The global agricultural system, responsible for up to 25% of global carbon emissions, has come into focus for investors in a climate-constrained world. In the first of a three-part series, we discuss the resource scarcity challenges facing the global food system and animal-protein value chains.
Part two will examine why commercial alternatives to animal protein are rapidly emerging, and part three will look at how corporate plant-based protein strategies are evolving, and the questions investors must ask of companies.
Systemic challenges in the global food system
Our global food supply faces a resource scarcity crunch. With the population expected to grow to 9.8 billion by 2050, few challenges are more critical than the development of a resilient, sustainable food system. We are far from that today. Animal livestock systems occupy 45% of the global surface area, and account for 15-18% of greenhouse gas (GHG) emissions. This is more than the global transportation fleet and is a large portion of the 25% of global emissions from agriculture as a whole.
Emissions and land use are set to grow rapidly as developing regions adopt higher protein diets. When protein is consumed at moderate levels, this improves nourishment, human health and living standards. About 40% of the world's population will shift further to animal protein consumption by 2050 under status quo scenarios. By then, the “budget” for global emissions will be 70% consumed by status quo agriculture under a 2-degree Paris Agreement scenario.
At its core, the resource challenge of consuming animal proteins is that animals are very inefficient converters of food. Animals convert a small portion of feed to consumable protein - the rest is used to support an animal’s metabolism, bones, tissues and so on. Chicken, eggs and fish convert feed to protein at a rate of 17-25%, whilst cattle convert at as little as 4%. This means 25 calories of feed are needed to produce 1 calorie of beef. Beef, the outsized source of emissions in global agriculture, produces at least six times more GHG emissions per unit of protein than eggs, about 14 times more than soya (tofu), and 17 times more than lentils.
This makes growing crops, and the associated fossil-fuel based fertiliser inputs, to feed animals far more resource-intensive than crops for humans due to the sheer volume required. Moreover, 80% of feed-based crops cannot be consumed by humans, thus competing for scarce land.
To serve a global population protein-sufficient diets that enhance standards of living, the world must dramatically improve the efficiency of agricultural land and water use, stop degradation of soil health, retain and improve biodiversity, and steeply reduce emissions from agriculture. Moreover, the role of animal proteins in the global diet must change in the face of urgent scarcity.
Plant-based nutrition offers consumers sustainable forms of protein and opportunities for food and agriculture companies seeking long-term growth that diversifies from the multitude of risks inherent in industrial-scale animal protein production. Such risks radiate well beyond emissions - one is the proliferation of antibiotics use in livestock, driving antimicrobial resistance (AMR), a threat to the future effectiveness of human medicines.
In the next edition of this blog series, we explain why commercial alternatives to animal protein are rapidly emerging and the key demand, supply and regulatory drivers.