowball by bringing out the dogs. Napoleon, who is in the head of the farm, decides that now, only pigs have a right to make decisions and implement laws. And that is when it's getting worse. During an attempt to build the windmill using Boxer and other animals as slaves or free labor, Napoleon crashes down. As the windmill falls over, he blames Snowball for everything taking place.

So, how does the plot remind you of a real-life situation? What social issues do you think are hidden in the book "Animal Farm" and how can you use them for a good essay? Take your time - we have prepared an insightful guide on how to implement those ideas from the novel in your writing.

15 Best "Animal Farm" Paper Topics

To begin with, collect the necessary information from the external sources and the book itself, and develop an outline. The best reference is the original Orwell's story, for sure. Have the book right beside you to consult it, if needed. While reading, make notes to pick the best quotes, and support your statements well.

The next stage is to make an outline - it will help you to move on while writing a paper. Depending on the theme you choose, your points will be named differently, but the overall image of your outline can be the following:

• A quote from the story
• The significance of the selected question
• Background information
• Thesis statement
• Claim 1 (A farm represents the country)
• Claim 2 (Animals underestimate the role of farm in their lives)
• Claim 3 (A farm as a real-life image from your experience)
• Paraphrased thesis statement
• Summary of the main points (claims)
• A rhetorical question (how far it could go if...)

At this stage, make sure that your paragraphs are organized logically, and the essay content will be coherent for the audience. The theme you select has a great impact on how your overall structure will look. And now, it is time to list the possible topics to write on.

The story is full of extraordinary characters that you can discuss. Pick and analyze one of them and try not to retell the plot.

• Snowball: A Vivacious Pig
• Squealer as an Example of a Brilliant Talker
• Boxer: An Enormous Beast
• The brutality of the nine dogs
• Benjamin and the stereotypes about the older generation

Those can be a good ground for a character analysis essay as well.

"Animal Farm" covers various social and political issues, so you have plenty of ideas to choose from.

• Leadership & corruption
• Total control of the labor class
• Lies and deception
• American Dream
• Social injustice

These are the central themes covered by George Orwell, and investigating one of them through the novel's plot will be a relevant choice.

There are many hidden messages in the story written by Orwell. If you can see those references, you understand what historical events are described in the book, and if you're not a fan of symbols - here are some topics for you:

• Character symbols: what do Old Major and Snowball symbolize?
• Image of the Soviet Union in The Animal Farm
• Parallels of historical and political events with the book plot
• The Battle of the Cowshed
• Post-communistic spirit and the role of the windmill

Those were some relevant essay topics for your Animal Farm assignment. Feel free to use them and express your ideas on the book in the best manner.

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Supreme Court’s ruling on humane treatment of pigs could catalyze a wave of new animal welfare laws

Professor of Law, Michigan State University

Disclosure statement

David Favre was a founding board member of the Animal Legal Defense Fund.

Michigan State University provides funding as a founding partner of The Conversation US.

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Should California be able to require higher welfare standards for farm animals raised in other states if products from those animals are to be sold in California? On May 11, 2023, the U.S. Supreme Court upheld California’s position by a 5-4 vote in National Pork Producers Council v. Ross .

While the ruling was fractured and reflected complex legal questions, it is a major victory for those working to improve farm animal welfare. A number of states will undoubtedly take advantage of the power that the Supreme Court has recognized.

As a specialist in animal law , I expect that this will result in a patchwork of laws that are likely to make national meat producers very uncomfortable. Ultimately, it could push Congress to set federal standards.

More indoor space for sows

Pork producers sued California over a law that the state’s voters adopted in 2018 via ballot initiative with over 63% approval. It set new conditions for raising hogs, veal calves and egg-laying chickens whose meat or eggs are sold in California. The state produces virtually no pork, but represents about 15% of the U.S. pork market .

At most commercial hog farms , pregnant sows are kept in pens called gestation crates that measure about 2 feet by 7 feet – enough room for the animals to sit, stand and lie down, but not enough to turn around . California’s law requires that each sow must have at least 24 square feet of floor space – nearly double the amount that most now get. It does not require farmers to raise free-range pigs; just provide more square footage for hogs in buildings.

The National Pork Producers Council argued that this requirement imposed heavy compliance costs on farmers across the U.S., since large hog farms may house thousands of sows , and that it restricted interstate commerce. The Constitution’s commerce clause delegates authority to regulate interstate commerce to the federal government . In a series of cases over the past 50 years, the Supreme Court has made clear that it will strike down any state law that seeks to control commerce in another state or give preference to in-state commerce .

States control farm animal welfare

Congress has remained mute on standards for handling farm animals, which are not covered under the 1966 Animal Welfare Act . Consequently, each state regulates this issue within its borders.

For example, in recent years, nine states have outlawed housing egg-laying chickens in “battery cages ” that have been the industry standard for decades. These wire enclosures are so small that the birds cannot spread their wings .

And nine states in addition to California have adopted laws requiring pork producers to phase out gestation crates. Massachusetts’ law, like California’s, would also apply to retail sales of pork raised elsewhere, but its enforcement has been on hold pending the Supreme Court’s ruling in the California case.

California’s market power

The California law says that if producers want to sell pork in California, they must raise pigs under conditions that comply with the state’s regulations. Farmers do not have to meet these standards unless they want to sell in California. The same requirement is applied to producers located in California and those based elsewhere, so the law does not directly discriminate between states in a way that would constitute a clear commerce clause violation.

Producers of eggs and veal that sell in California are on track to implement new space requirements for their animals under the law. But instead of working out how to comply, the pork industry sought to have the courts set the California law aside.

However, as the Supreme Court noted, major producers, including Hormel and Tyson , have said they will be able to comply with the California standard. Niman Ranch, a network of family farmers and ranchers who raise livestock humanely and sustainably, filed an amicus brief with the Supreme Court supporting California .

A fractured verdict

In rejecting the pork industry’s position, justices in the majority disagreed as to why the California law should be upheld. Some held that pork producers had not proved that the law would substantially interfere with interstate commerce. Others argued that regardless of the degree of interference, it was inappropriate to ask courts to balance compliance costs for the industry against California voters’ moral concerns about animal welfare.

“While the Constitution addresses many weighty issues,” Justice Neil Gorsuch wrote for the majority , “the type of pork chops California merchants may sell is not on that list.” Justices Clarence Thomas, Sonia Sotomayor, Elena Kagan and Amy Coney Barrett largely supported Gorsuch’s opinion.

Similarly, dissenting justices differed as to why the California law posed a constitutional problem. Justices John Roberts, Samuel Alito and Ketanji Brown Jackson asserted that the substantial interference requirement had been met, and they would have remanded the case back to the 9th Circuit Court of Appeals. Only Justice Brett Kavanaugh held that the California law should be held void because the positive animal welfare outcomes were not substantial enough to overcome the increased cost it imposed on pork producers.

Beyond pork

Farmers and animal welfare advocates understand that with this win, states with the most progressive animal welfare policies – primarily West Coast and Northeast states – will be able to effectively set national standards for the well-being of many agricultural animals, including chickens, dairy cows and cattle. Conceivably, California might also be able to require basic conditions for human labor, such as minimum wage standards, associated with products sold in California.

I expect that within five years, Congress will enact national legislation on farm animal welfare issues that will preempt differing state laws. It is impossible to predict now whether a new national law would improve animal welfare or adopt existing poor welfare practices – but California’s win represents a major victory for advocates who have sought for years to improve conditions for farm animals across the U.S.

This is an update of an article originally published October 4, 2022.

• Environmental law
• Animal welfare
• US Supreme Court
• Farm animals
• US Constitution
• Pork producers
• Animal welfare law

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The Entire Family Will Love Visiting This Fantastic Farm In Arizona With A Petting Zoo, Animal Feedings, And Monster Truck Tours

S ince I was a kid, I have loved going to petting zoos. Now that I have my own kids, I enjoy taking them to see and learn about animals. One family-friendly farm in Arizona that’s worth going to is the Rooster Cogburn Ostrich Ranch. Not only are there ostriches but several other animals, including a very surprising one, along with animal feedings and a Monster Truck Ranch Tour!

Located off the I-10 between Phoenix and Tucson is an incredible family-friendly attraction you must visit if you haven't already. It's also quite affordable. Welcome to the Rooster Cogburn Ostrich Ranch!

If you love animals as much as i do, you must visit this unique ranch. not only are there ostriches but many other animals including boer goats, dwarf goats, and miniature donkeys..., ...rainbow lorikeets, parakeets, chickens, and pekin ducks..., ...bunnies and giant sulcata tortoises..., ...and fallow deer. and, yes, you can pet and feed the deer and many of the other animals on the ranch, most curious of all is that this ranch also has a tank filled with cownose stingrays. if you've never fed or touched a stingray, i highly recommend it. i just love how friendly these sea creatures are, offered on select weekends throughout the year is the monster truck ranch tours. this one-of-a-kind tour is 50 minutes and will give you an in-depth lesson on ostrich farming along with information about the surrounding desert landscape and other animals along the way..

Have you been to this family-friendly farm in Arizona yet? If so, what was your favorite animal? Let us know! For location as well as seasonal dates and hours, visit the Rooster Cogburn Ostrich Ranch website. You can also give the Rooster Cogburn Ostrich Ranch Facebook page a follow for news and updates.

Visiting the ostrich ranch and need a place to spend the night nearby? Located less than 10 miles away is this Arizona City golf course home complete with a pool and RV parking. Book your stay today!

The post The Entire Family Will Love Visiting This Fantastic Farm In Arizona With A Petting Zoo, Animal Feedings, And Monster Truck Tours appeared first on Only In Your State ® .

