Currently reeling from the radical readjustment of global eating habits that has accompanied the pandemic, the international meat industry is facing another near-future reckoning with those determined to hold it to account for its high greenhouse gas emissions.
Citing a report by Fairr, a US$20-trillion heavyweight investor network, Bloomberg Green writes that “with momentum gathering for policy-makers to impose levies on farm animal emissions, carbon taxes could cut as much as $11.6 billion from 40 leading meat companies’ earnings before interest, taxes, depreciation, and amortization by 2050”—an amount equal to “about 5% of each company’s revenue.” Farm animal emissions constitute as much 18% of the annual global total.
The pandemic has been eating away at the fortunes of the meat sector as households are forced to forego restaurant meals and cook at home—often choosing meat less often as they do so. Citing data from the United Nations, an earlier Bloomberg report observes that “per-capita consumption this year is set to fall to the lowest in nine years, and the 3% drop from last year represents the biggest decline since at least 2000.” Pre-pandemic, “50% of all meat was consumed outside of the home” in the U.S., adds Bloomberg, citing data from Boston Consulting Group.
Prominent in “a swirl of factors” contributing to the shift away from meat is reduced discretionary income, which leads to reduced grocery spending, along with fewer meals eaten out (or ordered in, during pandemic times). And then there is the consumer disquiet produced by news reports of essential workers in abattoirs and animal processing plants who are suffering disproportionately from COVID-19.
While the pandemic has accelerated the public’s embrace of protein alternatives, Bloomberg notes that larger trends are at play as well: “There are hints of a structural change taking place, with millions eating more plant-based proteins because of environmental concerns.” Reduced animal protein consumption is being seen even among famously meat-loving Germans and Brazilians.
Citing predictions from the University of Missouri’s Food and Agricultural Policy Research Institute, Bloomberg reports that 2020’s “per capita meat consumption will decline for the first time since 2014,” with consumption expected to continue to fall “through at least 2025.”
Contributing still further to the fall in fortunes of the meat sector will be the direct impacts of the climate crisis, as high temperatures put stress on livestock and crop failures lead to steep increases in food prices.
Stepping up to help the meat sector weather this unprecedented swarm of risks is Fairr itself, which has introduced a modelling tool that enables companies to predict how their business will be affected by climate change and a shift to a low-carbon economy.
According to one scenario modelled by the tool, “a 2°C rise in temperatures by 2050 could cut profits at five major meat companies by at least 30%—potentially equal to billions of dollars—unless they lower beef and poultry exposure or raise market share in alternative proteins,” writes Bloomberg.
On the bright side, embracing such diversification should be a boon to the beleaguered sector, with another model showing that “profit at Canada’s Maple Leaf may climb 77% in the next three decades, given a heavy focus on alternative proteins.”
Describing his company’s new modelling tool as “the first step to help investors and companies understand the risk and opportunities of global warming in the meat sector,” Fairr founder Jeremy Coller noted in a press release that “when it comes to climate’s impact on the meat industry, the numbers are too big, and the quantum of environmental damage too substantial, for investors to ignore.”