28. October 2019
Predicting change or spreading hysteria?
Livestock vs no livestock: Looking at prognostics by RethinkX, the IPCC and others.
By Sarah Liebigt
Agriculture is changing rapidly. In which direction? Driven by what factors? Which way is the right one? Scientists and think tanks are trying to answer these questions in different ways. Farm &Food looked a look at three different studies and turned to scientists and experts for answers.
Alternative ways to feed the world are on the rise. Each day we improve technologies and the means to develop and produce food. The way we eat and the way farmers produce our food have to change simultaneously. One will affect the other. Causing hysteria has never helped anybody.
We anticipate that many consumers will shift to animal-free food products if those products begin to meet or exceed their animal-based alternatives on key areas like cost, taste, functionality, convenience, and health, says AgFunder’s Roy Leclerc. Factor in a more conscious consumer who is concerned about the impact of animal agriculture on our environment and sustainability and that switch may happen even faster.
One important factor is the emergence of new technologies such as gene editing, recombinant proteins, and artificial intelligence as well as major advances in tissue engineering, DNA sequencing, and mass spectrometry. Food companies can now create new products like never before: They indeed are on the rise, in value as well as in techniques and possibilities.
USE WHAT YOU HAVE AND TURN OUT
The ballet phrase, taken from a movie, can be adapted very well to the situation we are in right now: We have to use what we already have in order to turn out new methods for the food production system. Or new kinds of food. Or new, necessary views to look at our resources and how we use them.
The think tank RethinkX recently published a paper on the future of the cattle industry. Its most important statement sounds very dramatic: “By 2030, demand for cow products will have fallen by 70%. Before we reach this point, the U.S. cattle industry will be effectively bankrupt. By 2035, demand for cow products will have shrunk by 80% to 90%.”
The authors go on: “There will be enormous destruction of value for those involved in rearing animals and processing them, and for all the industries that support and supply the sector (fertilizers, machinery, veterinary services, and more). We estimate this will total more than $100bn. At the same time, there will be huge opportunities for the producers of modern foods and materials.”
“Production volumes of the U.S. beef and dairy industries and their suppliers will decline by more than 50% by 2030, and by nearly 90% by 2035. In our central case, by 2030 the market by volume for ground beef will have shrunk by 70%, the steak market by 30%, and the dairy market by almost 90%. The market by volume for other cow products such as leather and collagen is likely to have declined by more than 90%. Crop farming volumes, such as soy, corn, and alfalfa, will fall by more than 50%.”
That indeed sounds disruptive and dramatic. The paper uses images and graphs to illustrate the coming change in the industry, as RethinkX prognosticates it. The authors do not, however, leave the rather abstract level of exactly how that huge change is about to happen.
One of the key sentences is hidden in the executive summary: “In some markets, only a small percentage of the ingredients need to be replaced for an entire product to be disrupted.” That is definitely true. However, it does not fit the entire livestock-based food system, as the paper claims.
RethinkX says, simply because we can create the proteins that make up for 3.3% of a bottle of milk, we do not need the cow anymore. RethinkX does not say that in the future we can brew milk just the way we brew beer: throw the proteins in a tank and add “87.7% water, 4.9% sugar (mainly lactose), 3.4% fats, and 0.7% vitamins and minerals”. That is for the reader to conclude. To conclude from paragraphs on precision fermentation and illustrations.
“We are facing nothing less than the end of meat production as we know it,” predicts Dr. Carsten Gerhardt, partner and agricultural expert at A.T. Kearney. “As early as 2040, only 40 percent of the meat products consumed will come from animals.” This would also mean a shrinking of mass livestock farming with all its problems.
Gerhardt refers to a new study by the international management consultancy entitled “How will Cultured Meat and Meat Alternatives disrupt the Agricultural and Food Industry? Although the authors assume that the global meat market will continue to grow overall, new meat alternatives and cultivated meat are increasingly replacing ordinary meat.
Nothing new in the West
The technology RethinkX is referring to as “precision fermentation,” (which they define as using a microorganism to produce a specific desired molecule) has been used for quite a while already. The food industry is using it to make molecules ranging from vitamins to proteins to lipids like algal-derived omega-3 fatty acids used in supplements and plant-based seafood products.
Even if it could be used in more ways, this is no ground-breaking technique. Whats’s breaking is how said tech is used these days. The report also does not seem to consider consumer’s choice. A factor experts claim to considerably affect developments, prices and finally, the switch from cow to corn: “Consumption of healthy and sustainable diets presents major opportunities for reducing GHG emissions from food systems and improving health outcomes”, says the IPCC. The growth of the market for alternative proteines, as well as the “achievement of this potential (of reducing GHG emissions, e.n.) at broad scales depends on consumer choices and dietary preferences that are guided by social, cultural, environmental, and traditional factors, as well as income growth. *(IPCC, Chapter 5: Food Security, p 55)
“If the product tastes good, customers are willing to give up meat for a day every now and then,” says Wiesenhof’s executive board member Marcus Keitzer. “Vegans are no longer the main target group of new products. The new companies we have collaborated with create a taste experience that is very close to the original”; “Appearance, structure, biting and preparation are almost identical. This makes the products interesting for flexitarians, who see them as an alternative to meat, and thus there is a huge market potential.”
