The physical impacts of climate change and rapid growth of alternative proteins will put billions of dollars at risk for current food sector giants such as Tyson Foods and JBS, suppliers to household names such as McDonald’s, Walmart, Burger King and Marks & Spencer.
According to an analysis by Fairr, the $20 trillion investor network, seven “key risks” will impact the profitability of the meat sector in the scenario of a 2°C warmer world in 2050. These include the increased cost of electricity due to carbon pricing, higher costs of feed due to poor crop yields and increased livestock mortality due to heat stress.
For example, Fairr forecasts that by 2050 alternative proteins – such as plant-based burgers – will command at least 16% of the current meat market, rising to 62% based on factors such as technology adoption rates, consumer trends and a carbon tax on meat.
Companies reliant on beef are likely to be hit hardest, with loss in market share due to increased temperature resulting in cattle mortality and reduced productivity; they will also be exposed to potential taxes on the most carbon-intensive proteins. Moving to “lower carbon-intensive species”, like poultry is an option, said Fairr, but there are trade-offs, including higher electricity and energy costs (poultry production requires more energy than beef production) and volatile feed costs. “Pivoting towards alternative proteins is the most climate-friendly strategy,” the experts said.
The analysis includes a number of assumptions, including a carbon tax on meat by 2025 and high growth in the alternative protein market. In the US, plant-based meat sales account for 2% of the packaged meat market, according to the Good Food Institute. Plant-based milks now account for 14% of retail milk sales.
Fairr said the food industry is “burying its head in the sand” on climate, with only two of the 43 leading meat companies having undertaken a climate “scenario analysis”.