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Animal Farm: With spring planting season having arrived in Zone 7, it’s a good time to review agriculture from an investor’s perspective. Topics include agricultural price inflation in the wake of Russia’s invasion of Ukraine; public and private equity investments in agriculture, farmland ownership and the drivers of farmland returns; seed bio-engineering designed to reduce consumption of fertilizer, fungicide and water; and some satellite data on the immense agricultural damage occurring in Gaza and Israel. The Appendix addresses the avian flu’s impact on agriculture and the food supply. 

Watch the Podcast

Animal farm.

With spring planting season having arrived in Zone 7, it’s a good time to review agriculture from an investor’s perspective. Topics include agricultural price inflation in the wake of Russia’s invasion of Ukraine; public and private equity investments in agriculture, farmland ownership and the drivers of farmland returns; seed bio-engineering designed to reduce consumption of fertilizer, fungicide and water; and some satellite data on the immense agricultural damage occurring in Gaza and Israel. The Appendix addresses the avian flu’s impact on agriculture and the food supply.

Greetings, everybody, and welcome to the May Eye on the Market podcast. This one is called Animal Farm because it's an investor's look at agricultural investing. 

Before we get started, just a quick couple of words about the inflation and growth outlook. Our soft landings thesis that we wrote about in January is still alive. GDP for Q1 is tracking down at about 1.5% because of some inventory and trade headwinds, but Q2 is still tracking around 3.5%, which is pretty good. 

CPI has done a U-turn this year. A lot of the structural fixed categories have gone up, but labor market indicators are softening. So one or two Fed cuts still seems plausible for 2024, but that's all I think we get. And you may not get much in 2025, either, but that's what the outlook looks right now. 

And if I had to pick, I'd be more concerned about the risk of weaker growth than the risk of rising inflation given all the indicators we're looking at. New orders, less inventories is our preferred leading indicator, and it weakened recently in the U.S. But bottom line, a reasonably stable backdrop for investors and the soft landing thesis, which seemed really implausible a year ago, is still alive. 

So topics for today are what happened to agricultural and food prices in the wake of Russia's invasion of Ukraine and lessons for investors there, a look at public and private equity investing in agriculture and farmland and what the drivers are, a quick update on a company that's doing some interesting bioengineering of seeds to reduce consumption of fertilizer and fungicide and water. The Eye on the Market, the written Eye on the Market has a section on satellite data of the immense agricultural damage occurring in Gaza and also in Israel. I'm not going to cover that in this podcast. And then I just want to do some quick follow-up on Tesla from last time. 

So now, on agriculture, to start, I am also a citizen farmer and I grow tomatoes and cucumbers and figs and herbs, peppers, strawberries, things like that. All my flower beds are raised and fenced because of the deer. So I have a picture here. If you're watching on video, that's a picture of our tree house in construction as I was building it. And if you are an accomplished bow hunter, from October 1 to January 31 each year, you can sit up in the tree house with a coffee or a cocoa or something, and then cull the deer for us with your bow hunting, but only if you're good at doing that, which I am not. So OK. 

Food prices have a really interesting thing happened. When Russia invaded Ukraine, there were a lot of really scary Malthusian projections that there were going to be massive food shortages. And the ripple effects were substantial at the time. 

But you remember all the stuff we've written about, how geopolitical impacts tend to be temporary on equity markets? It now looks like the world's a resilient place with respect to agriculture and food prices, as well, because look at these two series on the World Bank and the UN on oils, meats, grains, fruit, sugar, cereals. These prices skyrocketed by 30% to 40% in 2022, but have since come all the way back down to where they were before the invasion started. 

Now, CPI measures facing consumers are a different story. In the U.S., they went up 20% and haven't declined. But that includes labor costs, distribution, energy, and a bunch of other policy issues. And it also includes the fact, as I'll show you in a second, that profit margins for the grocery sector are much higher than they've been in a long time. But the key takeaway here is the world's a resilient place. And sometimes when bad things happen in one place, good things can happen in another place to make up for it. 

Here's the slide I mentioned on grocery store profit margins. At around 7%, that's as high as they've been since the year 2000. And the FTC published this last month or two months ago as a way of partially explaining why food prices, why consumer price inflation in the U.S. for food haven't come down as much as global commodity prices for food products. 

We have a chart on here on all the different components of fertilizers. There's a couple of different phosphate measures, potassium, nitrogen. All of these prices have come back down to where they were before Russia invaded Ukraine, again, in part because of increased production in the U.S. and Europe to offset declines elsewhere. 

There were also some concerns that fertilizer prices would be so high that farmers wouldn't use them and lead to food shortages. That also didn't happen. Here, you can see that global fertilizer consumption, using a proxy for exports, have risen back almost to where they were in 2021. 

And then here, look at this one. A 35% decline in Ukrainian wheat production is a big deal. It barely made a dent in global production because Brazil and Canada and the U.S. and Kazakhstan, and places like that increased output. And the same took place with corn. 

Now, this is not to minimize what's taken place in Ukraine. Around a third of Ukraine's territory is now contaminated with lead, cadmium, arsenic, mercury, and things like that, leaching from unexploded munitions and squeeze by the Russians. All of that's leaching into the soil. The Russians have burned almost 10,000 acres of forests. They've polluted the rivers. They've decimated the wildlife. So the impact on Ukraine of this war is environmentally catastrophic. 

So let's talk about investing in agriculture. How do you do that? Well, one way is to invest in companies that do business with farmers. And that's probably the simplest and most straightforward way. So we have a chart in here that shows a basket, equal weighted, of the seven large-cap stocks in the U.S. S&P 500 that are involved in farm machinery, fertilizer chemistry, and agricultural products, like Archer Daniels Midland and Bunge Global, companies like that. 

That index has roughly tracked the S&P 500 Ex Tech, which is a proxy that we use for old economy investing. John Deere stock surged in 2021, which is why it looks like this basket has outperformed the S&P Ex Tech. But that was kind of a unique situation related to John Deere. But I think that's a pretty positive sign that agriculture investing can keep pace with the market Ex Tech, which is what it's done for the last few years. 

Now, from a cyclical perspective, things look like they're weakening; 2022 was an incredible year for revenues and fundamentals for farmers, but as we showed on the first page with the UN data, a lot of crop prices have come back down. So now we're seeing a five-year high in unsold inventories for tractors and combines, and things like that. That's one way to think about the cyclical pressures on agribusiness. 

Another way is to just look at the USDA projection of net farm income, which is falling pretty fast because of falling prices for soybeans, cotton, corn and hogs, let's say price declines of 20% to 25%, larger percentage declines for dairy and poultry. And then you've got just continued 5% to 10% price increases for labor, herbicide, seeds, repairs, livestock, interest costs, things like that. 

There is also, for the farmers that do it, there's quite a steep premium, a green premium for green fertilizer. In other words, if you start with green hydrogen made from electrolysis powered by wind and solar, which you turn into green ammonia, which you turn into green nitrogen fertilizer, there's a pretty steep premium for that. And for farmers that are seeking to decarbonize by buying electrified farm equipment, there are very steep premiums for those vehicles compared to their internal combustion engine counterparts. Bottom line is falling prices, modestly rising expenses are putting a big squeeze on farm income right now. 

Now, that's the public side of investing in agriculture. There is a private side, too, although it's a lot smaller than you might think. So NCRIEF is the source that we look to when we want to look at estimated, very estimated returns on real assets, whether it's timber, farmland or all the commercial real estate segments. And NCRIEF has a lot of institutional investors contributing data. That data on total return is based on the income they earn, plus the change in the value of the underlying asset, which is normally done by appraisal. 

So there's a couple of things to understand about farmland. First of all, the percentage of the total farmland universe that NCRIEF tracks is minuscule. It's like half a percent. And secondly, the amount of transactions taking place within institutional farmland ownership are really tiny relative to the assets they track. So appraisals are driving almost the entire thing. 

So it looks like farmland has generated an 11% return, with 5% or 6% balls for institutional investors in farmland. I wouldn't take this NCRIEF data super seriously. Farmland values have gone up in part because of falling interest rates, which decreases cap rates used to value these things, but I wouldn't put too much faith in the NCRIEF data. 

Here's that table I was discussing. Look at—so for example, farmland, the NCRiEF universe they track is $16 billion. There's $3.5 trillion worth of farmland in the United States, so that's half a percent. 

And what's interesting is there's a lot of angst about institutional ownership of certain assets, and I understand why. Blackstone, for example, and other institutional investors now own, according to Harvard, around 25% to 30% of all the single family rented home stock. So not all single family homes, but the single family homes for rent, institutional ownership is about 25%, which is big. 

Very different situation in farmland. Small family farms still account for 45%, mid and large families account for another 50% or so. And non-families, whether it's corporates, partnerships, institutional ownerships, foreign entities in Canada and Europe, in aggregate, they own 4%. So this is not an asset class that has been heavily invested in by passive vehicles or institutional investors. 

And I mentioned the Twitter sewer again. If you go on Twitter and you look up farmland, you'll see a lot of tweets about how Bill Gates is buying up and monopolizing U.S. farmland. This is why Foreign Policy magazine had an article that referred to Twitter recently as a sewer of misinformation. Bill Gates owns something like 0.2% or 0.3% of all U.S. farmland. So don't go to Twitter for news or facts. 

So let's see. Let's switch topics now a little bit to agricultural productivity. 

Over the last 100 years, there's been a lot of innovation in the sector. And over the last 20 years, we've seen the emergence of genetically modified things, whether soybeans or cotton or corn. There's machinery now that has autosteer capability. There's variable rate seeding, which is becoming more popular. People are using satellite imagery. And I wanted to focus on a company that I think is doing  something very interesting for those of you that like this kind of thing. 

