Diversification is a common risk mitigation. If you have a pension plan, your provider may have asked you how you want to diversify your pension with some investments in company shares, others in government bonds (safer but yielding less), and maybe even emerging-market or green investments. The rationale is that diversifying the types of investment lessens the potential impact on you if one of them nose-dives in value.
Regulators are also concerned by lack of diversity. They make UK building societies hold an extra cushion of capital to account for the fact that they are entirely dependent on the UK housing market.
In 1950, a man’s perfectly preserved body was found in a peat bog in Denmark – so well preserved that he was initially taken to be a recent murder victim. He had died 2,500 years ago but the contents of his stomach still held his last meal; it was a porridge made from barley, flax and the seeds of 40 different plants. There was clearly a very diverse source of food in those times.
Today, most humans get 75% of their calories from just eight foods: rice, wheat, maize, potatoes, barley, palm oil, soya and sugar, and there is little diversity worldwide in the varieties grown of each of those crops. This is also reflected in family meals: 59% of British families eat the same six meals each week, most of them repeating them on the same days (…assumes a takeaway or going out on the seventh day).
Practically all of the world’s industrial pig farms raise the same breed of pig: the Large White. This is because it puts on meat very fast and can be kept indoors or outdoors. Over the past few years, African swine fever has killed around half of all of China’s pig population and maybe a quarter of the world’s farmed pigs as well. Monocultures are always particularly susceptible to disease and a single, breed-specific pathogen can play havoc with food security.
Whilst diversification as a risk mitigation seems to be alive and well in financial services, it appears to be dangerously lacking in the food chain.
Data Sources: Eating to Extinction, Dan Saladino; The Economist magazine; mirror.co.uk