The future of climate food? Entrepreneur should seize the opportunity
Did you know that the food system is responsible for a third of overall global CO2 emissions? The graph below shows carbon emission breakdown across the food chain. It is well known that the global food system is carbon intensive and uses a lot of water to bring foods to our tables. One of the striking examples that is evidence of this, is the beef production. According to different sources the pasture-to-dinner trip of beef requires about 1,910 US gallons per pound (or 15,944 liters per kilogram). This is also why a lot of the climate conscious consumers are adopting more plant-based diets. Just to clarify though, the agriculture sector in general has done great strides in becoming more efficient, and less water intensive across its entire production chain. The start-up world, including companies that are women led are transforming the food industry for the better.
Examples of Climate Smart Food
Meat is a natural food item that comes to mind when talking about climate mitigation efforts across the agriculture sector. Meat produced in laboratories, through tissue engineering, has been expanding globally and is today offered in fancy restaurants as well as in most hamburger fast-foods. Just to give some financial data on the market for these products, in the. U.S. plant-based sales reached $7 billion in 2020, according to the Good Food Institute, and according to other sources, the plant-based meat market can reach $450 billion by 2040. Additionally, according to Statista, lab-produced meat is projected to equal conventional meat production by 2050, massively reducing the water needed to bring steaks and other meat products to our kitchen. While questions remain about lab meat cost structure, energy needs and health implications, we should applaud these lab protein companies like Impossible Foods (one of the pioneers in plant-based burgers, sausages, chicken nuggets, meatballs, and pork production), as they are taking massive risk to change the way we eat while reducing environmental impacts.
Other food item being affected by climate variability
Hazelnuts, tomatoes, almonds, soybeans, coffee, and avocados are products we all consume and that are very region specific in terms of production. Global markets are highly dependent on countries and regions such as California, Mexico, Italy, Turkey, and Brazil for their stable supplies. Due to climate variability and to the increased frequency and intensity of disaster events (droughts, floods, wildfire, and cold fronts just to name a few) these products’ harvests have declined massively over the last 5 years causing major price increases and affecting corporation’s bottom line. One of these is the beloved Italian Ferrero (with a turnover of over 11.4-billion-euro p/y) famous for its hazelnut chocolate, and who is tackling climate risk by becoming an ESG activist.
Brazil is another example of a major food player suffering from the changes in weather patterns. To keep up soybean production predictable (which has increasingly been affected by dryer summers), has accelerated deforestation which is disrupting one of the most critical climate system tipping points: the amazon forest. Regardless of any efforts, Brazilian soy-bean production is expected to decrease by 90% by 2050 if climate variability patterns continue. Another concerning trend is the sharp decline in tomato production. Italy, a country responsible for 13% of global and 48% of Europe’s tomato production (with an average of 7 million metric tons per year) is in serious trouble because of extreme weather patterns. According to Business Insiders last year alone, Italy lost 19% of its tomato production due to climate events, causing higher prices at the supermarket across Europe.
What does the trend look like?
With the population expected to reach 10 billion by 2050 (we are today 7, 9 billion) we will need about 56% more food to be produced according to the UNEP (United Nations Environmental Program) in order to feed ourselves while keeping food security at check. Tech innovation, biology, chemistry, anchored on ESG, with support from capital markets will play the catalyst role to ensure we move towards a lower carbon foot-print food marketplace. This will likely include less land dependent production, and more technology driven entrepreneurship bringing to market lab-grown meats and eggs, edible insects, seaweed, plant-based foods.
With increased regulatory pressure on the ESG front particularly as it relates to the decarbonization efforts, we will see more startups tackling climate risk while transforming the future of food. Lab meat and poultry start-ups are the natural front runners and I am very bullish on some of these companies becoming profitable and others preparing for IPOs. I believe these represent exciting opportunities to make money while having a positive societal and environmental impact.