If you think about fertilizer, because that's the really interesting one, farmers tend to apply a lot of fertilizer. Only half of it, roughly, gets taken up by the plants. The rest of it leaches into waterways or gets broken down in the soil, and then eventually that becomes nitrous oxide, which is hundreds of times more powerful as a GHG emissions agent than CO₂. 

And similar story for water and fungicides. Farmers either use them too much or they don't use them enough. And when they use them all the time, they apply them constantly. And so the question is, how could farmers get better at targeted applications of all these things, only when plants need them and not when they don't? It would reduce their expenses. It would reduce emissions. It would improve productivity, lots of good things. 

So InnerPlant is a company that's doing this. They've got their first USDA-approved, genetically modified seed for soy. And the way it works is they genetically re-engineer the seeds, the DNA of the seeds, to emit these fluorescent biomarkers when they're stressed because they haven't had enough water or they have a fungal infection, or they're infected with insects or they have inadequate fertilizer. 

And what's amazing about their biomarkers is that they've got different biomarkers that flash for each one of these things. And even within fertilizer, it makes different signals, whether it's a shortage in phosphorus or potassium or nitrogen. That's kind of amazing. And then these biomarkers are visible by satellites or drones or tractors, and then communicate the need for remedial steps to be taken to fix them. 

And so you can imagine how by only applying fungicides and herbicides and water and fertilizer when the plants need it instead of all the time, that's a big potential benefit. And these biomarkers tend to show up, or they're designed to show up two to four weeks before the visible symptoms of these things would otherwise be seen. So I thought that was really interesting. And we have a brief write-up discussion of what this company is doing. 

I mentioned that I'm not going to discuss the Gaza-Israel situation. It's written up in the piece. There's some satellite data of massive damage to tree crops and greenhouses in Gaza. We also discuss some of the agricultural damage that's been done in Israel. This is really—this war is going to have a really long-term impact, not just on all the people that are being killed, but on their ability to feed themselves. 

As an example, when agricultural areas are affected by war, it takes about five years to resuscitate the soils to make them ready for planting and another five to seven years for replanted tree crops, as one example, to start to bear fruit again. So if you want to read more about those issues, just look at the Eye on the Market itself. 

I wanted to finish up this month's podcast with a follow-up on a couple of Tesla-related issues from last time. And one of the things we mentioned last time is how Tesla management, Musk specifically, mentioned a pivot to robotaxis in some public statements about what Tesla was going to be doing next after all the problems they've had with the Cybertruck. And he's kind of hopscotched back and forth between talking about emphasis for the new Model 2, the cheap $25,000 version, and robocars as the key initiatives. But there's been a lot of attention paid to this robocar thing. 

And it made me wonder because there's a cap of, I think, 2,000 to 3,000 autonomous vehicles in the United States, the whole country, whether that's ones that you own or robotaxis, $2,000 to $3,000 cap. And the Department of Transportation is going real slow on these approvals. There's only a couple of places like Phoenix, San Antonio and Austin that are—wait, I think I might have that wrong. It's Phoenix, San Francisco and Austin, right, that are actually having on-the-ground, customer-facing trials of robotaxis. 

And so last year, towards the end of the year, the autonomous vehicle lobbying industry wrote a letter to the DOT saying, we're falling behind China. This is a big risk. The administration needs to get up and do something to facilitate greater development of robotaxis and autonomous vehicles. 

The Department of Transportation then announced something called AV-STEP, Autonomous Vehicle STEP, which was a program that was designed to put milestones in to allow for greater adoption and permitting of autonomous vehicle programs. And they announced it, and then nothing happened. Nothing. There's not a peep from them since. And so I was wondering what happened here. And then I think I know at least part of the answer. 

So last November, 26 unions with more than 5 million members across United Auto Workers, fire, aviation, rail, marine, sheet metal, Teamsters, they wrote a letter to the DOT that basically said autonomous vehicles are unsafe and untenable in their current form. And they argued that sometimes police and fire have to evade rogue autonomous vehicles in restricted areas. They trap sanitation workers. They cut off transport workers. 

They don't like the fact that autonomous vehicle companies are only required to report data on actual crashes but not near crashes when they drive into construction sites, bike lanes and pedestrian crossings, if they malfunction, if they require remote human intervention, if there are connectivity incidents. In other words, all these things don't have to get reported if a crash doesn't happen. And they're arguing that the kind of fail fast, fail hard approach that the tech sector likes to take is not consistent with public safety. 

So I think, for me, this is probably the primary reason why the Department of Transportation hasn't really done or said anything since last year on autonomous vehicles. The reason I'm going into all this is if it's one of the basic premises for the next 18 to 24 months of value creation at Tesla, particularly now that they fired everybody in the supercharger division, unless the cap was raised on autonomous vehicles, I don't know exactly what it is that Tesla would be doing commercially with this stuff. 

And even the most optimistic Tesla analysts on Wall Street—Morgan Stanley tends to be in charge of the Tesla fanboy community. Even their research sites caution about any near-term commercialization of revenues from autonomous vehicles. 

And now there's China, and Musk took a trip to China recently to try to pave the way for Tesla to compete in full-service driving. The Chinese appear to have announced some kind of approval for testing. But again, like everything else with China, it's very murky. It's unclear. Let's see what actually happens on the ground. 

So as things stand now, Tesla stock has rallied a little bit since the lows on enthusiasm related to robotaxis and maybe some accelerated development of the Model 2. And we have a chart here that shows that the Street forecast for Tesla range from $110 to $300. The stock price is almost directly in the middle, at about $170. 

And at the end of last—at the last Eye on the Market last month, I mentioned that I couldn't plot this chart to include all the analysts because there was a forecast of over $2,000 a share. And it came from the Ark, the group at Ark. And I mentioned that to me that it reminded me of the Arkham Asylum to have a forecast that included a couple of hundred billion dollars for just the autonomous vehicle segment by 2027, which is a business that doesn't even exist yet, any at all. And in the context of the Arkham Asylum, I mentioned that I would also be calling Clay Face, Two Face, and Doctor Phosphorus for their price targets, but I haven't heard anything back yet. 

So that's it for the May Eye on the Market. Look forward to talking to you again in June. We're going to try to get some information on what's going on with the commercial real estate, specifically what's happening to maturing loans, restructurings, loan modifications, and what are the impacts on the regional banks whose stocks are under pressure again. So thanks for listening, and I will see you next time. Bye. 

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Animal Farm

Michael Cembalest Chairman of Market and Investment Strategy for J.P. Morgan Asset & Wealth Management May 15, 2024

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Greetings, everybody, and welcome to the May Eye on the Market podcast. This one is called Animal Farm because it's an investor's look at agricultural investing.

Before we get started, just a quick couple of words about the inflation and growth outlook. Our soft landings thesis that we wrote about in January is still alive. GDP for Q1 is tracking down at about 1.5% because of some inventory and trade headwinds, but Q2 is still tracking around 3.5%, which is pretty good.

CPI has done a U-turn this year. A lot of the structural fixed categories have gone up, but labor market indicators are softening. So one or two Fed cuts still seems plausible for 2024, but that's all I think we get. And you may not get much in 2025, either, but that's what the outlook looks right now.

And if I had to pick, I'd be more concerned about the risk of weaker growth than the risk of rising inflation given all the indicators we're looking at. New orders, less inventories is our preferred leading indicator, and it weakened recently in the U.S. But bottom line, a reasonably stable backdrop for investors and the soft landing thesis, which seemed really implausible a year ago, is still alive.

So topics for today are what happened to agricultural and food prices in the wake of Russia's invasion of Ukraine and lessons for investors there, a look at public and private equity investing in agriculture and farmland and what the drivers are, a quick update on a company that's doing some interesting bioengineering of seeds to reduce consumption of fertilizer and fungicide and water. The Eye on the Market, the written Eye on the Market has a section on satellite data of the immense agricultural damage occurring in Gaza and also in Israel. I'm not going to cover that in this podcast. And then I just want to do some quick follow-up on Tesla from last time.

So now, on agriculture, to start, I am also a citizen farmer and I grow tomatoes and cucumbers and figs and herbs, peppers, strawberries, things like that. All my flower beds are raised and fenced because of the deer. So I have a picture here. If you're watching on video, that's a picture of our tree house in construction as I was building it. And if you are an accomplished bow hunter, from October 1 to January 31 each year, you can sit up in the tree house with a coffee or a cocoa or something, and then cull the deer for us with your bow hunting, but only if you're good at doing that, which I am not. So OK.

Food prices have a really interesting thing happened. When Russia invaded Ukraine, there were a lot of really scary Malthusian projections that there were going to be massive food shortages. And the ripple effects were substantial at the time.

But you remember all the stuff we've written about, how geopolitical impacts tend to be temporary on equity markets? It now looks like the world's a resilient place with respect to agriculture and food prices, as well, because look at these two series on the World Bank and the UN on oils, meats, grains, fruit, sugar, cereals. These prices skyrocketed by 30% to 40% in 2022, but have since come all the way back down to where they were before the invasion started.

Now, CPI measures facing consumers are a different story. In the U.S., they went up 20% and haven't declined. But that includes labor costs, distribution, energy, and a bunch of other policy issues. And it also includes the fact, as I'll show you in a second, that profit margins for the grocery sector are much higher than they've been in a long time. But the key takeaway here is the world's a resilient place. And sometimes when bad things happen in one place, good things can happen in another place to make up for it.

