Revisiting the pyramid, grandma and other things

The coronavirus has taken our world by storm. There has been little time to react and it will take more time to adapt. In a matter of days, our economy and societies have undergone an acid test like they had not in a long time. Important questions, many of them existential, have had to be asked. Perhaps, the most personal and intrusive one is to decide what is essential and what is non-essential, and by what, the question really has come down to who is and is not essential. This one is rather traumatic, because for many it has meant that they lost their jobs, part or all of their income, with all the implications about their livelihoods, security, sense of purpose and future.

Those who know me know that I look at many things through Maslow’s pyramid of needs. To me, the current troubled times that we are going through and how people cope -or not- with it, is very much the same as revisiting Maslow’s pyramid. Until a few months ago, the world economy seemed to run on all cylinders and although a recession seemed to be overdue, as one tends to happen every decade or so, there was very little that indicated that the economy would slow down drastically. The stock markets where like a fun fair. Then, everything freezes over. The topic of essential vs. non-essential sent us right back to the pyramid. All of a sudden, the lower layers of the pyramid took precedence. Physical security and security of food and shelter became obvious again, and the more superficial matters had to step back a bit.

Not only did many household budgets take a painful hit, store shelves were often scarcely filled. This pandemic has shown that our economic model is really built around quantitative growth and abundance, but should conditions change drastically, it is not as agile and resilient as we may have liked to think all this time, especially when nobody really wants to have inventories. Empty shelves did not remain empty for just a couple of days but it took more like a couple of weeks for some products to reappear in satisfactory quantities, and some items have hardly reappeared at all even a couple of months into this crisis. Shelves were empty, and yet farmers dumped their products, in particular dairy farmers literally pouring milk down the drain. An outrageous food waste has been taking place, in a time where food banks are overwhelmed and can get enough to help the ones in need. There is some thinking to do about connecting the links of the value chains, because it shows very little value and does not behave like a chain, either.

The small pop-and mom shops actually did rather well in this mayhem. They adapted quickly to ensure social distancing. They took orders for pick up and for delivery, and actually prepared them without errors. Most of all, they showed no disruption of supplies. The small meat store had meat and the baker had bread. They may be a bit more expensive than supermarkets, but the value of not wasting time and risking contamination to find only half of what is on your shopping list outweighs the slight price uptick. Grocery chains did not perform anywhere this level of service. At least, here I am talking about the part of the world where I live. Online ordering, pick and delivery have been subpar, and that is for those who actually were able to set up something. Orders were incorrectly filled and even after so many weeks, it is rather cumbersome.

A look at what flew off the shelves is quite revealing and a confirmation of our revisiting Maslow’s pyramid. Remember the trendy times from before the Corona Wars? Yes, it feels like an eternity but in fact it was not that long ago. When it came to food, many of us had been convinced that the good old-fashioned foods that previous generations, all the way back to the early times of agriculture, had become about irrelevant, that farming was going to be revolutionized, mostly by people without any background in agriculture. Cows were farting and that was unacceptable to some billionaires, as clearly the debonair ruminants were up to kill us with their gasses. I wrote my thought about that in previous articles. We had to give up animal products altogether. Sure. Then, the virus came and we stopped flying around in planes, we have to work from home and forget about morning and evening commute, our factories had to shut down and our energy use dropped dramatically. Then, all climate monitoring showed the same thing: greenhouse gasses emissions dropped significantly and the quality of our air improved, and all of that with the same numbers of cows and farm animals. Understand me well, some animal farming systems will need to change dramatically to adapt to a climate friendly approach of agriculture. We were supposed to all become vegetarians and vegans, and yet the most striking thing I could see in grocery stores was that meat, dairy and eggs were about all gone. People hoarded the recently forbidden fruit and apparently were proud to do so. With most of the staple animal products gone, what was left in the stores, then? Well, the sections with plant-based animal products surrogates were still aplenty even though the shelf space for those is usually rather small. No shortage of soy- and pea protein burgers, but no ground beef. No butter except the fancy expensive more “natural” ones, but plenty of margarine on the shelves. No milk today, but lots of soy and almond milk. No regular eggs, but no shortage of the expensive ones produced with special feed, supposedly healthier for us. On the protein side, consumers left massively the higher layers of Maslow’s pyramid, forgot the trendy products and hypes of all sorts to rush back to the basics.

Other categories that showed an amazing comeback are flour and pasta. What a change of heart! Here, too, consumers went back to the basics. Baking and cooking have been among the most popular activities during the pandemic lockdown. What happened to carbs and gluten? Weren’t they supposed to be the incarnation of all evils? Weren’t they supposed to make us fat and sick, to a point where self-proclaimed sometimes questionable dieticians and marketers worked really hard to convince us to not buy any of those staple products but instead choose for the much more expensive gluten-free alternatives that would fill their pockets? Well, not only the pasta, flour and baking sections in the stores were desperately empty because the staples products were back in favour, but the amazing part was that the shelves with gluten-free and other carb-alternative diet products were left about untouched. Flour is back, and so is bread and baked goods because 1) they are fun to make, 2) they are cheap to make and 3) they are good for you, of course with moderation that is. That is the stuff I am advocating on my other blog, “The Sensible Gourmet”. Take a look at it is you have time and you will see the many advantages of preparing food yourself. Baking and cooking are so much more than just that. They are an act of love and they are a unique way of connecting people and generations. This is what we are witnessing here. The need for social contact and love, the second layer from the bottom in Maslow’s pyramid is as popular as the bottom layer about basic physical needs. Baking is just a trip back to grandma’s kitchen. It is a reminder of our childhood and the atmosphere of grandma’s kitchen and the complicity that it brought around the stove. It is a reminder of the happy moments of tasting warm dough and making a mess with chocolate cream. In the current uncertain times, it is a safe haven where love and comfort bring us a badly needed protection from a harsh reality.

But the journey into nostalgia is not only limited in the kitchen. The poorly agile supply chain to large grocery stores and empty shelves showed that food supply is not a given. This has not gone unnoticed and if baking and cooking are popular right now, so is gardening. People transform their lawns into veggie gardens and those living in apartments buy and grow herbs, tomatoes or strawberries in pots on balconies to find some sense of food security. Empty shelves and long distances bring a reflection of where food should be coming from. There is a renewed attention for local food production, this time not some much as a trendy phenomenon, but for food security reasons, which in turn is becoming trendy. As usual with such issues, the conversation is more about a philosophical “we-should” approach but nobody really addresses the important part, which is how to make it work financially and for the local producers to be competitive, especially when many consumers are going through a violent financial crunch. Other questions would be to figure out who the farmers would have to be and where they should farm, as there used to be a lot of farming around cities, but the farms got bought, paved and developed in the past, so they will never come back. Urban farming could be a possibility, but so far, except some fancy expensive greens or massive subsidies, urban farms hardly survive. As someone who has a garden, I can tell you that growing your own food has advantages. I do not have to worry about residues, as I do not spray any chemicals. I also can tell you that the cost of a seed is much lower than buying produce from a store, but the untold reality about gardening is that to have a garden, you need to buy one and that if you look at it from an economic point of view and were to calculate your cost as if it were a commercial operation, you will have to include the price of the land on which you have your garden. Nonetheless, gardening is a great hobby. Personally, I find it very soothing to work the ground and take care of the plants with nobody around. It probably feels like a bubble or a cocoon and I can imagine that this is also part of the renewed interest about gardening.

