Governments, regulators, investors and consumers are taking a long hard look at the nature and viability of the meat industry in the wake of multiple failures exacerbated by Covid-19.
The shutdown of slaughterhouses around the world due to infected and dying meat plant workers continues to be front page news globally. Most recently, in Germany, North Rhine-Westphalia’s Gütersloh district sent 640,000 people back to lockdown after 1,700 slaughterhouse workers tested positive. There have also been recent closures at meat packing plants in Brazil and Ireland, in addition to earlier shutdowns at plants in the US, Canada, Australia, Spain, the UK and elsewhere.
Germany has just brought in €30,000 fines for violations of labour standards at meat packing plants, and the EU has announced an investigation into live animal transport regulations and practices within and beyond the 27-nation trading area. China recently stopped the import of chicken products from US food giant Tyson as part of its renewed pandemic restrictions. UK regulators are looking at restrictions on new factory farms due to local opposition and concerns about meeting climate targets. And governments around the world are concerned about the security of the food supply system.
The industry is vulnerable to new regulations designed to prevent or contain the next crisis and investors are taking note. The $20 trillion FAIRR investor network www.fairr.org warns that the industry faces a growing number of significant financial risks.
“Regulatory conversations are already taking place across Europe and the US, focusing on several core themes including breaking up industry consolidation, implementing moratoriums on factory farms, banning live export, limiting antibiotic use, and overhauling biosecurity containment and surveillance practices,” says Jeremy Coller, founder of FAIRR and Chief Investment Officer at Coller Capital.
In a new report called “An Industry Infected: Animal Agriculture in a Post-Covid World”, FAIRR cites the growing awareness that the factory farming-slaughterhouse system embodies a wide range of risks including worker health and safety, potential pathways for zoonotic diseases, the threat of contributing to future pandemics, high GHG emissions, large environmental footprints, its role in deforestation and its significant contribution to the rise of antibiotic resistance. “The industrialized model of animal production has been optimized to prioritize both cost and production efficiency, at the expense of multiple other factors including worker safety, biosecurity and ultimately, resilience.”
So, what is the outlook for the industry and the security of the food supply system?
“In the medium term, a shift to more sustainable plant-based proteins offers resilience where animal protein production has failed. Plant-based proteins are more efficient to produce, can be scaled up or down to meet market demand in a matter of days and don’t have the disease risks associated with livestock,” the FAIRR report says.
Consumers are increasingly open to plant-based alternatives, with sales rising sharply across many markets including North America, Europe and China. Recent surveys in the US and UK show that more than half of consumers are willing to try plant-based meat alternatives and reduce their consumption of red meat. Market researchers agree that the pandemic has strengthened recent trends in favour of plant-based foods. Potentially even more worrying for the industry, is a new finding that the pandemic is significantly raising awareness of the meat industry’s poor track record on worker health and safety, and animal welfare.
“Covid is shining a light for consumers to start evaluating their own choices and whether or not they want to continue to buy meat,” said Josh Balk, vice-president of farm animal protection at the US Humane Society, in an interview with Bloomberg.
The FAIRR report says additional risks for the industry – aside from the pandemic continuing to disrupt the animal protein supply chain — is that many plant-based foods are starting to compete directly on price. And that retailers and manufacturers are expected to increase their use of plant-based proteins to reduce supply chain risks.
FAIRR has issued a Pandemic Ranking showing that companies in the meat industry are doing “far too little to measure and manage pandemic risk.” The report says 44 (out of 60) companies, valued at $224 billion, are deemed high risk (worst performers). Other findings include, more than three-quarters of the companies are categorized as high risk for their track records on: waste and pollution (94% of companies); deforestation and biodiversity (88%); and, antibiotics (77%).
The multiple failures of the meat industry have given rise to all of these pressures and it appears the future security of our food supply will increasingly rely on the growth of plant-based food systems and on consumers making different choices.