Here's the slide I mentioned on grocery store profit margins. At around 7%, that's as high as they've been since the year 2000. And the FTC published this last month or two months ago as a way of partially explaining why food prices, why consumer price inflation in the U.S. for food haven't come down as much as global commodity prices for food products.

We have a chart on here on all the different components of fertilizers. There's a couple of different phosphate measures, potassium, nitrogen. All of these prices have come back down to where they were before Russia invaded Ukraine, again, in part because of increased production in the U.S. and Europe to offset declines elsewhere.

There were also some concerns that fertilizer prices would be so high that farmers wouldn't use them and lead to food shortages. That also didn't happen. Here, you can see that global fertilizer consumption, using a proxy for exports, have risen back almost to where they were in 2021.

And then here, look at this one. A 35% decline in Ukrainian wheat production is a big deal. It barely made a dent in global production because Brazil and Canada and the U.S. and Kazakhstan, and places like that increased output. And the same took place with corn.

Now, this is not to minimize what's taken place in Ukraine. Around a third of Ukraine's territory is now contaminated with lead, cadmium, arsenic, mercury, and things like that, leaching from unexploded munitions and squeeze by the Russians. All of that's leaching into the soil. The Russians have burned almost 10,000 acres of forests. They've polluted the rivers. They've decimated the wildlife. So the impact on Ukraine of this war is environmentally catastrophic.

So let's talk about investing in agriculture. How do you do that? Well, one way is to invest in companies that do business with farmers. And that's probably the simplest and most straightforward way. So we have a chart in here that shows a basket, equal weighted, of the seven large-cap stocks in the U.S. S&P 500 that are involved in farm machinery, fertilizer chemistry, and agricultural products, like Archer Daniels Midland and Bunge Global, companies like that.

That index has roughly tracked the S&P 500 Ex Tech, which is a proxy that we use for old economy investing. John Deere stock surged in 2021, which is why it looks like this basket has outperformed the S&P Ex Tech. But that was kind of a unique situation related to John Deere. But I think that's a pretty positive sign that agriculture investing can keep pace with the market Ex Tech, which is what it's done for the last few years.

Now, from a cyclical perspective, things look like they're weakening; 2022 was an incredible year for revenues and fundamentals for farmers, but as we showed on the first page with the UN data, a lot of crop prices have come back down. So now we're seeing a five-year high in unsold inventories for tractors and combines, and things like that. That's one way to think about the cyclical pressures on agribusiness.

Another way is to just look at the USDA projection of net farm income, which is falling pretty fast because of falling prices for soybeans, cotton, corn and hogs, let's say price declines of 20% to 25%, larger percentage declines for dairy and poultry. And then you've got just continued 5% to 10% price increases for labor, herbicide, seeds, repairs, livestock, interest costs, things like that.

There is also, for the farmers that do it, there's quite a steep premium, a green premium for green fertilizer. In other words, if you start with green hydrogen made from electrolysis powered by wind and solar, which you turn into green ammonia, which you turn into green nitrogen fertilizer, there's a pretty steep premium for that. And for farmers that are seeking to decarbonize by buying electrified farm equipment, there are very steep premiums for those vehicles compared to their internal combustion engine counterparts. Bottom line is falling prices, modestly rising expenses are putting a big squeeze on farm income right now.

Now, that's the public side of investing in agriculture. There is a private side, too, although it's a lot smaller than you might think. So NCRIEF is the source that we look to when we want to look at estimated, very estimated returns on real assets, whether it's timber, farmland or all the commercial real estate segments. And NCRIEF has a lot of institutional investors contributing data. That data on total return is based on the income they earn, plus the change in the value of the underlying asset, which is normally done by appraisal.

So there's a couple of things to understand about farmland. First of all, the percentage of the total farmland universe that NCRIEF tracks is minuscule. It's like half a percent. And secondly, the amount of transactions taking place within institutional farmland ownership are really tiny relative to the assets they track. So appraisals are driving almost the entire thing.

So it looks like farmland has generated an 11% return, with 5% or 6% balls for institutional investors in farmland. I wouldn't take this NCRIEF data super seriously. Farmland values have gone up in part because of falling interest rates, which decreases cap rates used to value these things, but I wouldn't put too much faith in the NCRIEF data.

Here's that table I was discussing. Look at—so for example, farmland, the NCRiEF universe they track is $16 billion. There's $3.5 trillion worth of farmland in the United States, so that's half a percent.

And what's interesting is there's a lot of angst about institutional ownership of certain assets, and I understand why. Blackstone, for example, and other institutional investors now own, according to Harvard, around 25% to 30% of all the single family rented home stock. So not all single family homes, but the single family homes for rent, institutional ownership is about 25%, which is big.

Very different situation in farmland. Small family farms still account for 45%, mid and large families account for another 50% or so. And non-families, whether it's corporates, partnerships, institutional ownerships, foreign entities in Canada and Europe, in aggregate, they own 4%. So this is not an asset class that has been heavily invested in by passive vehicles or institutional investors.

And I mentioned the Twitter sewer again. If you go on Twitter and you look up farmland, you'll see a lot of tweets about how Bill Gates is buying up and monopolizing U.S. farmland. This is why Foreign Policy magazine had an article that referred to Twitter recently as a sewer of misinformation. Bill Gates owns something like 0.2% or 0.3% of all U.S. farmland. So don't go to Twitter for news or facts.

So let's see. Let's switch topics now a little bit to agricultural productivity.

Over the last 100 years, there's been a lot of innovation in the sector. And over the last 20 years, we've seen the emergence of genetically modified things, whether soybeans or cotton or corn. There's machinery now that has autosteer capability. There's variable rate seeding, which is becoming more popular. People are using satellite imagery. And I wanted to focus on a company that I think is doing something very interesting for those of you that like this kind of thing.

If you think about fertilizer, because that's the really interesting one, farmers tend to apply a lot of fertilizer. Only half of it, roughly, gets taken up by the plants. The rest of it leaches into waterways or gets broken down in the soil, and then eventually that becomes nitrous oxide, which is hundreds of times more powerful as a GHG emissions agent than CO₂.

And similar story for water and fungicides. Farmers either use them too much or they don't use them enough. And when they use them all the time, they apply them constantly. And so the question is, how could farmers get better at targeted applications of all these things, only when plants need them and not when they don't? It would reduce their expenses. It would reduce emissions. It would improve productivity, lots of good things.

So InnerPlant is a company that's doing this. They've got their first USDA-approved, genetically modified seed for soy. And the way it works is they genetically re-engineer the seeds, the DNA of the seeds, to emit these fluorescent biomarkers when they're stressed because they haven't had enough water or they have a fungal infection, or they're infected with insects or they have inadequate fertilizer.

And what's amazing about their biomarkers is that they've got different biomarkers that flash for each one of these things. And even within fertilizer, it makes different signals, whether it's a shortage in phosphorus or potassium or nitrogen. That's kind of amazing. And then these biomarkers are visible by satellites or drones or tractors, and then communicate the need for remedial steps to be taken to fix them.

And so you can imagine how by only applying fungicides and herbicides and water and fertilizer when the plants need it instead of all the time, that's a big potential benefit. And these biomarkers tend to show up, or they're designed to show up two to four weeks before the visible symptoms of these things would otherwise be seen. So I thought that was really interesting. And we have a brief write-up discussion of what this company is doing.

I mentioned that I'm not going to discuss the Gaza-Israel situation. It's written up in the piece. There's some satellite data of massive damage to tree crops and greenhouses in Gaza. We also discuss some of the agricultural damage that's been done in Israel. This is really—this war is going to have a really long-term impact, not just on all the people that are being killed, but on their ability to feed themselves.

As an example, when agricultural areas are affected by war, it takes about five years to resuscitate the soils to make them ready for planting and another five to seven years for replanted tree crops, as one example, to start to bear fruit again. So if you want to read more about those issues, just look at the Eye on the Market itself.

I wanted to finish up this month's podcast with a follow-up on a couple of Tesla-related issues from last time. And one of the things we mentioned last time is how Tesla management, Musk specifically, mentioned a pivot to robotaxis in some public statements about what Tesla was going to be doing next after all the problems they've had with the Cybertruck. And he's kind of hopscotched back and forth between talking about emphasis for the new Model 2, the cheap $25,000 version, and robocars as the key initiatives. But there's been a lot of attention paid to this robocar thing.

And it made me wonder because there's a cap of, I think, 2,000 to 3,000 autonomous vehicles in the United States, the whole country, whether that's ones that you own or robotaxis, $2,000 to $3,000 cap. And the Department of Transportation is going real slow on these approvals. There's only a couple of places like Phoenix, San Antonio and Austin that are—wait, I think I might have that wrong. It's Phoenix, San Francisco and Austin, right, that are actually having on-the-ground, customer-facing trials of robotaxis.

And so last year, towards the end of the year, the autonomous vehicle lobbying industry wrote a letter to the DOT saying, we're falling behind China. This is a big risk. The administration needs to get up and do something to facilitate greater development of robotaxis and autonomous vehicles.

The Department of Transportation then announced something called AV-STEP, Autonomous Vehicle STEP, which was a program that was designed to put milestones in to allow for greater adoption and permitting of autonomous vehicle programs. And they announced it, and then nothing happened. Nothing. There's not a peep from them since. And so I was wondering what happened here. And then I think I know at least part of the answer.

So last November, 26 unions with more than 5 million members across United Auto Workers, fire, aviation, rail, marine, sheet metal, Teamsters, they wrote a letter to the DOT that basically said autonomous vehicles are unsafe and untenable in their current form. And they argued that sometimes police and fire have to evade rogue autonomous vehicles in restricted areas. They trap sanitation workers. They cut off transport workers.

