WHERE’S THE BEEF?: The entire meat supply chain faces perilous future
When policymakers turned their attention to climate change, energy was the first target, transport came later. Meat, which contributes a quarter of global emissions, is next.
JIM GILES: Global meat consumption will drop by close to 3 percent in 2020, the United Nations predicted recently. That would be the second consecutive annual fall. So what’s going on?… Let’s look at the issue on three time scales. Things look bad for the industry on every one. When policymakers and investors first turned their attention to climate change, energy was the first target. The result was the ongoing decarbonization of the electricity grid. Other sectors, including transport, came later. Now we’re seeing the rise of electric vehicles. The food sector, which contributes around a quarter of global emissions, is next…
Results of this shift are emerging around the world. In New Zealand, farms will be included in the country’s emissions trading scheme from 2025 onwards, effectively taxing meat and other high-carbon foods. In Germany, there is a national debate about how meat and dairy prices should reflect climate-related externalities. A similar conversation is taking place in the Netherlands. If these and other emissions plans are enacted, the 40 biggest meat companies could face a $40 billion tax bill by 2050, according to modeling by FAIRR, a group that monitors investment in animal agriculture…
It’s likely that America will be slower than other nations to use policy to limit meat consumption, if it does so at all. Yet that may not matter, because alternative proteins are bringing another wave of disruption. Like the policy moves, it’s easy to assume that alternative proteins won’t dent America’s demand for meat… That criticism holds for now, but it likely won’t for much longer. The best way to think about alternative proteins is as an emerging technology.
Like every technology, from cars to cell phones, the version we use today bears little resemblance to the original. The same will be true of plant-based meats in 2030… The impact of these improvements won’t be linear. Alternative proteins will begin by chipping away at the market share of easier-to-replace products, such as ground beef. Other beef products then will have to bear the full cost of the production and processing infrastructure, driving prices up. This will make alternatives more competitive, further eroding the market for beef products…
To take just one example: “Production volumes of the U.S. beef and dairy industries and their suppliers will decline by more than 50 percent by 2030, and by nearly 90 percent by 2035.” No matter that 10-year projections almost never prove precisely correct. What’s more important here are the dynamics that the authors identify. If those hold true, the meat industry will be turned upside down. What should we make of this coming storm? Whatever your views on eating meat, there are reasons to welcome it. Agricultural emissions, of which meat constitutes an outsized share, must fall if we are to avoid the most severe impacts of climate change…
Yet that shouldn’t blind us to the negative impacts of disruption. Millions of Americans work in jobs that will be affected by these changes. Whole communities are reliant on ranching and meat processing. Investment funds — and remember, that may mean your pension — have billions tied up in meat products. If the industry is about to enter a death spiral, we need to plan for a just transition. SOURCE…
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