So here we are. We revisited Maslow’s pyramid of needs. We took a trip back in time to grandma’s kitchen and garden. Grandma (at least both mine who were born in early 1900s) knew scarcity. She knew the value of things and would never waste anything. She would not throw food away, as it was too precious, and the same thing is true about everything, being bits of candle, bits of soap, water or old socks that would be repaired. About this, it was interesting to see a run on sewing machines in France recently, as they were on ad. Grandma knew what sustainability meant, even without a university degree on the subject. It was engrained in the way they were raised. Other things that my grandmas used to telling me to do were to always cover my mouth and nose when sneezing, wash my hands after touching things from others, in particular money. Sounds familiar? After all, they had grown up in a time when there were not many vaccines, tuberculosis and long ailments were shortening many lives and they also had been through the Spanish flu.

The coronavirus has hit abruptly and showed we do not really have a contingency plan or a preparedness plan, another problem has been lingering for some time. Climate change could have even much more devastating effects and although we have been warned times and times over, our actions to adjust have been very meek. Perhaps the virus should bring us to think about the next crisis and how to absorb the shock, if we really can or want to.

The current crisis has led us to look for more security but will we learn from it and will it last? The question is what this will mean for the future? How will retailers adapt, if they do? How will supply chain adapt? How will food producers manage a transition to a 5-foot economy, as the Dutch government calls it? How will farmers and food producers find the work force of the future? What products should have priority in the future of food and agriculture, and will the marketing realign along grandma’s lifestyle or will we feel compel to revert as soon as possible to the pre-coronavirus times? These are critical questions to ensure that we will keep having food supplies secure and affordable. I will come back on these questions in future articles.

Copyright 2020 – Christophe Pelletier – The Happy Future Group Consulting Ltd.

Insects and worms

Here is a topic that I have started to address quite a long time ago, long before it got popular with the bobos. Actually, it became popular only after the mainstream media got knowledge of the UN FAO views on insects as a source of food for people in the future.

Yuk vs. Yum

The main thing I hear regularly about insects and worms is the “yuk” effect. Yuk is mostly a western countries’ issue. In Asia and Africa, insects and worms are actually quite popular. I can understand that crawlies might not look as appetizing as a steak, but I always like to bring some perspective by showing other foods considered delicacies in western countries that are not all that different from insects, such as lobster, shrimp or snails. People are willing to pay a steep price for those. There is a difference, though: the flesh ratio of lobster, shrimp, langoustines, snail, crab and similar creatures is much higher than that of crickets, for instance. It is also true that Westerners prefer meatiness, while many Asian cultures like crunchy and having to chew and suck the flesh out of the shell or off the bones. Nonetheless, insects are not all that bad. Worms are actually much meatier than insects and why would they not follow the path of snails. As you may know, I was born and raised in France, which is often viewed as a country of snail eaters. It is true to same extent, but here is some history about snails as food in France. First thing to realize is that snails were eaten commonly in times where other animal proteins were not abundant and expensive. Those who could not afford meat would look for alternatives. Snails were one option. Another was… guess… frogs found in ponds! But the French would not eat just any snail. After all, they were French and therefore discriminating about food. Two types of snails were popular because of their meatiness: the “Petit Gris” (Little Grey) and the Escargot de Bourgogne (Burgundy Snail), the latter being rather big and meaty. As you probably know, the British would be disgusted at the idea of eating snails (the “yuk” thing), until the wealthier decided that it was fashionable to eat “escargots” instead. Yes, it tastes much better when you say it in French. So maybe all that needs to happen is for the snobs, bobos and other hipsters to decide to eat exotic insects and worms in the language of their (the insects’ and worms’, not the snobs’) country of origin. And they already do but it is a small niche. I can find some insects around but the price per pound is even higher than caviar, so no thank you! That is what frustrates me about many of those start-ups. And understand me well, I am all for innovation and entrepreneurship. I believe money should be the reward for a job well done, not the end for just a promise that has not yet materialized. Despite all their nice claims to save the world, the environment and being so incredibly responsible about everything, they are actually interested primarily in trying to score financially and be sold to a large corporation that will be willing to overpay for their shares based often on a concept that still needs to prove itself, but after all why not. But to do that, they actually lock themselves in small niches in such a way that there are only two ways to move forward: one is to stick to high margin pricing and have little growth possibilities, the other is to slash the prices to get more volume moving but often transforming the specialty into a commodity. What other reason would there be to focus on Western markets that say “yuk!” while there is a huge potential in Asia and Africa but for lower margins? You guessed it: pleasing the shareholders who want sell their shares and cash in as soon as possible.

Anyway, human nutrition is only part of the equation. Just like snails were an alternative for lean times in France, the consumption of insects and worms in parts of today’s world are also an alternative to other animal protein too expensive to buy. You can bet that when given a choice, many insects and worm eaters will choose for a juicy steak. Human consumption of food is not all that much led by sound rational nutrition. If we were all rational with food we would 1) eat balanced meals, 2) we would not overeat day after day to get ourselves in debilitating diseases and 3) we would not waste some much food. So, we are not rational, and that is the main difference between human food and animal nutrition (except for pets, for which we have decided to introduce the same irrationality with the same consequences for our furry friends). Animal nutrition is all about meeting properly the nutritional needs of the animals, never let them overeat and not waste any feed because it just costs money to the farmer. Actually, animal nutrition should be an example for humans in many respects. The difference between humans and cows, pigs, chickens and fish is that the animals do not put any psychology in their food. They eat to live and they do not live to eat… mostly. This is why I have said for years that I think insects have their highest potential as an ingredient for animal feed, well, as long as the price is competitive with other alternatives.