They don't like the fact that autonomous vehicle companies are only required to report data on actual crashes but not near crashes when they drive into construction sites, bike lanes and pedestrian crossings, if they malfunction, if they require remote human intervention, if there are connectivity incidents. In other words, all these things don't have to get reported if a crash doesn't happen. And they're arguing that the kind of fail fast, fail hard approach that the tech sector likes to take is not consistent with public safety.

So I think, for me, this is probably the primary reason why the Department of Transportation hasn't really done or said anything since last year on autonomous vehicles. The reason I'm going into all this is if it's one of the basic premises for the next 18 to 24 months of value creation at Tesla, particularly now that they fired everybody in the supercharger division, unless the cap was raised on autonomous vehicles, I don't know exactly what it is that Tesla would be doing commercially with this stuff.

And even the most optimistic Tesla analysts on Wall Street—Morgan Stanley tends to be in charge of the Tesla fanboy community. Even their research sites caution about any near-term commercialization of revenues from autonomous vehicles.

And now there's China, and Musk took a trip to China recently to try to pave the way for Tesla to compete in full-service driving. The Chinese appear to have announced some kind of approval for testing. But again, like everything else with China, it's very murky. It's unclear. Let's see what actually happens on the ground.

So as things stand now, Tesla stock has rallied a little bit since the lows on enthusiasm related to robotaxis and maybe some accelerated development of the Model 2. And we have a chart here that shows that the Street forecast for Tesla range from $110 to $300. The stock price is almost directly in the middle, at about $170.

And at the end of last—at the last Eye on the Market last month, I mentioned that I couldn't plot this chart to include all the analysts because there was a forecast of over $2,000 a share. And it came from the Ark, the group at Ark. And I mentioned that to me that it reminded me of the Arkham Asylum to have a forecast that included a couple of hundred billion dollars for just the autonomous vehicle segment by 2027, which is a business that doesn't even exist yet, any at all. And in the context of the Arkham Asylum, I mentioned that I would also be calling Clay Face, Two Face, and Doctor Phosphorus for their price targets, but I haven't heard anything back yet.

So that's it for the May Eye on the Market. Look forward to talking to you again in June. We're going to try to get some information on what's going on with the commercial real estate, specifically what's happening to maturing loans, restructurings, loan modifications, and what are the impacts on the regional banks whose stocks are under pressure again. So thanks for listening, and I will see you next time. Bye.

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Text, J.P. Morgan, Eye on the Market, J.P. Morgan

On the right, Michael Cembalest sits in an office with a sign that reads J.P. Morgan on shelving and windows overlooking the city behind him. On the left, a picture of farm animals in human clothes standing upright with a sign that reads, All Animals Equal. Text, May 2024, Animal Farm.

Greetings, everybody, and welcome to the May Eye on the Market podcast. This one is called "Animal Farm" because it's an investor's look at agricultural investing.

US growth/inflation outlook. Our soft landing thesis is still alive as of mid-May. US Q1 GDP is now tracking just 1.4% due to headwinds from inventories and trade. Q2 is tracking 3.4% with domestic final sales projected to rise at 2.7%. While CPI measures did a U-turn this year, labor market indicators are softening. One or two Fed cuts still seem reasonable for 2024. I'm more concerned with the risk of weaker growth than the risk of rising inflation. New orders less inventories is our preferred leading indicator, and it weakened recently in the US. J.P. Morgan

Before we get started, just a quick couple of words about the inflation and growth outlook-- our Soft Landings thesis that we wrote about in January is still alive. GDP for Q1 is tracking down at about 1.5% because it's an inventory and trade headwinds. But Q2 is still tracking around 3.5%, which is pretty good.

CPI has done a U-turn this year. A lot of the structural fixed categories have gone up, but labor market indicators are softening. So one or two Fed cuts still seems plausible for 2024. But that's all I think we get. And you may not get much in 2025 either, but that's what the outlook looks right now.

And if I had to pick, I'd be more concerned about the risk of weaker growth than the risk of rising inflation given all the indicators we're looking at. New orders, less inventories is our preferred leading indicator, and it weakened recently in the US. But bottom line, a reasonably stable backdrop for investors. And the soft landing thesis, which seemed really implausible a year ago, is still alive.

Topics, Agricultural price inflation in the wake of Russia's invasion of Ukraine. Public and private equity investments in agriculture, farmland ownership and the drivers of farmland returns. Seed bio-engineering designed to reduce consumption of fertilizer, fungicide and water. Satellite date on the immense agricultural damage occurring in Gaza and Israel. Tesla follow-up. J.P. Morgan

So topics for today are what happened to agriculture and food prices in the wake of Russia's invasion of Ukraine and lessons for investors there, a look at public and private equity investing in agriculture and farmland and what the drivers are, a quick update on a company that's doing some interesting bioengineering of seeds to reduce consumption of fertilizer, and fungicide, and water. The written Eye on the Market has a section on satellite data of the immense agricultural damage occurring in Gaza and also in Israel. I'm not going to cover that in this podcast. And then I just want to do some quick follow up on Tesla from last time.

A photo of a treehouse. Text, October 1 to January 31. J.P. Morgan

So now, on agriculture to start, I am also a citizen farmer, and I grow tomatoes, and cucumbers, and figs, and herbs, peppers, strawberries, things like. That. All my flower beds are raised and fenced because of the deer. So I have a picture here if you're watching on video. That's a picture of our tree house in construction as I was building it.

And if you are an accomplished bow hunter, from October 1 to January 31 each year, you can sit up in the tree house with a coffee, or cocoa, or something and then cull the deer for us with your bow hunting, but only if you're good at doing that, which I am not. So OK.

Text, Inflation in food prices is not the same as consumer food price inflation. Below is a graph titled Changes in food prices that shows the UN world food price index meat, dairy, cereals, vegetable oils, sugar increases sharply from 100 in 2021 to 140 at the beginning of 2022 and decreases sharply to 125 in mid-2022 and then decreases more steadily until it is 105 by 2024. The World Bank food commodity index oils, meals, grains, fruit, meat, sugar also increases sharply from 100 in 2021 to133 in the beginning of 2022 then decreases to 115 mid-2022 and steadily decreases back to 100 in 2024. The US CPI food at home steadily increases from 100 in 2021 to 120 in 2024. Text, Source, Bloomberg, J.P.M.A.M., April 2024. J.P. Morgan

Food prices-- a really interesting thing happened. When Russia invaded Ukraine, there were a lot of really scary Malthusian projections that there were going to be massive food shortages, and the ripple effects were substantial at the time. But you remember all the stuff we've written about how geopolitical impacts tend to be temporary on equity markets? It now looks like the world's a resilient place with respect to agriculture and food prices as well because look at these two series on the World Bank and the UN on oils, meats, grains, fruit, sugar, cereals. These prices skyrocketed by 30% to 40% in 2022, but have since come all the way back down to where they were before the invasion started.

Now, CPI measures facing consumers are a different story. In the US, they went up 20% and haven't declined. But that includes labor costs, distribution, energy, and a bunch of other policy issues.

And it also includes the fact, as I'll show you in a second, that profit margins for the grocery sector are much higher than they've been in a long time. But the key takeaway here is the world is a resilient place. And sometimes, when bad things happen in one place, good things can happen in another place to make up for it.

Text, Profit Margins. Below is a graph titled US grocery stores profit margin that shows profits at 6.5% in 2000. They dip down to 5% in 2004 and stay under 6% with a low under 5% in 2018. In 2020 they start increasing steadily to 7% in 2024. Text, Source: "Feeding America in a Time of Crisis," FTC, March 2024. J.P. Morgan

Here's the slide I mentioned on grocery store profit margins. At around 7%, that's as high as they've been since the year 2000. And the FTC published this last month, or two months ago, as a way of partially explaining why consumer price inflation in the US for food haven't come down as much as global commodity prices for food products.

Text, Fertilizer prices back down. Below is a graph titled Global prices for fertilizers that shows Diammonium phosphate, Triple superphosphate, Urea (nitrogen), and Potassium chloride all start between $200 and $400 per metric ton in January 2021, increase to a peak in mid-2022, then decrease to between $400 and $600 in April 2024. Phosphate rock starts at $100 in January 2021 and steadily increases to $400 in 2023 then drop sharply to below $200 by April 2024. Text, Source: Bloomberg, World Bank, J.P.M.A.M, Apriil 2024. J.P. Morgan

We have a chart in here on all the different components of fertilizers. There's a couple of different phosphate measures, potassium, nitrogen. All of these prices have come back down to where they were before Russia invaded Ukraine, again, in part because of increased production in the US and Europe to offset declines elsewhere.

There were also some concerns that fertilizer prices would be so high that farmers wouldn't use them and lead to food shortages. That also didn't happen.

Text, Fertilizer production/exports back up. Below is a chart titled Global fertilizer exports that show the total million tons of potash, phosphate and nitrogen were 100 in 2021, dipped to 90 in 2022, then increased to 95 in 2023. Text, Source: International Food Policy Research Institute, J.P.M.A.M., April 5, 2024. J.P. Morgan

Here, you can see that global fertilizer consumption, using a proxy for exports, have risen back almost to where they were in 2021.

Text, Ukraine. Below is a graph titled Production of wheat that shows the Global production versus Ukraine production. Both follow the same increases and dips from 2008 to about 2019. After 2019, the global production steadily increases while Ukraine dips then increases and dips low again. Text, Source: USDA, J.P.M.A.M., 2023. J.P. Morgan

And then here, look at this one. A 35% decline in Ukrainian wheat production is a big deal. It barely made a dent in global production because Brazil, and Canada, and the US, and Kazakhstan and places like that increased output.