However, reports such as RethinkX’ did cause some ruckus among traditional farmers in the USA.
There will be no coup against the “livestock system”
In responding to questions regarding cell-cultured proteins at the World Dairy Expo in Madison WI, Secretary of Agriculture Dr. Sonny Perdue defined USDA policy concerning the innovation. He was responding to a question as to what his Department would do to protect conventional livestock production. Dr. Perdue opined, “It is about having a balanced playing field. If you think USDA should deny technology in order to protect the traditional protein market, I would respectfully disagree.” Labeling is central to the issue of both vegetable-based protein alternatives for meat and milk,. Perdue commented “Our role in the USDA is to provide transparency and correct information to consumers and let them make their choice”. Following chick-news, “the dairy industry is especially concerned over substitutes since 20 percent of the fluid milk market has been displaced by plant-based products including soy milk, almond milk and others. The dairy industry believes that if the term “milk” is confined to products derived from cows, their markets might be restored or at least stabilized.
In Germany, for example, BALpro, the association for alternative proteins, would be a contact point for the likelihood of forecasts such as that of RethinkX. BALPro is the exchange platform for leading technologists, scientists, innovation drivers, VCs and companies in the field of alternative protein sources. “In our network, innovation comes from collaboration,” says Fabio Ziemßen, Vice Chairman of BALPro and Director of Innovation at NX Food. “We advise political decision-makers in areas such as protein plant strategy for the development and establishment of regional, clean and (internationally) competitive value chains.
So how does BALpro assess developments and their pace in the traditional sector?
“A few years ago, nobody would have thought it possible to speak of a ‘sector’ today,” says Ziemßen. The quality and marketability of many plant-based products had been significantly underestimated. “Innovations in the cultivated meat sector are also making progress at an unprecedented speed. The willingness of many manufacturers to transform their own product portfolios and the growing interest of investors – even outside the hotspots in the USA and Tel Aviv – only give an idea of the economic, ecological and social potential”.
“All players in the food industry must ask themselves how they will position themselves for the future and what role they will play in a changing economic, ecological and social system,” says Fabio Ziemßen. Whether you are an established supplier or a start-up: anyone who reacts today to tomorrow’s changes, creates synergies with other suppliers and drives innovation is well advised. A coup against the ‘livestock husbandry system’ will not take place and is not our goal either”.
Growth through Diversity
What do production companies have to say to the rapid developments in altpro? Will the industry change as quickly as RethinkX is describing it?
Wiesenhof agrees that meat consumption will change in the coming years and that herbal alternatives will have a firm component in the market in the future. “In my opinion, however, meat consumption will continue to play a significant role in the future. As with other forms of supply, there will certainly be a coexistence of products and the customer will then decide which product to choose.”
Executive Marcus Keitzer continues: “We follow a differentiated approach and do not believe in black and white scenarios. Our task as a food manufacturer is to create as many different and convincing offers as possible for the consumer.”
“For example, we have entered into a strategic partnership with the Israeli company SuperMeat, which develops meat from cell cultures. In the future, a cultured meat range could supplement our product range. Our strategy is called “Growth through Diversity” and is complemented by SuperMeat, our investment in Good Catch Foods and our distribution partnership with Beyond Meat and JUST. Companies such as Beyond Meat, Good Catch Foods and JUST represent the next generation of outstanding vegetable protein products.”
How does traditional agriculture react to developments in the AltPro-sector? As long as they include farmers in their business developments, they can offer them an option to keep up, says Keitzer: “Most of our contract farmers understand when we explain that it stabilizes the company and thus helps the farmers. We use our expertise in other areas without neglecting our core business. We advise our farmers and inform them about the market. This is time-consuming, but important so that farmers understand what we are doing.”
In times of climate change and fast-moving trends in agriculture, the pressure on farmers to produce not only cost-effectively but also fairly, sustainably and healthily is growing. Companies that do not come from traditional agriculture but have their origins in food research are pushing their way onto the market. Agricultural experts like Gerhardt sees great economic opportunities and a radical change in the food industry, also in view of completely new business models and supply chains. In his opinion, the current market entry of “Beyond Meat” and the associated media hype is only the beginning. The global meat market will grow from around 1,000 billion US dollars annually to around 1,800 billion by 2040. Since the cards are also being shuffled from scratch, however, it is not surprising that many investors are investing massively in new approaches. By 2018 alone, around 950 million US dollars had been invested in start-ups. Of this amount, 50 million US dollars were invested in the comparatively young idea of producing meat by cell proliferation and structuring without killing an animal.
Companies such as Rügenwalder Mühle, Wiesenhof and discount stores have jumped on the bandwagon and expanded their portfolio to include plant products. These products carry the well-known brands and are placed on the shelves in most shops right next to traditional meat products. Substitutes such as JustEgg or crispbread made from insect meal are taking up more and more space, both on plates and in marketing campaigns. We are on the right track.
The industry is changing. And fast. Agriculture has always been under pressure, and the consumer, one of the driving forces behind this change, rarely sees the progress, the use of new technologies or even the risks that every farmer bears. Keitzer is right when he says that there is no simple black-and-white answer.