Here are some clues why feeding insects and worms to animals makes perfect sense. First, here is some wisdom from anglers. What bait do they use when they go fishing for trout for instance? They use a decoy that looks like a fly, because they practice fly fishing, and they use the fly because fish eat flies, and other insects! It is just this simple. Fish feed producers are currently going this road. Another example is about a customer of mine when I used to work in the poultry business. He was from the UK and when the “mad cow” disease hit in the UK in 1996, discussions turned about eliminating meat and bone meal from animal feed, as the suspect reason of transmission was the use of contaminated meat and bone meal produced in rendering plants containing sheep infected with scrapie, a disease. Meat and bone meal was used because it has a high protein content, good nutritional value and it worked fine for many years. Nonetheless after the mad cow crisis, meat and bone meal had to be removed and my customer told me with a straight face (remember that he was the managing director of a poultry company) that there was no reason to put meat and bone meal in chicken feed because chickens are vegetarians. Isn’t that a disaster to have disconnected people from Nature (I wrote an article a long time ago about this topic)? Chickens are vegetarians. Yeah, right. Anyone who has seen chickens roaming around a farm yard will tell you that they eat worms and insects. They are not vegetarian at all. Actually, in spite of many claims of people opposed to animal farming and meat, it is difficult to find a species of monogastric (one-stomach species, like humans, pigs or poultry) that does not consume animal protein. Usually, all the species that they mention as being vegetarians are polygastrics (digestive tract consisting of several stomachs, like ruminants) which have the ability that monogastrics do not have to eat grass and other cellulose-rich materials and being able to transform them into meat and milk as I mentioned in my article about “cow farts”. Anyway, back to my friend (because we became good friends –we are still in touch from time to time after 20 years or so) from the UK and his vegetarian chickens, I replied that not only chicken do eat worms and insects but worms process dead material, kind of like a rendering plant. Well, that was a bit awkward and the real reason came up. It was much better to tell me that his customer would not want chicken meat from animals fed with meat and bone meal and that it was final, and that he needed me to go along with that. Although not quite rational, that was a better reason than the bogus vegetarian chicken argument. His customer, a leading UK retailer had strong views about animal feed. Among their arguments was that feeding ruminants, which are vegetarian from nature, with animal protein was comparable to cannibalism; or that using fish meal could be acceptable only the day they would see a cow grabbing a fish out of the water to eat it. Such arguments were partly emotional of course, but had some rooting in good old-fashioned common sense, which I would never blame anyone for using. So, use good common sense and also solid factual science to feed yourself. It is not mutually exclusive and it does not stop anyone from being a true gastronome. You can take me as an example of that, as it is another brand of mine, The Sensible Gourmet!

Copyright 2020 – Christophe Pelletier – The Happy Future Group Consulting Ltd.

What’s ahead for animal protein?

As I explained in previous articles about protein, the future of animal farming looks rather good, actually. This does not mean that current productions systems are perfect. They are not, and many changes are necessary. Four drivers are going to make animal farming evolve towards systems that meet future requirements in term of environment, health, sustainability and consumer demands. They will not affect only farms, but the ways entire value chains are organized and even future flows of animal protein in international trade.

Two pillars of sustainability are externalities and the necessity to close the loops. Strangely enough, these two fundamental topics rarely ever get mentioned. Yet, they will define the future. I mentioned externalities quite a few times on this blog and if you are interested to read what I say about it, just do a search on the search window on the right side of this page. Basically, externalities are the long-term economic effects and in particular long-term costs of repairing the damage that any human activity causes. Closing the loops is simply following the basic principle that nothing ever disappears or get created, but that everything gets transformed. These two pillars of sustainability are going to force us to review how balanced -or not- productions systems are. Greenhouse gases and minerals balance from manure will force a change in location of animal productions, in regard to the location of production areas of ingredients for animal feed, feeding programs, logistics of both feed ingredients and animal products, in particular in terms of transport. Distance between markets will be only one part of the equation. Transportation systems will weigh even more. Will trade rely on road transport, rail or water ways? Different transportation systems have very different carbon footprints and this will affect the future of some industries depending on how they are organized and where they are located. It will also force countries to invest heavily in their infrastructure, which is another topic that is too often ignored and yet so critical for the future. Of course, infrastructure is not as sexy as tech start-ups and more importantly, it does not have the same appeal for investors. After all, infrastructure is an expense that benefits all, while the current thinking about money is more about individualising profits. Yet, infrastructure will have more impact than tech. Location will also be influenced by water availability, as water will become an increasingly influential aspect of sustainability. Just as an example, California has been struggling with water availability for decades. Yet, it keep sending water-rich produce to other regions, thus exporting its already scarce water. On top of that, California produces about a quarter of American agriculture. See the danger ahead? For the future, the economic paradigm will shift from “producing where it is the cheapest to do so” to “producing where it is the most sustainable to do so”.  The main reason for the shift will be externalities as we will have no choice but internalizing the externalities (sounds fancy doesn’t it?… try to place that one in a cocktail party when you have a chance).

Location is one of the changes, but of course when it comes to greenhouse gases, there will be other solutions to reduce the impact. Feed programs are one, and gas capture from manure will be another one. Tech and innovation will play their roles in those areas. Markets will do to, and I expect manure to become a highly valued co-product, and not a by-product anymore. Just as manure is a side effect of intensification and high densities, so are diseases. Last year saw the huge outbreak of African swine fever in China, which so far has lead to the destruction of 25% of the world’s pigs. That is the perfect example of what can happen again. It is not the first outbreak. There have been other ones before of the same disease and of avian influenza. The risk of diseases and their huge cost will also contribute to a readjustment of location of animal production, in terms of production centers, in terms of density of farms and also of densities on the farms themselves. So will the prospect of possible transmission of diseases from animals  to humans.

Next to such production issues, consumer demands will also change the way animal products are produced. The pressure for better animal welfare is increasing and will not weaken. It is just fair and it also makes a lot of economic sense. In my times in the pig industry, the poultry industry and in aquaculture, I did quite some research on the topic and the numbers spoke chapters. Treating animals with the proper respect pays off big time. Yet, I also faced a lot of resistance when I tried to show my conclusions by then. I guess that it did not fit in the thinking of the times. The future proved me right, though. The need for better animal welfare will also contribute to a change in production systems, housing and feeding in particular. Animal densities on farms will also be reduced. This trend is already taking place in Europe and there are more and more farming programs that go in this direction. And so do government policies. Along with animal welfare, environmental concerns from consumers will also push towards more “natural” methods of farming. Intensive animal husbandry is not going to disappear but its excesses will. The problem is that too many people tend to associate intensification with efficiency but it is only true to a point. When we reach that point, any incremental intensification does not lead to incremental efficiency anymore and the further we pass this point, efficiency actually decreases and externalities increase substantially. The future will be about finding the optimum between intensification, animal welfare, environmental impact and long-term effects. Next to that, as consumer markets mature, especially when people already eat more than they really need, demand shift from quantity to quality and we will see more and more quality programs appear. It will be good for consumers, for health, for the environment, for the animals during their life and for the profit margins of farmers.