Text, Ukraine. Below is a graph titled Production of corn with the global production and Ukraine production following the same increases and dips until 2022 when Ukraine dips lower. Text, Roughly one-third of Ukraine's territory contaminated with toxic elements such as lead, cadmium, arsenic and mercury leaching from ammunition and weapons into the soil. Forests totaling 9,300 acres have been burned, rivers polluted, wildlife decimated and land mines scattered across 67,000 square miles. Source: USDA, J.P.M.A.M, 2023, J.P. Morgan

And the same took place with corn.

So now, this is not to minimize what's taking place in Ukraine. Around a third of Ukraine's territory is now contaminated with lead, cadmium, arsenic, mercury and things like that leaching from unexploded munitions and weapons fired by the Russians. All of that's leaching into the soil.

The Russians have burned almost 10,000 acres of forests. They've polluted the rivers. They've decimated the wildlife. So the impact on Ukraine of this war is environmentally catastrophic.

Text, Public agriculture investing. Below is a graph titled Agriculture returns vs S&P 500 ex-Tech that shows agricultural products, fertilizer/seed chemistry, and S&P 500 ex-Tech steadily increased from 2015 to 2020 when it starts to increase more rapidly and be more volatile until 2024. The eq-wtd ag basket did the same except increased more starting at 2020. And farm machinery increased the most in 2020, jumping from under 200 to 475 and increasing after that. Text, US ag basket 7 large cap stocks in farm machinery, fertilizer and agricultural products. Source: Bloomberg, J.P.M.A.M., May 2024. J.P. Morgan

So let's talk about investing in agriculture. How do you do that? Well, one way is to invest in companies that do business with farmers. And that's probably the simplest and most straightforward way. So we have a chart in here that shows a basket equal weighted of the seven large-cap stocks in the us, S&P 500 that are involved in farm machinery, fertilizer, chemistry, and agricultural products, like Archer Daniels Midland and Bunge Global, companies like that.

That index has roughly tracked the S&P 500 ex-Tech, which is a proxy that we use for old economy investing. John Deere stock surged in 2021, which is why it looks like this basket has outperformed the S&P ex-Tech, but that was a unique situation related to John Deere. But I think that's a pretty positive sign that agriculture investing can keep pace with the market ex-Tech, which is what it's done for the last few years.

Text, Rising inventories. Below is a graph titled Stock of unsold US farm equipment that shows the monthly inventory of unsold machinery, tractors and combines in thousands. Both tractors and combines started around 30,000 in 2019, then dipped to the lowest in 2022. Tractors have gone back up to 30 by 2024. Combines have gone up to 24 in 2024. Text, Source: Sandhills Global, March 2024. J.P. Morgan

Now, from a cyclical perspective, things look like they're weakening. 2022 was an incredible year for revenues and fundamentals for farmers. But as we showed on the first page with the UN data, a lot of crop prices have come back down. So now we're seeing a five-year high in unsold inventories for tractors, and combines, and things like that. That's one way to think about the cyclical pressures on agribusiness.

Another way is to just look at the USDA projection of net farm income, which is falling pretty fast because of falling prices for soybeans, cotton, corn, and hogs.

Text, Falling net farm income. Below is a graph titled US net farm income that shows the real (2000 US) and nominal following the same dips and increases until 2020 when they are further apart, with nominal peaking at $180 billion while real peaks at $110 billion in 2022. Text, 20% to 25% projected price declines for soybeans, cotton, corn, and hogs; larger % declines for dairy and poultry. 5% to 10% projected increases in cost of labor, herbicides, seeds, repairs and livestock feed and a 38% projected increase in interest costs. Source: USDA ERS, J.P.M.A.M., February 2024. J.P. Morgan

Let's say, price declines of 20 to 25%, larger percentage declines for dairy and poultry. And then you've got just continued 5% to 10% price increases for labor, herbicide, seeds, repairs, livestock, interest costs, things like that.

There's also, for the farmers that do it, there's quite a steep premium, a green premium for green fertilizer. In other words, if you start with green hydrogen made from electrolysis powered by wind and solar, which you turn into green ammonia, which you turn into green nitrogen fertilizer, there's a pretty steep premium for that. And for farmers that are seeking to decarbonize by buying electrified farm equipment, there are very steep premiums for those vehicles compared to their internal combustion engine counterparts. Bottom line is falling prices, modestly rising expenses are putting a big squeeze on farm income right now.

Text, Farmland looks great according to NCREIF. .Below is a graph titled Unleveraged real asset returns since 2000 that shows Farmland, 11% annual return since 2000, Industrial properties, 11%, Apartment properties, 8%, Retail properties, 8%, Timberland, 6%, Office properties, 6%, and Hotel properties, 5% with farmland and industrial properties increasing by far the most from 2000 to 2024. Text, Source: Bloomberg, NCREIF, J.P.M.A.M. Q1 2024, J.P. Morgan

Now, that's the public side of investing in agriculture. There's a private side, too, although it's a lot smaller than you might think. So NCREIF is the source that we look to when we want to look at very estimated returns on real assets, whether it's timber, farmland, or all the commercial real estate segments. And NCREIF has a lot of institutional investors contributing data. That data is on total return is based on the income they earn, plus the change in the value of the underlying asset, which is normally done by appraisal.

So there's a couple of things to understand about farmland. First of all, the percentage of the total farmland universe that NCREIF tracks is minuscule. It's like, half a percent. And secondly, the amount of transactions taking place within institutional farmland ownership are really tiny relative to the assets they track, so appraisals are driving almost the entire thing.

So it looks like farmland has generated an 11% return with 5% or 6% vols for institutional investors and farmland. I wouldn't take this NCREIF data super seriously. Farmland values have gone up in part because of falling interest rates, which decreases cap rates used to value these things, but I wouldn't put too much faith in the NCREIF data.

Text, ...but NCREIF's farmland asset base is miniscule and heavily affected by appraisals. A table titled Appraised value of NCREIF real assets vs asset size has columns Asset Class, NCREIF universe (US$ billions), Total universe (US$ billions) and NCREIF share with the following rows, Industrial, $292, $2,400, 12.2%. Apartment, $239, $3,800, 6.3%. Office, $179, $3,200, 5.6%. Retail, $118, $2,900, 4.1%. Timberland, $27, $266, 10.2%. Farmland, $16, $3,500, 0.5%. Hotel, $3, $160, 2.2%. Text, Small family farms account for 45% of all farmland. Mid-size and large family farms account for 51%. Non-family (corporate or institutionally owned) farmland remaining 4%. The "Twitter sewer." Source: NCREIF, N.A.R.E.I.T., Ag America, J.P.M.A.M. May 2024, J.P. Morgan

Here's that table I was discussing. So for example, farmland, the NCREIF universe they track is $16 billion. There's $3.5 trillion worth of farmland in the United States, so that's half a percent. And what's interesting is there's a lot of angst about institutional ownership of certain assets, and I understand why. Blackstone, for example, and other institutional investors now own, according to Harvard, around 25% to 30% of all the single-family rented home stock-- so not all single-family homes, but the single-family homes for rent, institutional ownership is about 25%, which is big.

Very different situation in farmland. Small family farms still account for 45%. Mid and large families account for another 50% or so. And non-families, whether it's corporates, partnerships, institutional ownerships, foreign entities in Canada and Europe-- in aggregate, they own 4%. So this is not an asset class that has been heavily invested in by passive vehicles or institutional investors.

And I mentioned the Twitter sewer again. If you go on Twitter and you look up farmland, you'll see a lot of tweets about how Bill Gates is buying up and monopolizing US farmland. This is why Foreign Policy magazine had an article that referred to Twitter recently as a sewer of misinformation.

Bill Gates owns something like 0.2% or 0.3% of all US farmland. So don't go to Twitter for news or facts. So let's see.

Text, Agriculture productivity. Below is a graph titled Genetic and precision agriculture that shows the adoption rate in percent of GE soybean, GE cotton, GE corn, machinery autosteer, grid/zone soil sampling, satellite imagery, and variable rate seeding. The soybean, cotton, and corn increased to about 90% by 2010 and stayed there while the rest are more steadily increasing. Text, Source: UC Davis, USDA, 2023, GE = genetically engineered. J.P. Morgan

Let's switch topics now a little bit to agricultural productivity. Over the last 100 years, there's been a lot of innovation in the sector. And over the last 20 years, we've seen the emergence of genetically modified things, whether soybeans, or cotton, or corn.

There's machinery now that has AutoSteer capability. There's variable-rate seeding, which is becoming more popular. people are using satellite imagery.

And I wanted to focus on a company that I think is doing something very interesting, for those of you that like this kind of thing.

Text, ...takes another step. 50% of fertilizers applied taken up by plants; rest leaches into waterways or broken down by soil microbes. Nitrous oxide: 300x more powerful as a GHG agent than CO2. Fungicides, only 22% of farmers use them and when they do, they're generally used blindly on all crops. In contrast, roughly 70% of crops would benefit from fungicides, but only need them in targeted applications. InnerPlant: genetic engineering plant of DNA to emit fluorescent biomarkers when stressed due to drought, fungal infections, insect infestation, inadequate fertilizer or non enough water. Visible by satellites, drones, and tractors which communicate the need for remedial steps. Powerful signals: biomarkers designed to emit distress signals 2 to 4 weeks before visible symptoms are noticeable. J.P.Morgan

So if you think about fertilizer, because that's the really interesting one, farmers tend to apply a lot of fertilizer. Only half of it, roughly, gets taken up by the plants. The rest of it leaches into waterways or gets broken down in the soil. And then eventually, that becomes nitrous oxide, which is hundreds of times more powerful as a GHG emissions agent than CO2.

