The future of food is set to slash carbon emissions – and disrupt the economyby Rebecca Macfie
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Billions of dollars are being poured into the development of animal-free protein foods, potentially cutting agriculture’s carbon emissions, but at a cost to our farm-based economy.
The new menu items include meat made from plant protein but with the taste and texture of real beef; chicken and beef grown from self-reproducing cells; milk made from fermented yeast that matches the nutritional profile of cows’ milk; chicken made from pea protein that tastes and cooks like the real thing but doesn’t involve the slaughter of a single chook.
In New Zealand, which earns its keep by exporting animal protein, it may sound like a pipe dream of fanciful entrepreneurs that would spell economic catastrophe for beef and lamb farmers. But some of the smartest money in the world is betting on the nascent technology of animal-free protein, attracted by its potential to help solve the climate and ecological crises facing the planet, to address animal welfare concerns associated with industrial farming and to create a lucrative new “clean-food” industry akin to the booming green-energy sector.
Microsoft’s Bill Gates, Virgin’s Richard Branson, Google’s Sergey Brin, Silicon Valley venture funds Kleiner Perkins and Khosla Ventures and US meat conglomerates Cargill and Tyson Foods are among those to have invested in high-tech food start-ups. Last month, Swiss food giant Nestlé climbed on the clean-food bandwagon too, citing a massive consumer shift towards plant-based protein as it announced the purchase of Californian company Sweet Foods, which makes such products as pig-free bacon and ham.
Menu of technologies
According to agritech specialist and “future food” commentator Rosie Bosworth, the sector is being fuelled by advances in technologies such as tissue engineering, synthetic and molecular biology, gene sequencing, sensors, artificial intelligence (AI) and big data, which are accelerating “faster than Moore’s law” (the rule of thumb that computer power doubles every two years). The latest survey by agritech investment firm AgFunder puts the venture capital sum ploughed into disruptive high-tech food start-ups, including companies developing novel foods, insect farming, high-tech hydroponics, robotics and supply-chain technologies, at US$4.4 billion ($6.2 billion) in the first half of the year, on top of US$8 billion in 2015 and 2016.
Bosworth calls it “Food 2.0, or food without the farm”. She told a recent Environmental Defence Society conference in Auckland that the sector is populated by entrepreneurs who are “out to disrupt the US$7.8 trillion global food system”.
Boston-based Ravi Varghese, an analyst with Ceres Investor Network – which includes 130 institutional investors with US$15 trillion in funds under management – describes the animal-free meat sector as “the new Tesla”. Those who dismiss it as a mere niche product are missing the potential for huge upheaval in the food industry, he says.
Pointing to attention-hogging US start-ups such as Beyond Meat and Impossible Foods – which are making meat from plant protein – Varghese says their goal is to match or improve on the taste of animal meat, and eventually make it cheaper because plant crops require just a fraction of the land, water and inputs required to rear animals.
“Tesla started with a high-end product that owed its appeal to sleek styling and eye-catching performance rather than its environmental benefits. Now it can’t keep up with demand. With Tesla overtaking storied companies such as GM and Ford to become the largest US carmaker by market capitalisation, copying its playbook doesn’t seem like a terrible strategy for plant-based protein,” Varghese wrote in a blog post.
Meat replacements have been on the market for years – remember TVP (textured vegetable protein)? – but products such as the Beyond Burger and New Zealand company Sunfed Meat’s recently launched Chicken Free Chicken are pitched at meat-lovers rather than vegetarians.
Steven Carden, chief executive of state-owned farmer Landcorp, recognises that the rise of animal-free proteins is a profound challenge for New Zealand’s agricultural sector. “Basically, any protein source that historically came from animals can now be replicated with a taste profile that’s virtually identical. The implications are that, after 130 years of farming animals, and as [a company] that’s responsible for looking after 900,000 animals day by day, we are now thinking for the first time we have to … diversify our land use much more into plant-based food production rather than animal-based.”
Given the amount of investment going into high-tech foods, “New Zealand has to forever surrender being a low-cost producer of animal protein,” says Carden. “We have to quickly adjust.”