As the graphs from my articles Cow farts, or quite a bit of hot air?  and What’s ahead for plant-based foods? show, demand for animal products is expected to increase and a number of products will do quite well. As I mentioned in the same article, ruminants actually play a important role in the management of grasslands and I mentioned their importance for a healthy environment, I believe that responsible animal production systems will help mitigate climate change. Of course, this means that the necessary changes be carried out as I mentioned earlier on in this article. I also believe that animal productions will play an important role in economic development, especially in developing countries and in regions where the population is expected to increase the most. It is nice to expect that the urban population will increase, but it is essential for a prosperous future that we also make sure that people in rural areas can be prosperous and that we do not end up with a demographic desertification of regions that can contribute to a prosperous future. Just as animal productions, although they were intensive and have had a negative impact on the long term, have helped many European young farmers stay in their regions and make a decent living for themselves, it can play the same role in rural areas in developing countries. It is true that mistakes have been made in the past and grave ones. We cannot change the past, but we can learn form past mistakes and make sure not to make them again. Productions that I expect to be successful and popular as economic development tool are poultry (meat and eggs) and aquaculture. Poultry and chickens in particular have the advantage to have a short production cycle and this helps farmer getting a quick cash-flow, which is essential to limit the need for capital. Aquaculture can have the same advantage with fast-growing species but less with species that have a longer production cycle as capital requirements can be heavy, although this can be attractive to investors. Two big pluses for aquaculture are the strong deficit between supply and demand and the health aspect of aquaculture products. The world is quite short of healthy seafood.

I see many areas of success for certain types of animal productions and I have summed them up in the following illustration. In particular, I would like to emphasize is my expectation for the future to see a surge of grass-fed beef with special breeds in semi-intensive systems in which there will be a minimum amount of high energy feed and no hormones at all. For all productions, I expect to see more and more of old-fashioned “authentic” products and recipes, and also a lot of “happy animal” products to be marketed more aggressively than has been the case so far.

Copyright 2020 – Christophe Pelletier – The Happy Future Group Consulting Ltd.

What’s ahead for plant-based foods?

Over the past year, there has been quite a bit of talk about alternative proteins and in particularly the so-called plant-based products. Let’s face it; the hype (which I already mentioned in my previous article about cow farts) has been very well organized to inflate what has been going on in the markets. Probably, it is part of the culture of “disruptive” tech start-ups. They are quite good at using social media, making the wildest claims about how they are all going to change the world. When it comes to food, what will happen before you know it is that there will be no need for farms anymore. Just take a look at Sci-Fi movies and it is there! Yeah, right. The problem, well one of the problems, I have with this is that I have heard it before. Actually, I heard similar things before today’s disruptors were even born. In the 1970s, after the Apollo programs, we would not eat traditional foods anymore. No, our meals were going to be contained in pills. Yeah, right. It did not happen. Around the turn of the century, we had the new economy, not just a new economy, but the new economy thanks to dotcoms and internet. The old economy was history, for ever. Yeah, remind me how the dotcom bubble burst and how a few years later the old economy demonstrated it was still alive and kicking through its Great Recession. More recently, we all heard that Amazon was going to “disrupt” retail so much that brick and mortar retailers were going to go down. Yes, Wal-Mart was finished. Not. Actually, Wal-Mart is doing quite fine and for a simple reason. Solid businesses follow what is happening in their markets and they make the proper changes. And that is exactly what happened with most retailers around the world. They went digital and they started to sell online and deliver to customers. Similarly, e-books were going to kill paper books and online diplomas were to mean the end of universities. Well, paper books and bookstores certainly have had difficult times but they did a nice comeback. And universities are still very much alive, while the MOOCs are the ones that seem to have left the building. There is more to life than digital versions of the original products and services. Silicon Valley and co suffer of a good dose of hubris. Maybe, they should attend to that before it might become their demise some day.

The thing with so-called disruption is that the only businesses that actually get disrupted (in the true sense of the word, not the trendy sense) are the ones that are asleep and not paying attention. They would have died anyway. The businesses that are awake adapt. That is pretty basic business stuff. Since I got started about disruption, I would just say that I do not like that term because as I mentioned earlier, it is taken in its new trendy meaning, which really means nothing else than innovation and change, but those words are too mundane. I will agree that disruption sounds more dangerous. It makes you feel like a rebel and a threat. Yeah, isn’t it something that we all fantasize over when we are kids, being a tough rebel?

Let me be clear, I am all for innovation and for having implemented changes in a number of businesses; I know that it is a constant of life, but I am interested in change that is a natural evolution toward real improvement. I am much less interested in gadgets and made-up hypes that have as primary goal to fill the pockets of a few. I guess I am not easily impressed and it is not because something is the flavor of the month that I forget about my good old well rooted-in critical mind.

So let’s go back to the plant-based protein products. First, they are nothing new, even if the current business owners want to make us believe that their products are jewels of high-tech. If so, how come that so many companies are going in the very same market on such short notice? The answer is simple, those products are not difficult to replicate. Plant-based alternatives are not new and they have been around for a couple of millennia for some of them such as tofu, koftas and falafel. Soy burgers have been around since the 1930s, really becoming mainstream in the 1980s.

What makes the current ones so different? Honestly, not that much at all. So why the hype? For two reasons mostly. One is the use of social media which are great tools to inflate whatever message you have and that so many people are willing to relay for you without even knowing what they are talking about. But it makes them feel part of the tribe for as long as it lasts. The other one is that this time big money has been invested in those companies and wants to cash in big, so they are putting their resources and their relationships at work to reach that goal. When your product is the talk of the day every day in every media outlets, it sounds like it has taken over the world. It’s just good old-fashioned smoke and mirror tactics. Just find out which billionaires and venture capitalists have put money in these companies and you will realize that it is a beautiful exercise in investor-driven social-media-led push marketing for a production-driven commodity business. Here in Canada, we have seen the exact same pattern with cannabis stocks after the country legalized cannabis sales a year ago. A lot of hype was aimed at having money buying stocks so that the founders could make great capital gains. It almost sounded that because of the new legislation, every Canadian would splurge on pot, either breathing it or eating and drinking it. Yeah right. As if making something legal would inevitably turn people into addicts. Pot users could already find all they needed before the legalization, as is the case everywhere in the world. So, the market was already well defined. Nonetheless, cannabis stocks shoot up like rockets because when greed kicks in people get gullible. Actually, I suspect greed is as addictive as drugs. Early investors sold on time with big fat capital gains and one year later, the share price of cannabis stocks are stagnating to low levels again. I expect something similar to happen with plant-based protein stocks. It is already kind of happening already, especially with Mr. Big Bucks-who-blames-cows-for-farting-for personal-gain having sold his Beyond Meat stocks quite conveniently before they started to stumble.

