Late last month, John Hart attended the ProteinTech 2018 conference and got thinking about New Zealand’s agricultural future.
I was at the ProteinTech 2018 conference held in Auckland in late July – the first of its kind, and judging by the response, definitely not the last. Among the 200 plus attendees were representatives from traditional farming – sheep, beef, dairy and arable crops – as well as industry bodies, marketers, and more than a few bankers and investors.
Everyone was keen to hear what alternative protein means for New Zealand’s primary industries, and, by the end of the day, we had a pretty good picture of what we are facing. Over the course of the last few years, alternative protein has gone from a theoretical threat to a real thing that producers are developing and consumers are buying. So what is it?
The products available (or soon to be) fall into a few broad categories: plant-based products like the Impossible Burger, or New Zealand’s own Sunfed Meats; cellular agriculture (or vat-grown meat), and the others, like insect protein and fungus-based products. Most of them are specifically designed to mimic and replace meat-based protein consumers buy now. Their promoters use some compelling arguments around resource use, and the removal of animals from the process of creating food.
Our economy derives great benefit from exporting protein – mostly in the form of meat and dairy – so what does that mean for New Zealand? There was a lot of discussion about consumer choice, marketing, and overcoming misinformation. Given the audience, a slight vibe of defensiveness was understandable, and much was made of the unnaturalness or overly-processed nature of artificial protein foods.
By focusing on consumer perception and our marketing response, I think we overestimate how much control we have in some spheres, and how little we have in others. Global food consumption patterns vary constantly and are always in flux. The rise of “vegan” products doesn’t automatically mean a decline in meat sales as new markets open, develop and mature.
We can exert some control over our destiny in marketing our products but the majority of the meat and dairy we produce becomes ingredients in processed food made in other places. The risk I see to New Zealand farming-as-usual is from manufacturers moving to meat and dairy alternatives in their products. We can’t stop that, and most consumers won’t know or care. When was the last time you read the back of a chocolate bar wrapper? Would you even know if dairy ingredients had been replaced by a comparable alternative?
Why would manufacturers do that? There are plenty of supply chain drivers like price, consistency and geography, but it gets worse. Losing market share in ingredients is one thing – we could probably still find other markets for the food we produce. It will really hurt us when enough alternative protein ingredients exist that they start driving down the price of commodity ingredients.
A lot of the alternative protein products on the market now are barely out of prototype, but they are still competing with traditional protein and making a profit. When these technologies mature, prices will do what they always do under economies of scale and process efficiency: they will drop. Producing protein in factories that could be located anywhere in the world using automated systems will almost always undercut food grown on specific pieces of land in specific climates. We have to consider what the rural landscape might look like if dairy or farmgate meat prices dropped year on year. Think about the businesses, families and communities that are in harm’s way if that happens.
So what should our response be? There are two broad directions we could go in. First we can play to the strengths of our existing system, or second, we can compete against alternative proteins with our own. There was good discussion at the conference of both approaches, and the reality will probably look like a bit of both.
I’ve long believed that our future lies in producing the world’s best high quality “real” food, with low/no environmental impact, impeccable animal welfare, end-to-end traceability, and a great story around people and communities. Then we sell it to the richest global consumers.
But commentator Rod Oram eloquently drove a stake (steak?) through the heart of that idea. His argument was, unless we went well above and beyond “no impact” and into farming systems that actively restored and rebuilt the natural environment, we’d still get left behind by others who were doing that better than us. His analogy was: “We would be refining the internal combustion car, just as the world is moving to electric vehicles”. I think he’s got a point. We have to be able to tell a story of the absolute best food in the world, and that by buying our food, consumers are helping to heal the planet. To differentiate ourselves from cheaper alternatives, we’ll have to go to the very top of the market.
To live up to that story, we would have to change a lot: building farming practices that regenerate our land, water and communities, and that still generate enough profit to work. As a start, that probably looks like a lot fewer hooves per farm and much more diverse farm activities. We would need to devote heroic amounts of capital to developing and marketing our story, and even if it all worked, we would probably be producing less food for export, but have to find better returns for the farmers that remained in the industry. We would still need to plan for a decline in overall farming activity. The focus on high-value products and marketing basically means we would be out of the commodity ingredients business. Think about the billions invested in meat and milk processing that would have to be written down, and the many billions more needed to transform in order to survive.
The second approach (and remember it isn’t necessarily either/or) is that New Zealand embraces the alternative protein wave and we generate our own products. But there are no guarantees of success here either – there is already a lot of research, infrastructure and capital being applied in other countries.
We do have a local example in Sunfed meats, with their non-chicken chicken product made here from pea protein imported from Canada where farmers are subsidised. Could locally-grown peas be used and still make a competitive product? Possibly not, but we have no shortage of arable farmers willing to give it a go. (As a side note, my home of Wairarapa is currently under a ban on growing peas due to the presence of a pea weevil. It’s another warning that reliance on single crops can bring vulnerability to a region.) Also, some of the alternative meat and dairy proteins utilise genetically modified organisms to create their ingredients. That path might well be an either/or decision for New Zealand: “GE free real food” might not be compatible with a high-tech food future. And even if we could rapidly develop novel alternative proteins products, and we could competitively produce the plant-based inputs here, there is a reason cows are the main land use in large parts of the country: lots of our land isn’t suitable for arable crops.
I’m trying not to make any judgements on the merits of alternative proteins vs conventional farming: there are arguments for both. But what I want us to do is think about alternative protein as a phenomenon that is going to happen to us. The sooner we figure out what to about it, the better.
Industry bodies have made a good start by exploring the possible impacts and opportunities, but now is the time to figure out a unified approach and response. And government also needs to play a key role in making it happen and figuring out how we invest what is required.
As I see it, in the best-case scenario, we end up with an innovative, R&D-driven, resilient, diverse primary sector that we can all be proud of, with well-paid jobs and vibrant rural communities. Incidentally, if we crack that, our climate change response is probably pretty well sorted too. One thing is for sure: if we ignore alternative protein and hope for the best, our farming future will be out of our hands.
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