Food for thought
But what’s the beef with cattle, sheep and other farmed animals? The global food sector produces about a quarter of all climate-warming gases and ruminating livestock – cattle, sheep, goats and deer – account for about 60% of that. That’s equivalent to all the exhaust emissions from the world’s vehicles, reports Chatham House, a London think tank.
“If cattle were their own nation, they would be the world’s third-largest emitter of greenhouse gases,” according to Drawdown, a new book analysing the most effective ways to reverse global warming, edited by US environmentalist and author Paul Hawken.
According to reports commissioned by Beef + Lamb New Zealand, the production of 1kg of New Zealand beef generates 22kg of CO2-equivalents (a unit of greenhouse gases that includes methane and nitrous oxide), and 1kg of lamb generates 19kg of CO2-e. That compares with global medians of 26.6kg for 1kg of beef and 25.6kg CO2-e for 1kg of lamb (see graph).
Monogastric animals (with single-chambered stomachs, unlike ruminants’ four-chambered ones) such as chickens and pigs don’t emit methane as a by-product of their digestive process, so they have a much lower greenhouse-gas footprint. But protein-rich plants such as legumes and pulses outperform all types of meat in terms of climate-damaging emissions, generating about 0.5kg of CO2-e per kilogram of food.
New Zealand dairy production, which Fonterra says is at “world-best” levels in terms of emissions, generates 0.89kg CO2-e per kilogram of milk. That compares with a median of 1.3kg CO2-e.
Globally, twice as much land is used to raise livestock as for growing crops, and of the crops that are grown, a third are fed to livestock rather than directly to people. Agriculture is responsible for 70% of the world’s freshwater use and two-thirds of biodiversity loss, and is a major source of water pollution from the run-off and leaching of animal waste and fertiliser. And that’s with only 7.5 billion people on the planet; by the middle of this century, the global population will be approaching 10 billion.
The demand for meat in wealthy countries has levelled off, but consumption is at a high level after rising for decades. Meanwhile, increasing prosperity in developing countries will expand the ranks of the middle class by 3 billion over coming years – and as people get richer, they tend to eat more meat.
According to a 2016 research paper by the World Resources Institute, demand for animal protein is on track to rise by 80% by 2050. Without big changes in consumption patterns and reductions in greenhouse-gas emissions from the food sector, there’s simply no chance of limiting the global temperature increase to 2°C, let alone the 1.5°C goal of the Paris climate agreement.
And it’s not just the planet that’s suffering. Countless studies have shown that excessive meat consumption is bad for our health. “Accumulating evidence suggests that eating red and processed meat is significantly associated with [the incidence of] stroke and stroke mortality, as well as with increased risk of type 2 diabetes,” according to a wide-ranging 2015 paper led by Dr Walter Willett, professor of epidemiology and nutrition at the Harvard TH Chan School of Public Health. In affluent countries, a high rate of red-meat consumption – especially processed meat – is also “strongly associated” with increased risk of total mortality, cancer and death from cardiovascular disease.
Conversely, eating legumes (such as peas and beans) four times a week has been associated with a 22% lower risk of coronary heart disease. Nuts have been shown to reduce the risk of coronary heart disease and type 2 diabetes. And a high intake of vegetables and fruit has been shown to be important for cardiovascular disease prevention, according to Willett’s paper.
By happy coincidence, the foods that are good for people are also good for the planet. “The diets that promote human health and environmental sustainability broadly intersect,” he notes.
In a widely cited paper published in the journal Nature, David Tilman of the University of Minnesota and Michael Clark of the University of California, Santa Barbara, crunched greenhouse-gas data from crop, livestock and fishery production systems, as well as 50 years of data on global dietary trends, to figure out the likely effect of widespread uptake of healthier diets.
They compared data from those eating a typical omnivorous diet with people who followed a Mediterranean diet (rich in vegetables, fruit and seafood and including only moderate amounts of meat), a pescatarian diet (no meat but including seafood) or a vegetarian diet. People on the three alternative diets were found to have 16-41% lower incidence of type 2 diabetes, 7-13% lower rates of cancer and 20-26% lower rates of coronary heart disease.