What is ahead for plant-based meat alternatives?

The first thing to think about is what those products are. What do they mimic? They mimic beef burgers mostly and sausages to some extent. They do not look as much like fresh beef burgers as they do the basic sad frozen ones. My point here is that they look like cheap commodities. And the thing about looking like a commodity is that it makes your product a commodity. The fact that so many other companies can replicate similar product in such a short period of time just confirms that it is a commodity and certainly not a niche specialty. The first rule for a niche to resist competition is that the product/service is quite difficult to replicate and match. Clearly, that basic first rule does not apply here. The only product that escapes the commoditization risk is the plant-based shrimp. Shrimps are a commodity but there is such a shortage of seafood compared with demand, shrimp prices are high and should remain high for a while. Imitation shrimp profit margins should be more resilient.

The second thing that comes to mind is the price of plant-based protein products. I can give here only what I can see in the stores around where I live in Canada. The regular price for a half-pound package of plant-based burger is CAD7.99 (that’s CAD15.98 per lbs). That is about twice the regular price of a pound of ground beef, but I can buy ground beef on ad for CAD3.99 and even from time to time CAD2.99. The price gap is quite big, and that will have to change if the plant-based burgers want to gain substantial market share. I believe this is starting to happen with a Canadian brand of plant-based burgers advertising last week at CAD4.99 for half a pound (that’s down 40% from the regular price) and this week the American brand was for sale at CAD5.99 for half a pound (25% down from regular price). Price drop has to be compensated by additional volumes to achieve profit margin goals. Here a word of advice to the CEO of that American company who expressed not being interested in hearing about his competitors (weird statement but what the heck, who can you fear when you think you are God): pay attention to your competitors because they want to take a slice of the pie and possibly your entire pie with it; their growth will not be your growth. Prices start to show some action and the big meat companies who are about to enter have not made their mark yet. That is going to be fun, because the hype created this idea that the market potential is huge and they are ramping up to produce large volumes. The meat and poultry industry has a long history of overcapacity, oversupply and profit margin destruction. I suspect that they will bring some of that experience in the plant-based imitation meat. I think things are going to be interesting. Prices are going to go down and raw materials (soybeans and peas) probably will increase in price to match demand. Prices down plus costs up is the perfect equation for squeezed margins, both for plant-based and animal protein by the way. The ones who will benefit the most are the crop farmers to some extent, but mostly the producers of protein isolates (the raw material used to produce the imitation burgers), the highest margin will be in the health and wellness protein supplement sector, basic low-cost plant-based burgers should well because of attractive pricing, and perhaps the consumers to some extent.

But for consumers, a couple of other things will play a role. One of them is perception. Do they like the product? And with perception comes value. Will the perceived value be higher than the price gap between the imitation product and the original beef? Perception is not just about the product but also about the company. So far, producers are perceived as small start-ups, which is often translated by consumers as small, brave and pure. If they knew actually how much big money and Big Agriculture is behind, I wonder how that would affect perception, and this time will come because, after all, are we not in a transparent food system by now as all food corporation like to claim?

Plant-based burgers producers brag about the many places where they have their products offered to consumers, but being on the menu of a restaurant is not the same as having consumers actually buying it, but they present it as it were, and stock markets react accordingly. There has been a lot of buying out of curiosity because of the hefty social-media hype but the perception is a different story. I have read many reviews and I cannot see any significant trend one way or another. There are those who praise the product and there those who trash it. Online reviews are notorious for the amount of fake reviews and I am sure there are plenty of those on both sides for obvious hidden agenda reasons. Fact is however that only after a few weeks in the trial, the Canadian restaurant chain Tim Hortons removed the plant-based burgers from its locations except in British Columbia and Ontario. Plant-based burgers “opponents” mention a number of characteristics they do not like: high price, highly processed products, high sodium content, long list of ingredients and some ingredients they can hardly read and have no idea what they are. I will make a mention of sodium content here. In the stores around my place, I can find only one Canadian brand and one American brand. I compared the sodium content of their products with regular potato chips. Here are the numbers: potato chips 230 mg sodium for 50 g product, Canadian brand imitation burger 540 mg sodium for 113 g (that’s 239 mg Na per 50 g of product – slightly more than the potato chips!!); and American imitation burger 340 mg sodium for 113 g product (that’s 150 mg Na per 50 g of product – that’s two thirds of the potato chips sodium content). Why don’t they add sodium and let people decide how much salt they want to put on their burger? I know the answer to that question but I will let you figure it out. I rarely buy potato chips but when I do, I buy the half sodium ones, which are lower in sodium than even the American imitation burger. You can make the same comparison with what you find in your stores and draw your own conclusions.

The third thing to expect is the push back from the animal protein producers, and that has already started. There are many fights about definition of meat and dairy. Let’s face it, the producers of plant-based products know very well that if they advertise to carnivores with an herbivore undertone, it will not work very well, so they try to make their products look more carnivore-like. There are also fights about environmental claims about benefits of plant-based vs. animal protein, many of them unsubstantiated. Altogether, plant-based products keep many lawyers busy. The fact that there many legal battles does not bode well. In France, there is an old saying: “better a poor agreement than a good lawsuit”. It will be interesting to see how that will translate for the future of plant-based. Of course, bold statements such as the plant-based sector bring the US meat and dairy sectors to complete collapse by 2030 is not a great way to make friends. Plus, please refer to the beginning of my article for why existing businesses are much more resilient that newcomers tend to think, but hey they have to attract investors’ money after all so no claim is bold enough.

Regardless of all the fights and arguments, the market will decide and as usual markets will decide on price and value. The value will be about money but also about health and environmental aspects as well. The question, though, will be whether the price differential will be worth it. I indicated prices earlier. In terms of potential market share, from reliable sources I have found it sounds like plant-based might represent 2% of the protein market in 2020 and perhaps reach 10% in 2030 in the USA. To gain more market share, plant-based imitation meat products would probably need to be offered at half the price they are now at least, everything remaining equal, further. If they don’t adjust their pricing, they will be happy to amount to 5%. Also and because the market could be crowded, plant-based protein producers will have to differentiate themselves from the competition and the characteristics that I mentioned earlier will weigh more, and so will the use of GMO ingredients or not play a role. Of course, there is a good chance that, as usual with the food industry, they all will try to differentiate themselves the same way, thus shifting their universe a bit to the right but all offering more or less the same.