And similar story for water and fungicides-- farmers either use them too much, or they don't use them enough. And when they use them all the time, they apply them constantly. And so the question is, how could farmers get better at targeted applications of all these things-- only when plants need them and not when they don't? It would reduce their expenses. It would reduce emissions. It would improve productivity, lots of good things.

So InnerPlant is a company that's doing this. They've got their first USDA approved genetically modified seed for soy. And the way it works is they genetically re-engineer the DNA of the seeds to emit these fluorescent biomarkers when they're stressed because they haven't had enough water, or they have a fungal infection, or they're infected with insects, or they have inadequate fertilizer.

And what's amazing about their biomarkers is that they've got different biomarkers that flash for each one of these things. And even within fertilizer, it makes different signals whether it's a shortage in phosphorus, or potassium, or nitrogen. That's amazing.

And then these biomarkers are visible by satellites, or drones, or tractors, and then communicate the need for remedial steps to be taken to fix them. And so you can imagine how by only applying fungicides, and herbicides, and water, and fertilizer when the plants need it instead of all the time, that's a big potential benefit. And these biomarkers tend to show up, or they're designed to show up two to four weeks before the visible symptoms of these things would otherwise be seen. So I thought that was really interesting, and we have a brief write-up discussion of what this company is doing.

I mentioned that I'm not going to discuss the Gaza-Israel situation. It's written up in the piece. There's some satellite data of massive damage to tree crops and greenhouses in Gaza. We also discussed some of the agricultural damage that's been done in Israel.

This war is going to have a really long-term impact, not just on all the people that are being killed, but on their ability to feed themselves. As an example, when agricultural areas are affected by war, it takes about five years to resuscitate the soils to make them ready for planting and another five to seven years for replanted tree crops, as one example, to start to bear fruit again. So if you want to read more about those issues, just look at the Eye on the Market itself.

Text, Why is the D.o.T. going slow on autonomous vehicles after announcing in 2023 that in would move forward with "AV-STEP"? Signed by 26 unions with more than 5 million members (UAW, fire, aviation, rail, marine, sheet metal, Teamsters, etc). Transportation Union note to D.o.T., November 2023. AVs are unsafe and untenable in current form. Police/fire have to evade rogue AVs in restricted areas. Transport/sanitation workers cut off/trapped by AVs. AV reporting rules should include near-crashes involving AVs travelling into construction sites, bike lanes and pedestrian crossings; and malfunctions, degradations, remote human interventions, clustering and connectivity incidents as well (i.e. not just crashes). Local jurisdictions need more input into AV deployment. "Fail fast, fail hard" approach taken by many technology companies is anathema to public safety. J.P. Morgan

I wanted to finish up this month's podcast with a follow up on a couple of Tesla-related issues from last time. And one of the things we mentioned last time is how Tesla management, Musk specifically mentioned a pivot to robotaxis and some public statements about what Tesla was going to be doing next after all the problems they've had with the Cybertruck. And he's hopscotched back and forth between talking about emphasis for the new model 2, the $25,000 version, and robocars as the key initiatives. But there's been a lot of attention paid to this robocar thing.

And it made me wonder because there's a cap of, I think, 2,000 to 3,000 autonomous vehicles in the United States-- the whole country, whether that's ones that you own or robotaxis, $2,000 to $3,000 cap. And the Department of Transportation is going real slow on these approvals. There's only a couple of places, like Phoenix, San Antonio, and San Francisco, and Austin that are-- wait. I think I might have that wrong.

It's Phoenix, San Francisco, and Austin that are actually having on-the-ground customer-facing trials of robotaxis. And so last year, towards the end of the year, the autonomous vehicle lobbying industry, wrote a letter to the DOT, saying, oh, we're falling behind China. This is a big risk. The administration needs to get up and do something to facilitate greater development of robotaxis and autonomous vehicles.

The Department of Transportation then announced something called a AV-STEP, Autonomous Vehicle STEP, which was a program that was designed to put milestones in to allow for greater adoption and permitting of autonomous vehicle programs. And they announced it, and then nothing happened. There's not a peep from them since.

And so I was wondering what happened here. And then I think I know at least part of the answer. So last November, 26 unions with more than 5 million members across united auto workers, fire, aviation, rail, marine, sheet metal, teamsters, they wrote a letter to the DOT that basically said, autonomous vehicles are unsafe and untenable in their current form.

And they argued that sometimes police and fire have to evade rogue autonomous vehicles and restricted areas. They trap sanitation workers. They cut off transport workers. They don't like the fact that autonomous vehicle companies are only required to report data on actual crashes, but not near crashes when they drive into construction sites, bike lanes, and pedestrian crossings, if they malfunction, if they require remote human intervention, if there are connectivity incidents.

In other words, all these things don't have to get reported if a crash doesn't happen. And they're arguing that the fail fast, fail hard approach that the tech sector likes to take is not consistent with public safety. So I think, for me, this is probably the primary reason why the Department of Transportation hasn't really done or said anything since last year on autonomous vehicles.

The reason I'm going into all this is if it's one of the basic premises for the next 18 to 24 months of value creation at Tesla, particularly now that they fired everybody in the supercharger division, unless the cap is raised on autonomous vehicles, I don't know exactly what it is that Tesla would be doing commercially with this stuff. And even the most optimistic Tesla analysts on Wall Street-- Morgan Stanley tends to be in charge of the Tesla fanboy community. Even their research sites caution about any near-term commercialization of revenues from autonomous vehicles.

So as things stand now, Tesla stock has rallied a little bit since the lows on enthusiasm related to robotaxis and maybe some accelerated development of the model 2. And we have a chart here that shows that the street forecast for Tesla range from $110 to $300. The stock price is almost directly in the middle at about $170.

Text, Tesla and the Arkham Asylum. Below is a chart titled Select Tesla analyst price targets as of May 10, 2024 that shows the US$ per share for various analysts with J.P. Morgan the lowest at just over $100 and Morgan Stanley the highest at just over $300. The stock price on May 10, 2024 was about $170. Text, Clayface, Two-face, Dr. Phosphorous. Source: Bloomberg, J.P.M.A.M., May 1, 2024. J.P. Morgan

And at the end of last-- at the last Eye on the Market last month, I mentioned that I couldn't plot this chart to include all the analysts because there was a forecast of over $2,000 a share. And it came from the group at Ark. And I mentioned that, to me, it reminded me of the Arkham Asylum to have a forecast that included a couple of hundred billion dollars for just the autonomous vehicle segment by 2027, which is a business that doesn't even exist yet to any at all. And in the context of the Arkham Asylum, I mentioned that I would also be calling Clay Face, Two Face, and Doctor Phosphorus for their price targets, but I haven't heard anything back yet.

So that's it for the May Eye on the Market. Look forward to talking to you again in June. We're going to try to get some information on what's going on with the commercial real estate, specifically what's happening to maturing loans, restructurings, loan modifications, and what are the impacts on the regional banks whose stocks are under pressure again? So thanks for listening, and I will see you next time. Bye.

The painting of the farm animals in human clothes with the sign that reads All Animals Equal appears again. Text, May 2024, Animal Farm

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Bird Flu Is Already Here. Just Look at the Millions Killed.

By Alex Tey

Ms. Tey is a freelance reporter studying journalism and the environment at New York University.

We don’t yet know if H5N1 bird flu will spill over from animals to infect a large number of humans. Based on the few cases of transmission so far, the World Health Organization has expressed concerns that infection in humans “can cause severe disease with a high mortality rate.”

But already it has wrought devastation upon so many lives. The deaths of millions of birds and mammals around the globe in the last few years directly and indirectly from this outbreak should be enough to spur urgent action to stop the spread of the virus, as well as remind us of the role humans play in the proliferation of infectious diseases.

It’s my belief that humans have an obligation to the nonhuman life we share this planet with to mitigate the harm we’ve enabled this virus to cause. Our unsustainable activities — factory farming, climate-warming emissions and habitat destruction, to name a few — have helped turn bird flu from a natural phenomenon into an anthropogenic disaster. But even if you don’t share that conviction, it is still in our best interest to keep this virus from spreading.

Disease has always been part of avian natural history. Wild birds are routinely exposed to mild viruses, but are seldom killed by them. Humans, however, have introduced factors that favor disease: A warming climate can weaken avian immune systems, and infections spread more easily when birds come into more frequent contact while sharing what little habitat remains.

And factory farming makes things even worse. When farm animals are kept in large numbers and close quarters in poultry and dairy farms, viruses can spread and mutate more easily. It’s a human-facilitated training ground for diseases. The progenitor of today’s H5N1 strain, for example, emerged in 1996 when a virus infecting farmed geese in Guangdong Province in southern China spilled back into wild populations.

Maintaining the health of their animal holdings and their businesses — not to mention the potential risk to farm workers and the ever-present threat of human spillover — requires farmers to act quickly. And when bird flu hits farms, often the only real way to contain it is the precautionary culling of entire flocks, which has resulted in tens of millions of dead hens since 2022. The United States Department of Agriculture recommends that farms use killing methods that avoid suffering. But as many as 66 million chickens and turkeys have been culled with a technique that animal welfare groups call unnecessarily cruel: ventilation shutdown, which kills over several hours through overheating.

Given the animal suffering at stake, minimizing interactions between wild and captive birds is all the more important in preventing the spread of bird flu in both populations. But it’s a daunting task for the agriculture industry, given how difficult it can be to isolate dense animal populations kept in close quarters. When biosecurity measures at farms fail — or aren’t even properly attempted — wild populations take an extremely hard hit.