Calculating cradle-to-grave greenhouse-gas emissions associated with each diet (known as life cycle analysis), they found the vegetarian diet would reduce food-related emissions by 55%, the pescatarian diet by 45% and the Mediterranean diet by 30%, compared with the emissions that would be generated if current consumption trends continued to 2050.
In another groundbreaking study, a team led by Oxford University’s Charles Godfray found that reducing animal-based protein and increasing consumption of plants could reduce greenhouse-gas emissions by as much as 70% by 2050, compared with business-as-usual trends. Total mortality would also be reduced by 6-10%, and annual savings of US$1 trillion in healthcare costs could be achieved.
Not surprisingly, research like this has sharpened the focus on agriculture’s contribution to the global climate crisis. A major 2016 study by the UK’s Oxford Martin Programme on the Future of Food concluded that imposing climate taxes on meat and milk would result in big cuts to agricultural emissions and encourage healthy dietary changes. The research, published in the journal Nature Climate Change, found that a 40% tax on beef and 20% on dairy would compensate for the climate damage caused by the production of each food group.
The idea of a meat tax has also been mooted in Denmark. And the Chinese Government last year released new dietary guidelines calling for a 50% reduction in meat consumption. The move, primarily aimed at health promotion, was heralded by climate campaigners as a boon to efforts to reduce emissions.
In Drawdown, Hawken ranks cutting meat consumption and shifting to a plant-rich diet as the fourth most-effective measure to stem climate change out of 80 technologies and policies analysed. Calling it a “compelling win-win” for human health, Hawken and his researchers said meat should be reframed as a delicacy, rather than a dietary staple.
“Few climate solutions of this magnitude lie in the hands of individuals or as close to the dinner plate.”
Hard habits to break
But if weaning the world off oil, coal and gas was a staggeringly difficult challenge, convincing people to change what they eat could be even harder. New Zealanders are the biggest meat-eaters in the world, tucking away almost 127kg a year, according to research by Natasha Stotesbury and Danny Dorling at Oxford. That’s more than the notoriously carnivorous Americans (118kg), and 43% more than the meat-loving French (89kg).
The home cook who puts a chickpea casserole or green-lentil curry in front of a Kiwi family is liable to be greeted with curled lips and demands of “where’s the meat?” But that’s where the entrepreneurs behind such firms as Auckland’s Sunfed Meats and Los Angeles-based Beyond Meat see a big opportunity, both to make money and to reduce emissions and environmental degradation.
Beyond Meat’s pea-protein products are in the meat aisle in Safeway, Whole Foods and Kroger supermarkets in the US, where they compete with rump steak and pork ribs for the attention of carnivorous consumers.
American venture capitalist Victor Friedberg was one of the early investors in Beyond Meat through his company S2G Ventures (Seed 2 Growth). He told the Listener the Beyond Burger was the “tipping point” in the growth of the alternative-meat sector, and mainstream food companies are taking notice. Last year, Tyson Foods, the world’s second-biggest producer of chicken, beef and pork, took a 5% stake in the company, having come under pressure from activist investors demanding to know how it was responding to the commercial threat from animal-free protein alternatives.
Friedberg says Beyond Meat can’t keep up with demand for the patties. Who’s buying, and why? “They’re flexitarians – people who are still eating meat but looking to reduce,” he says.
Silicon Valley-based Memphis Meats, founded by cardiologist Uma Valeti, is growing meat in the lab from animal cells. “We take cells from high-quality animals, we identify the cells that can self-renew and then select them for the best taste and texture,” Valeti said at the EAT Forum on food and climate issues in Stockholm in June. “We put them in a clean cultivator – basically a mechanical cow or chicken – where they get the vitamins, minerals, amino acids and proteins they need, just like a real animal. It grows for four weeks and then we harvest it.”