If going plant-based protein is more efficient than meat, and it is because it removes one layer in the food chain, then it would only be logical that plant-based be cheaper both in price and in cost, but it’s not because unfortunately most “future of food” products are not meant to cater the hungry poor. So, here is another price to keep in mind: the price for a pound of cooked beans, peas, chickpeas and lentils is around CAD0.99 per pound. If you wish to switch to vegetarian, using the wholesome grain in the first place without industrial processing is quite a financially attractive proposition and I believe that they will be winners for the future from a global perspective, not just the US market with its First World solutions for First World problems. The thing is that the First World does not seem to know about cooking anymore, in spite of trendy flashy kitchens. The market will also decide which businesses succeed and which ones fail. Start-ups little gods or not, the percentage of failure remains the same as ever: about 75% of businesses do not make it longer than 3 years. Often, the reason is ignoring competition and not understanding that it takes much more than production methods to win over customers. As for the animal protein sector, what will be the consequences? I have written a few articles about the subject (do a search on meat and protein in the search bar on the right hand side of this page to get the list of articles). I will simply finish with a chart that show past consumption and estimates of animal protein consumption for the future based on UN FAO data and you will see that animal protein are really not expected to suffer from competition of alternative protein sources.

There will be plenty of room for everybody: animal protein, plant protein, processed or wholesome, as well as traditional products and all sorts of innovative alternatives. There is no need for cockiness, belligerent statements and inexact claims. The markets and future economics will sort out the winners. In the end, we all have to work together and the key will be about producing and consuming sustainably. Production systems will change. That is normal. And it is going to take the efforts of all 10 billion people and their food choices, not just from food producers.

Copyright 2019 – Christophe Pelletier – The Happy Future Group Consulting Ltd.

Cow farts, or quite a bit of hot air?

Very likely, the only reason why one would have missed all the “commotion” around cow farts is to have been stranded on a desert island without any access to some telecom network. Who would have thought that those poor ruminants were actively busy suffocating us? Just in case anyone would doubt this is the case, some influential billionaires were ready to join the fight against animal protein and put their money to work in protein alternatives to save the world. Yeah, right. I will get back later on this with my views on the altruism of the one percent.

First things first. Cows have been blamed for climate change based on research. Actually, it is useful research, but like any research and statistics, it needs to be put in context. Here is a chart that shows the results of that research from Clark & Tilman, from the University of Minnesota.

On that chart, I have added two productions based on literature: Norwegian salmon fillet and Chinese aquaculture ponds. I did not put an emission number as it did not come from the same source and methodology as the Clark & Tilman research, but it is my best guess of where they would fit. My purpose here is to make the same point as the one I want to make on beef: there is a broad diversity of production systems and it is necessary to look at each of them on an individual basis.

The research results are an average of many different production systems, 742 in total for the entire research. The results are averages and that is a weakness because averages do not mean much if there is no mention of the standard deviation within the group. Before pointing fingers, they should analyze the variance between the various production systems for a particular type of food. Another weakness of their research is that it does not indicate which share of each link in the production and supply chain contributes to the environmental footprint. In the case of ruminants, where is the problem the largest? On the grasslands? In intensive fattening operations? In the logistics of meat? In the logistics of feed? And so on and so on. Several years ago, Brazilian beef producers were upset about a research showing that their footprint was much larger than the European Union’s, and they strongly disagreed. Yet, in the EU, most of the beef comes from the dairy herd (as you can see on the chart, the dairy footprint is much lower on average), the infrastructure is quite good and in particular, there is massive use of waterways, which have a much smaller carbon footprint than road transport by trucks, especially on sometimes terrible road conditions, on which there sometimes is massive loss of grains that fall off the trucks. Anyway, without getting into too many details, the bottom line of this story is that production and supply systems vary greatly between regions and those differences translate in differences in terms of environmental footprint. Another issue with the carbon footprint of beef from that study had also been pinpointed by another research from the Oxford Martin Programme at Oxford University that also showed that methane has not the same lifespan and long-term effect as CO2.

Back to GHG emissions of agricultural products, overall conclusion here are

  1. Don’t jump to conclusions and especially do not generalized
  2. Go beyond average numbers and look at the individual production system
  3. Learn from the best to improve production and supply systems
  4. Identify which links of the chain are the weakest ones in terms of greenhouse gasses and fix the weaknesses
  5. For governments, subsidize the systems that are the cleanest and tax (or possibly ban) the dirtiest

Another aspect to look at when it comes to ruminants is cellulose. There is plenty of cellulose in the world and the thing is that we, humans, do not have the enzyme (cellulase) to break down and metabolize it. Ruminants can break down cellulose thanks to the micro-organisms they have in their rumen, and this is how we can indirectly eat grass in the form of milk and meat provided by ruminants. This is all the more important as the world area of grasslands is twice the size of the world area of arable land. Actually there is between 3 and 4 times as much grassland acreage as arable land, but many of such grasslands barely can sustain animal farming so with twice the size of arable land, I give a safe estimate of what is usable. The beauty of using ruminants on grasslands, besides milk and meat, is that grazing is actually an amazingly circular economy (very trendy term nowadays and that should appeal) system: the animals eat the grass, and poop their excrements on the pastures and thus fertilizing and regenerating them. Another interesting fact to know is that grasslands actually fix more carbon on Earth than forests do, so proper grassland management is actually a great tool to mitigate climate change on a global basis. Sorry to disagree with all the anti-cow hype but ruminants are very useful. In quite a few of my past articles, I have mentioned the concept of externalities, or in other words the long-term costs (negative externalities) or benefits (positive externalities). Ruminants on grasslands generate quite some positive externalities and that should be taken in the conversation. Ruminants eat grass. That is a fact of Nature, and too bad for our societies which try desperately to make us lose our connection with Nature and even our own biology by transforming us mostly in passive thought-controlled not questioning anything consuming units. Ruminants eat grass and that is why I see grass-fed beef as a winner in the future of animal protein, not in volume but in value both nutritional and environmental, and actually from a farmer’s income point of view, too. Another statistic that everyone should have in mind in the discussion about livestock is that the UN FAO estimates at 1.7 billion (yes billion with a B) the number of people whose livelihoods depend on livestock.

So, from what I just wrote, do we want to remove two thirds of agricultural land from our potential from food production and do we take away the livelihoods of another 20% of all people on Earth so that hipsters from San Francisco and opportunistic billionaires can cash in on a very artificial hype? Food production used to be production-driven, then we started to convince ourselves that we changed it into market-driven (which has been mostly marketing-driven really) and now we are in a situation of making (some) food products investor-driven, which is not really about solving large-scale problems, but a mix of production-driven marketing-driven to play on people’s concerns about health and environment to convince them to buy new products and boost the share price of start-ups. We haven’t changed anything really: we still have the same volume-driven approach of always more that we know is not sustainable. Beware the pendulum will swing back. Let people choose what they want to eat. Don’t preach because most of the preaching, like all preaching is about control. I am an omnivore but I also cook and enjoy many vegetarian recipes. I do not believe that I should eat meat at every meal or every day for that matter. I also, and that may be because I can cook quite well, I do not need to get my plant-based servings from a food processing plant. I also believe that cooking and home economics, along with agriculture, should be taught in school, because they are essential for true sustainability. Moreover, since there is sexual education in school, it only seems normal that these matters belong in everyone’s curriculum.