Though wild bird deaths are harder to tally than poultry culls, the numbers that we do have are disturbing. The strain of bird flu coursing through North America ignited a season of plague for Atlantic seabirds when it first appeared in late 2021 at a Newfoundland farm. From April to September 2022, bird flu killed about 41,000 wild birds in Canada. At least 17 percent of northwestern Europe’s breeding population of Sandwich terns — over 20,000 birds — died. And from November 2022 to January 2023, the virus killed thousands of wild Ross’s and snow geese in North Dakota , Kansas , Indiana and California .

The overall death toll may lie in the millions , with millions more threatened by potential infection thanks to the long-range migrations of waterfowl.

Under normal circumstances, most bird populations can bounce back from die-offs. But climate-warming human activity could impair future recoveries in North America.

When bird flu caused “ unprecedented reproductive failure ” at a Newfoundland breeding colony of northern gannets in 2022, it was probably worsened by a marine heat wave that coincided with the outbreak. Heat stress weakens birds’ immune responses , and is likely to become more common as the planet warms. Warmer temperatures can also make recovery from H5N1 more difficult by deepening the effects of decreased food supplies, pollution and habitat loss.

None of this is encouraging for North American birds, which have already lost billions in the last half-century because of habitat loss and other forces. We contributed to the conditions that helped bird flu mutate into a highly pathogenic form. “Now it’s taken off, and it’s totally out of our control,” said Samantha Gibbs, the lead wildlife veterinarian at the U.S. Fish and Wildlife Service.

Worse may lie in store. If the virus spreads unencumbered, it could spell further disaster for species like the beloved Atlantic puffin or the regionally endangered roseate tern. Colony-nesting seabirds like these nest in close quarters and in high numbers, reducing predation but magnifying the effects of disease. Recent asymptomatic cases in Adélie penguins on the Antarctic Peninsula have spurred fears of outbreaks in tight-knit penguin colonies. The blurring of the lines between the wild and the domestic, as infections spill over and back again, also heightens the threats to livestock — and humans.

But to fret only about the prospect of human infection betrays an ecological narcissism. We must not ignore the nonhuman suffering for which, through factory farming, anthropogenic climate change and habitat destruction, we are responsible.

While you most likely need not worry about catching bird flu from meat, eggs or dairy, this is as good a time as any to cut down on products that contribute to climate change (like greenhouse gas-intensive beef) or perpetrate cruelty (like eggs from caged chickens). The same factory farms that cause excessive animal suffering can also function as a reservoir for disease.

An enduring commitment to nonhuman life on Earth would bring down the risk of zoonotic disease spreading to humans. But saving the planet for our own benefit is only by degrees less shortsighted than destroying it to our own detriment. As its most influential and destructive denizens, we owe a duty of care to all of nature — not just its human inhabitants.

Alex Tey is an editor at large of New York University’s student newspaper, Washington Square News.

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Hens found suffering at free-range RSPCA-backed egg farms supplying M&S and Tesco, activists say

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Marks & Spencer has suspended a free-range egg farm as a supplier after seeing footage there of a living hen hanging upside down, as well as sick hens alongside living ones.

It was one of four free-range farms that had RSPCA endorsement where animal welfare advocates filmed inside. Together, the four sold eggs to Marks & Spencer, Tesco and Asda, as well as the Happy Egg Company.

The activists said they saw “appalling” conditions with suffering and dying birds.

Each farm had sick, dying and dead hens alongside living ones, according to the activists – but they warned that the scenes were “a distressing norm in the free-range egg industry”.

Animal rights charity Animal Justice Project (AJP), which shot footage at the farms between December and February, said its investigation laid bare claims of high welfare as a facade. The RSPCA suspended another of the four after seeing the footage.

The most shocking discovery, according to AJP, was a hen hanging upside down on Home Farm in Lincolnshire, which was an A-listed supplier for M&S via egg company Bumble Hole Foods.

“She was struggling to free herself from a hazardous slatted system, with other birds already dead and hanging off tiers,” an AJP spokesperson said.

“The situation was exacerbated by insanitary conditions throughout the farm. In the packing room rat poison had been ‘haphazardly scattered’ and a dead mouse lay among the filth.”

Home Farm cancelled its RSPCA Assured membership in February, although filming had taken place two months earlier.

Bumble Hole Foods says it sources eggs from farms accredited for their hygiene standards and chicken welfare.

The witness said they also saw distressed animals with splayed legs, birds with bad feather loss, decomposing bodies and overcrowded nesting areas.

M&S suspended the farm when The Independent showed the chain the footage.

The other three farms still had RSPCA Assured endorsement when filming took place, but on seeing the footage, the charity suspended Ratford Farm in Wales, where the activist saw “run-down facilities and instances of neglect”.

In sheds that housed more than 14,000 birds, one hen was filmed with an apparently twisted neck, dead hens were filmed on the floor, and one hen had severe diarrhoea, it was claimed.

Conditions were also “disturbing”, it’s claimed, at Glenrath Farms in Scotland, owned by an “egg dynasty” and one of the UK’s largest producers of free-range eggs that produces more than a million eggs daily for Tesco and Asda.

Animal Justice Project said it saw “sick hens in filthy conditions showing signs of severe distress” such as twisted beaks, swollen feet and panting.

“The stench of ammonia filled the air, and numerous deceased hens were scattered throughout the premises – in one area, seven lifeless birds lay together, their necks seemingly broken before they were discarded,” the spokesperson said.

“Central nesting areas were deliberately blocked off, depriving hens of essential spaces to rest and lay eggs, and ‘enrichment’ efforts, represented by plastic bucket lids and mesh scraps, remained untouched.

“During each visit in February, drone footage showed the birds were denied access to the outdoors for four consecutive days, with ‘pop holes’ sealed shut.”

Over half of the respondents in a YouGov poll for Animal Justice Project said they believed free-range hens had daily access to outdoors.

In 2022, a director of Glenrath Farms won an award from the Poultry Club of Scotland.

At a Tesco-supplying farm in the East Midlands, which provides eggs for The Happy Egg Co, a brand synonymous with “ethical” egg production, Animal Justice Project said it documented cases of severe prolapses, wings that looked broken, and widespread feather loss.

Dying and decaying birds were allegedly seen on shed floors.

Sean Barrs, an Animal Justice Project campaigner, said: “Today’s modern egg industry in Britain unveils a heartbreaking truth: sick, dying, and live hanging egg-laying hens, crammed by the thousands into huge, factory-style sheds designed for maximum production.

“Even RSPCA Assured certification fails to shield these birds from suffering, despite the organisation’s mission claiming to advocate for ‘every kind of animal’.”

An M&S spokesperson said: “The footage shows unacceptable levels of welfare which fall well below the rigorous standards we set for all our suppliers. We have immediately suspended the farm [Home Farm in Lincolnshire] from our supply chain while we urgently investigate with RSPCA Assured.”

A Glenrath spokesperson said bird welfare was a priority, adding: “We’re disappointed animal activists chose to break into our farm, causing a significant biosecurity and disease risk. It is a criminal offence to break into a secure property.

“It looks as though the activists were in the shed whilst the birds were resting, which would cause them to become upset and distressed. When birds are resting nest boxes are routinely closed.

“Whilst a misshapen beak is unfortunate and the industry makes great efforts to ensure accurate beak trimming, occasionally some birds do still have misaligned beaks.” There was no indication birds were struggling to feed or drink, they said.

Questioning whether birds became lame or died because of intruders, they said a vet who inspected the hens detected no welfare issues.

But the investigators said they did nothing illegal, having got in through an unlocked door and a damaged “pop hole” – which they said they filmed.

They also put on coveralls and booties so posed no biosecurity risk, which was also videoed, AJP said.

An RSPCA Assured spokesperson said: “This footage is very distressing to watch and we launched an investigation as soon as we were made aware of it.

“As part of that investigation, RSPCA Assured assessors have made unannounced inspections of the three farms that are members of the RSPCA Assured scheme. We’ve also analysed the footage to identify any breaches of the RSPCA welfare standards.

“We can confirm that we have suspended one of the farms, pending further investigation. This means they cannot market or sell any products under the RSPCA Assured label. Our investigation into the other two farms is ongoing and we are unable to comment further at this time.

“A fourth farm shown in the footage cancelled its membership in February, so we are unable to investigate.

“Sadly, from time to time things can go wrong on farms, but one case of poor welfare is still one too many, which is why we have taken these allegations very seriously.”

Asda aligned itself with the response of the British Retail Consortium (BRC), which represents all supermarkets . Andrew Opie, of the BRC, said members worked closely with trusted suppliers to ensure high welfare standards were upheld. “They have strict processes in place and will thoroughly investigate evidence of welfare breaches,” he said.

The Independent asked Tesco to comment but did not receive a reply.

A spokesperson for Noble Foods, which owns The Happy Egg Company, said: “At The Happy Egg Co, the care and wellbeing of all our hens is a top priority and our agricultural team runs a robust schedule of regular farm visits, which includes spot checks from third parties to ensure they meet our stringent welfare standards.

“As soon as we were shown this footage featuring one of our farms, we launched an immediate review. Our team assessed the farm, and the RSPCA carried out an independent and unannounced assessment on Monday 29 April, where the farm was found to be fully compliant with industry regulations and best practices. The RSPCA had previously visited the farm only two weeks prior and has found no cause for concern at either visit.”

The British Free Range Egg Producer Association was asked to comment on behalf of Ratford Farm, as well as Home Farm, which also did not respond to requests to comment. Nor did Bumble Hole Foods respond to requests to comment.

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