That compares with the 18-24 months it takes to raise beef cattle. Valeti says the food is also safer. “Most meat contamination occurs at the time of slaughter. Because we don’t do that, there are immense safety implications.
“This is just one more tool to meet the growing demand for meat, so we are not eating through the planet. We can have meat and a better planet. We can have both.”
Valeti pitches Memphis Meats as a “movement” and claims its innovations represent “one of the biggest technological leaps for humanity”. This year, it produced lab-grown chicken and duck from self-reproducing poultry cells. It’s aiming to launch its products to consumers by 2021. In August, the company attracted Kansas-based meat conglomerate Cargill (which last year dropped the word “animal” from its protein division) as an investor in a US$17 million funding round, alongside Kimbal Musk, brother of Tesla founder Elon, Virgin’s Branson and Microsoft’s Gates.
Beyond the impossible
California firm Impossible Foods has developed a burger from wheat and potato protein that is famous for “bleeding” like animal meat thanks to a molecule called heme. Abundant in animal muscle, heme also occurs in plants. Impossible Foods identified heme in soy roots, and is using genetic engineering to produce it in large volumes.
The Impossible Foods burger is so far available only in a few US restaurants, but the company has attracted US$257 million from investors including Gates, Khosla Ventures and Singapore’s sovereign wealth fund Temasek Holdings, and last month opened a factory in Oakland, California, that it says will be able to supply 1000 restaurants.
Founder Pat Brown, an emeritus professor of biochemistry at Stanford, has described livestock agriculture as “by far the most destructive technology in the world” and declared he wants to completely displace it, enabling land to be returned to wilderness. Brown says his market is not vegetarians and vegans but hard-core meat eaters who will be sold “the best burger they’ve ever tasted”.
Among other new high-tech entrants to the food industry are Finless Foods, making fish fillets from stem cells; Ripple, using yellow peas to make milk; and Perfect Day, making milk from yeast and brewing technology, which plans to launch its product next year. Modern Meadow is bioengineering animal-free leather using collagen protein; Hampton Creek (backed by Khosla and tech entrepreneur and New Zealand citizen Peter Thiel) is using plants to make egg-free mayonnaise, dough and biscuits; and Ava Winery is aiming to produce wine, molecule by molecule, without the grapevines. Bosworth says there’s even faux foie gras made without force-feeding geese.
The horticulture sector, too, is being challenged by start-ups. US company AeroFarms has developed a high-rise “vertical farm” in a former New Jersey steel mill. Using LED lighting, thousands of sensors and precision application of nutrients and moisture, it is producing vegetables without sun or soil, using 95% less water than outdoor growing, and no pesticides or fungicides. It claims to produce higher yields in less time than normal horticulture.
As is commonly the case in disruptive new industries, it hasn’t all been plain sailing: Hampton Creek has had a few internal ructions and has seen off a lawsuit by Unilever, and Impossible Foods is under fire for allegedly using its genetically modified heme without confirmation from the Food and Drug Administration that it’s safe.
Although animal-free meat and milk account for only a tiny proportion of the global food market – a mere 0.25%, according to a recent report in the San Francisco Chronicle – analysts are predicting massive growth. In a 2015 report, technology analysts Lux Research predicted that alternative protein products could represent a third of the global protein market by mid-century.
As Bosworth puts it, “The cultured/synthetic meat and protein train has left the station, and at a speed that even we industry proponents weren’t quite expecting.”
Fanning the growth are activist investors such as the Ceres network, which are beginning to apply to food companies the same techniques that have been used to force oil, coal and gas companies to confront climate change and disclose their exposure to “stranded” carbon assets. Those that fail to heed the demands of such investors face the risk that their shares will be dumped, as has happened to some fossil-fuel companies: the New Zealand Superannuation Fund and Swedish sovereign wealth funds are among those ditching their holdings in companies regarded as liabilities in a world that must reach net-zero carbon emissions.