I would say beware of social media as it is not a reliable source of information. It is only a digital form of the good old human habit of gossiping, and as such can spread all sorts of misinformation, just like the pre-digital era gossiping used to do. The difference is the number of people that can be reached.

So, to conclude, I would like to pinpoint a couple of things:

  1. Animal farming has indeed a higher carbon footprint than crops
  2. Therefore, it has to be carried out in a sustainable manner and what is not sustainable must be eliminated
  3. Therefore, animal protein production and supply systems will have to change in the future and they will change
  4. Meat is a valuable food and source of nutrients, but it is not for recreational everyday gluttony. After all, animal had to give their lives for us to have meat, and the concept of sacrifice should be present in our minds
  5. And to finish, a bit of a joke but not quite it either: there are indeed cow farts but there is also quite a bit of bullsh*t about the topic.

Copyright 2019 – Christophe Pelletier – The Happy Future Group Consulting Ltd.

Is animal farming really on the way out?

Lately in the food world, one can read many stories about alternatives to protein from animal farming. Animal farming also gets blamed for its contribution to greenhouse gas emissions. With so much finger pointing, one can wonder whether animal farming has a future. Proponents of alternatives do all they can to convince everyone that the writing is already on the wall. Personally, I believe that things are far from being that simple.

To predict what scenarios are likely for the future, it is necessary to look at the issue from its many dimensions, both on the production side as on the consumption side. I prefer to look at it first from the consumption side because consumer markets shape production systems more than production systems shape consumer markets.

From the consumer end, there is already much to say. First, as the population is increasing and more people are able to afford protein, the demand for protein is increasing and will continue to do so in the coming decades. I wrote already many articles about this during the nine years of this blog and the topic is also part of my books. The fact that more and more people can afford food is a positive development. The problem is that more and more of them now actually consume more than they should. Overconsumption boosts the need for more production beyond what nutritional needs are. Overconsumption comes down to excess, waste and pushes our use of resources too far. The goal must be to help people to eat balanced meals and not to overeat. If the purpose of the suppliers of alternative protein is to push for consumption of their products and not address the issue of overconsumption, they will be just as guilty as the current protein suppliers. The future challenge is not just to replace one overconsumption with another. It is to stop overconsumption. Unfortunately, as long as our economic model is about volume growth, one should not have too many illusions. Future food prosperity is really about having always enough, not about always more. To achieve this goal, we must shift from sheer volume growth thinking to high quality (including production of course but also social and environmental) with faire distribution of the created wealth between all links of the value chains, and in particular a fair price for farmers through proper planning between supply and demand. The purpose is to supply affordable food instead of just cheap food with all the consequences that we all can see of the race towards always cheaper. Unfortunately, the volume-driven model is heavily subsidized in the wrong places and that will also have to stop if we want change.

Consumers also need to realize the true value of food instead of taking it for granted because future food is anything but for granted. Regardless of the type of protein, one thing is sure: it is precious and rare. This is much more so than for carbohydrates. Protein should be treated with respect. Here are two examples why I make this point. I remember in the 1990s the CEO of Tyson Foods explaining in a conference that the poultry industry is a producer of lean protein and he lamented that, in the US at least, the favorite use was to deep fry it in cheap oil, and thus completely change the nutritional quality of chicken meat. The second example was during a presentation by the CEO of a German fish fast food restaurant chain called Nordsee, who was mentioning that breaded fish was very popular, but not so much because fish is healthy but because fish sticks were used to be a carrier of ketchup from the plate to the mouth. If the true purpose of meat for some consumers is to be a carrier of oil or ketchup, then this is a problem. Never should a product that required the sacrifice of an animal be used to soak into cheap and unhealthy product when over consumed. Speaking of sacrifice, it is good to remember that the word “sacrifice” comes from the word “sacred”. It is true that often our dealings with animal protein looks more like sacrilegious. This is a useful detail to think about when considering consumption of meat. The thing is that animal protein should never really be a commodity. It should remain special. But that is not the way or economic model has decided.

From the production side, agriculture has followed a similar pattern as most other industries. It is about lowering costs (nothing wrong with that) and standardization (maybe a topic more susceptible to debate). Regardless of what people may think of intensive animal husbandry, this system is not here per accident. It is the reflection of how we look at economy and ourselves. Have no illusion about alternatives to animal protein; they follow exactly the same economic philosophy. I always say that the dominant production system is the one that matches the desires of the larger number of consumers. The saying “we are what we eat” is very true. If you look at it that way, you can see that our economy is just as much about intensive human husbandry as it is with farm animals. Economy is organized around three components: resources, labor and capital. Depending on the prioritization and distribution of these three components, we build different systems. A simple example can illustrate what I mean is mechanization: workers have been replaced by machines backed with capital investment in machines. The tricky thing about heavy injection of capital is that the system becomes capital-dependent. The capital must deliver a return on the investment and very often the only way is inject even more capital, just to keep the head above water. It is good for the bankers, but as many farmers and food producers will tell you, less so for them.

So, will animal farming eventually disappear? Of course, it is difficult to answer this with certainty. My opinion is that it is not going to happen any time soon, if it ever happens. What will change are the production systems. After all, the current intensive production systems have not been around since the dawn of times. They are actually fairly recent. They have changed and are continuously adapting. Production systems that are not environmentally sensible will disappear, simply because they will not be able to be profitable and competitive. The reason for this is simple: sooner or later they will not be able to ignore the negative externalities anymore from their production costs. Environmentally sensible systems will take over. Note that I do not use the term environmentally friendly but I use environmentally sensible instead. I believe it is a much better reflection of reality. Will this transition be smooth? It might be, but it is much more likely that it will not be.

Another question to reflect about is whether animal farming is unnecessary? My answer to this is: no! First, like it or not humans are omnivores. Our dentition can testify about that. That is the result of dozens of thousands of years and it is ingrained in our system. It is nature. We are mammals, even though there’s no shortage of groups who try to even deny our biological reality and try to reduce people –and animals- to legal entities. Between Laws of Nature and man-made laws, we will see which ones will prevail. Our first food –milk- is animal in nature. There always will be people who want to eat animal protein. Every time that economic prosperity has increased, meat consumption has increased. It does not happen per accident. When money is tight, meat is often the first thing to decrease. To get back to the question, I believe that animal farming is alright, as long as it is respectful of the environment, of the animals, and also of the farmers. I believe that animal protein is a privilege what we must cherish, not a right that we should take for granted. Animal protein is not the sole source of protein and there are many delicious dishes to make with vegetal protein. Look at Indian cuisine! If the purpose of animal farming is to stuff oneself, then yes I am with those who have an issue that approach of farming and consumption.

