Cows grazing in a field

Meat Is a (Really) Bad Investment: Here’s Why

Here’s why investing in animal agriculture is like betting on a sinking ship

In 2020, 12 million Brits say they will be cutting out meat, dairy and fish from their diets. And a recent report from Yale University found that 54% of Americans are willing to eat less beef, lamb and pork on a regular basis and 46% are willing to use dairy alternatives to their milk and cream.

This growing trend toward plant-based foods paired with the negative impacts climate change is already having on farming which will only intensify as the years pass, could mean financial ruin for those working in animal agriculture.

At least, that’s the message coming out from FAIRR, a $20tr investor network. They’ve just released a new modelling tool that can quantify the risks and opportunities for brands dealing with climate change. And the numbers don’t lie.

Billions of Dollars at Stake

They analysed 43 of the largest meat companies that are publicly listed – like Tyson Foods, JBS, BRF and Minerva – and showed that billions of dollars are at risk if global temperatures rise 2 degrees above industrial levels as outlined in the IPCCs report.

These are companies that supply food to brands like McDonald’s, Walmart, Burger King and Marks & Spencers. And some of them could lose 45% of their earnings by 2050.

FAIRR’s report showed that only 2 out of the 43 companies have a publicly disclosed climate-related scenario analysis (that’s 5% compared with 23% in the oil and gas industry).

The tool outlined seven risks to profitability related to climate change, including:

  • Increased electricity costs due to carbon pricing
  • Higher feed costs due to poor crop yields
  • Increased livestock mortality due to heat stress

There has also been rapid growth in alternative proteins over the past few years and that shows no signs of stopping. Sales of meat alternatives are predicted to be at least 16% of the total meat market by 2050, but that could be closer to 62%.

‘Investors can see the inescapable truth for the meat sector is that it must adapt to climate change or face ruin in the years ahead.

Conversely, there is also an appetising prospect of enormous upside if the world’s meat companies shift their protein mix to align with a climate-friendly path.

It’s not an acceptable strategy when it comes to this level of climate risk for the food industry to bury its head in the sand.’

Jeremy Coller, FAIRR’s Founder

But as Jeremy said, where there are huge risks, there are also huge gains.

Maple Leaf, a Canadian food producer, was an early investor of plant-based proteins with its purchase of Lightlife. The Canadian Broadcasting Corporation reported that sales of plant-based protein in 2018 was $1bn and that CEO Michael McCain said he expects double-digit growth in the segment for the foreseeable future.

FAIRR believes their earnings could grow by 77% if they continue to invest in alternative proteins and move away from crops and livestock that are impacted by climate change.

Three Pathways for Producers

  • Climate regressive pathway: The company sticks to its 2020 market position, with no market share in alternative proteins and maintains carbon-intensive species such as beef in 2050.
  • Baseline (market pathway): The company grows protein share (conventional and alternative) in 2050.
  • Climate progressive pathway: The company grows alternative proteins faster than in the baseline, shifts feed and livestock mix towards less climate-influence crops and species in 2050.

So if you’re looking to invest, it’s worth digging into the details to find out just how the company is planning to deal with climate change.

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