Julie Nash, Ceres’ senior manager, food and capital markets, told the Listener the network is “looking to bring the lens of climate change into the agriculture sector … We are looking to focus investors on this issue.” Ceres has so far been concentrating on such commodities as cotton and palm oil, issues such as degradation of freshwater and measures such as pressuring global food companies to account for their environmental footprint throughout their supply chains.
British financier Jeremy Coller – who has invested in Sunfed Meats, Impossible Foods, Beyond Meat and Hampton Creek – is harnessing shareholder pressure through the Farm Animal Investment Risk and Return (Fairr) network. Since he set up Fairr in 2015, it has grown to include 71 investors with US$3.3 trillion in funds under management.
Coller, who has been a vegetarian since age 11, told the Listener “the concept of stranded assets is shifting [from fossil fuels] to food. Factory farming is going to become a stranded asset.”
He says investors have the power to bring about massive change in the way food companies operate “because we own them”. Fairr’s first target has been antibiotics in the food-supply chain, and it has also started pressuring food multinationals such as Unilever, Kraft and Tesco to come up with plans to diversify away from animal protein.
In a report he wrote with London-based ShareAction chief executive Catherine Howarth, Coller argues that the world faces a “protein bubble” that carries both huge risks and opportunities for investors. “As the world’s population rises and demand for protein grows, the current protein supply chain simply cannot cope …
“With the clock ticking on climate change and an imminent public health crisis, some governments are already moving to legislate against highly polluting and potentially carcinogenic foods. Forward-looking investors and large food companies can move now to respond to and help shape this burgeoning market.”
So, where does this leave New Zealand, which earned almost $6 billion from meat exports and $11.2 billion from dairy exports last year, and where half of all greenhouse-gas emissions come from ruminating animals and agricultural soils?
The fiercest criticism of agriculture’s environmental footprint is directed at the intensive feedlot systems found in the Northern Hemisphere, but New Zealand’s pastoral farming regime is also vulnerable. High rates of nitrogen leaching into waterways from intensive dairy farms and occasional animal-welfare scandals invite the scrutiny of international markets and consumers who, with the rise of such alternatives as Chicken Free Chicken and the Beyond Burger, will have a widening range of animal-free options to choose from.
Nash says it’s inevitable that New Zealand’s agriculture sector will face increasing pressure to provide a detailed account of its environmental impact. International food companies will be expected to report to their shareholders and consumers “not only their own direct emissions and impacts, but also those of their suppliers, and suppliers of suppliers. I think there will be increased demand for data and requests for disclosure. Countries with large agricultural footprints are going to need to be aware of, and part of, that dialogue.”
The Listener wanted to find out how Fonterra, New Zealand’s biggest exporter of animal protein, is responding to these trends, including the looming competition from cow-free milk companies such as Ripple and Perfect Day. However, the company refused our interview request. Instead, a spokesman sent a statement saying: “We monitor all developments relating to dairy. Alternative products have been in the market for many years, including soy, rice and nut products. Dairy is full of natural goodness. Nature has designed it to provide a complex mixture of proteins, fats, minerals and other nutrients, which provide a range of long-term health benefits to consumers. In monitoring these new developments and technologies, we look to see what they solve and provide to consumers.”
DairyNZ chief executive Tim Mackle was happy to talk, explaining that the industry group – in partnership with Fonterra and the Ministry for Primary Industries – is rolling out a climate-change strategy to help farmers understand agricultural emissions, and developing a pilot greenhouse-gas reporting scheme with 100 farms.
“We are among the world’s most efficient producers of milk and meat,” he says. “I fear that Kiwis might get the wrong idea that we are bad in terms of our emissions from agriculture – because we are not, in terms of our intensity.”
People in the developing world want to eat more animal protein, he says, and “while there is demand, someone’s got to produce it … [Given the projected 10 billion world population] I think synthetic or plant-based foods are a positive development for the world. But we still believe there will be demand for animal protein, particularly high-quality dairy.”
Mackle says he’s confident that researchers will come up with a fix for the problem of methane emissions from cows and sheep.
Beef + Lamb New Zealand is setting up a project to investigate how plant-based, lab-grown and insect-based protein alternatives could affect the red-meat sector here. Chief executive Sam McIvor says one of the objectives will be to sort “hype from reality”, identify the threats and opportunities, and understand consumer attitudes to alternative meats.
He says New Zealand’s pastoral red-meat production is among the most emissions-efficient in the world. If production here fell, demand would simply be met by higher-emitting farmers elsewhere.
However, such claims are hard to confirm, given the widely varying methodologies used internationally to measure the life-cycle effect of food production. According to a conference presentation earlier this year by AgResearch principal scientist Stewart Ledgard, emissions from beef produced in Oceania (primarily New Zealand and Australia) are similar to those in European and North American systems, where the animals are typically grain-fed and housed in barns for much of the year.
Sector heads such as McIvor are wondering if the high-tech protein sector is mere hype, but Landcorp’s Carden says change is coming, and fast. A century and a half of pastoral farming has done an “enormous amount to build the economic backbone of this country”, but the industry model based on land conversion and increasing stock intensity has reached its “economic, social and environmental limits”, he says. At the same time, the explosive growth of animal-free proteins will be “substantially disruptive”.
“I think they will become mainstreamed into a core range of products, principally either a combination of the traditional patty – minced meat, which is a substantial proportion of beef consumption globally – and obviously in the milk market as well.
“So, New Zealand needs to think pretty rapidly about how it repositions itself. I don’t think people’s aversion to faux meat in a hamburger patty will last long, either because they don’t know about it because – judging by the Impossible Foods burger – it’s impossible to tell, or because over time they won’t care because they understand the environmental story, and the taste is great, and it’s at a price point that’s cheaper than they used to pay.
“When a McDonald’s or a Burger King is at the point where they are starting to introduce those products, that will mainstream it. The horse will have bolted at that point.”
But shifting to a “new farming future” won’t be easy, says Carden, who has overseen the cancellation of further dairy conversions, the development of sheep and deer milking and large-scale tree planting since taking the helm at Landcorp four years ago.
“In the first place, if we are going to produce animal protein, we have to make it really high quality and niche and difficult to replicate, because there is always going to be a segment of the market that’s prepared to pay. But they will have to pay much more and it will have to be worth it for them to pay much more. So it needs to have a good provenance story around it, as well as health and well-being attributes.”
The search for alternative land uses – such as protein crops – is no less challenging. “What do we do with all the assets that are on this land that are designed to milk cows? Because animals are relatively inefficient at turning plants into protein … to produce the same amount of food from plants from a calorie perspective would require much less land, especially if you were starting to use it for, say, Sunfed or Impossible Foods, which are highly efficient.”
He says there is a serious risk of “billions and billions of dollars in stranded assets”, including high-priced agricultural land that has had its value driven up by demand for dairy conversions, and dairy sheds and processing plants reliant on high milk volumes.
“Change is coming to the sector quickly,” he says. But most farmers are small businesses dealing with volatile conditions and with limited capital to make big changes. “It’s not like they can get a bank loan to fund the retrofit of their cowshed into a hydroponic nursery, when that market is not yet developed.”
Kiwi farmers won’t be immune to the effects of radical change. “There’s no reason food production shouldn’t be disrupted in the same way that taxis [by Uber], hotels [by Airbnb] and phone companies [by technology] have been. In fact, we are probably more vulnerable.”
As one of the first entrepreneurs in the world to commercialise a plant-based meat alternative, Sunfed Meats founder Shama Lee is at the leading edge of that disruption. But she believes the company, which she started three years ago, represents an opportunity for New Zealand farmers. She says she’d love to be able to source the yellow peas used to make Sunfed’s Chicken Free Chicken from Kiwi growers rather than importing them from Canada.
“We want to grow this industry so that farmers have a choice. It’s about expanding possibilities. We are stuck in this old way of thinking and we can’t seem to get our way out of it. We need to take a step back and re-engineer the whole system. This trend is happening, very strongly, and either we [New Zealand] do it or we get left behind.”
This article was first published in the October 21, 2017 issue of the New Zealand Listener.
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