Of course, most of the opposition to animal farming takes place in Western countries. It is kind of a First World problem. If certain animal farming systems are environmental time bombs, other systems are actually beneficiary. In many developing countries, having a few goats or cattle is actually essential for the economy and for the survival of farmers. Pastoral systems contribute to prosperity and social stability. Another important point is the biology of ruminants. Just as much as I was mentioning the biology of humans as the results of dozens of thousands years of evolution, the same is true for animals. Ruminants are amazing processors of cellulose. Humans can thrive on grass, because we are not equipped biologically to extract nutrients from it. Ruminants are experts at that. Since there is about twice as many hectares of grasslands as there is of arable land, grasslands represent a huge food potential and ruminants are superb transformers of cellulose in high-value foods for humans in the form of milk and meat. The key is that must be done sensibly and by taking future consequences into account. Many societies around the world know the value of farm animals. If ruminants are excellent transformers of cellulose, it is also important to mention that they have never evolved to be grain eaters, at least in large quantities. Sooner or later, this will become a much more vivid issue than it is now.

Suppliers of alternative protein bring a number of arguments why their products have the potential to replace “traditional” animal meat. The environment plays a central role, in particular the issue of greenhouse gasses. They also address the animal welfare as a driver for their products. The issue of slaughterhouse by-products is also a valid argument. Theoretically, texture proteins, lab meat, insects and vegetarian diets do address these concerns, indeed. So can alternative protein push animal farming out of business? The answer is complex and I will try to answer it as concisely as possible.

The animal protein market is huge and one cannot expect to replace it overnight. Since the demand for protein is going to increase further, alternative protein would probably happy to take only a chunk of the growth. They have to create their spot in an existing and very competitive market. Textured proteins have been around for decades and they have never represented a threat to traditional meat. That does not mean that it could not change of course. Lab meat is all new and there is at this stage no solid indication that they can even compete with traditional meat on world markets any time soon. They are still a long way of representing a force in the animal protein business. Time will tell. An important detail for both textured protein and lab meat is the number of factories, incubators and texturing lines that they need to build to replace animal farms. That will represent huge investments for which they will have to earn the money to carry out. Competing with traditional animal proteins means engage fully in a commodity markets where margins are often thin. They will compete with independent farmers who are often contracted by corporations and often hardly make minimum wage. These suppliers will have to fight against the huge animal protein corporations and deal with retailers and food service companies with strong bargaining power. Will they really want to take the road to commodity markets? I doubt it, or it will be a very long journey. When I hear or see their pricing objectives, nothing tells me that they are really willing to target the mass animal protein market. It looks more to me that they will try to work from a targeted marketing strategy and will work their way into niches for quite some time. Another hurdle is the consumer perception for their products. Vegetarian products already have exposure and are well-perceived. Lab meat may be a more difficult challenge. The mere fact that lab meat producers want to call it clean meat instead and are already facing opposition from meat producers who claim that lab meat is not real meat shows that they have not solved the perception challenge, yet. Even the term meat is not a given.

Where does that leave us for the future and the issue of animal farming greenhouse gas emissions? Considering the time that I believe it will take for alternatives, I do not see that they will play as big a role as they think and/or claim. I believe that reducing greenhouse gasses emissions will have to be enforced. Regulations on production systems will have to address this. This has to happen today already. There is no time to wait until these emerging industries will have developed critical mass. Also production volumes will have to be addressed. It is likely that if we want to be serious about curbing the environmental footprint of animal husbandry, they will not be many alternatives to capping production volumes. That will be a tough one as nobody will want to be at a disadvantage with their competitors. There will be the exact same discussions as there already are with climate change and those who refuse to participate. Neither governments nor corporations will take effective measures. The answer lies with consumers. They are the ones who have the power to reduce animal protein production and changing production systems. From an environment point of view, the only real option is a reduction of global consumption of animal protein. That is the easiest and fastest path to solve the problem, but I do not expect a massive shift from omnivore to vegetarian of such amplitude that anything significant will happen. Unfortunately and just like with anything else related to climate change and overconsumption, only a minority will really act voluntarily. On the consumer side, if prices remain too cheap to trigger a change in behavior and a reduction of consumption, then overconsumption will simply continue. What I wrote in my previous article will fully apply to the topic of animal protein and animal farming.

Copyright 2018 – Christophe Pelletier – The Happy Future Group Consulting Ltd.

 

How can insects be a part of future food security?

Since the FAO published a report in May 2013 presenting insects as a possible source of food to meet future protein demand, the topic has become quite popular in the mainstream media. I wrote an article about this (Insects on the menu) in May 2010, in which I was giving some of my thoughts. I still think along the same lines.

In the last few weeks, I bumped into the insect story several times, purely by coincidence. I believe insects can play a role but I am getting a bit frustrated by the lack of specifics in all the talk about insects and worms.

Apparently insects would present many performance advantages compared with traditional meat productions. Aaron Dossey did a presentation at the IFT15 symposium organized by the Institute of Food Technologists. Here are the advantages of insects he mentioned as reported in the article from Science Daily of July 14 2015:

  1. Efficiency. They use less land, water, feed, energy and other resources than livestock.
  2. Environmentally friendly/clean. Insects create fewer greenhouse gases and are not contaminated with pesticides. They also do not have any hormones in their bodies.
  3. Prolific. They reproduce quickly so they can replace depleted resources.
  4. Biodiverse. There are millions of insect species, so it is easy to find a match to a location’s need.
  5. Nutritious. They have protein and Omega 3s, a class of essential fatty acids that help lower cholesterol.

All of this is nice but…

  1. How efficient? How much less land, water, feed and energy and other resources?
  2. Environmentally friendly as long as they do not massively invade it. How many fewer greenhouse gases? No hormones at all, really? Of course insects contain hormones. They are necessary for their physiology and development. So which hormones was he referring to?
  3. Yes they are prolific, which raises the issue of what would happen if insects escape from farms in large numbers. They are prolific but they are tiny, so it takes huge numbers to match the weight of a cow or pig or even a chicken. The real question to answer is how many tonnes of insect protein can a farm produce compared with other animal productions? What should be the size of an insect farm and how many farms should there be to meet future demand. Also what feed will the bugs eat to grow?
  4. Biodiversity may be nice, but what species would be production worthy when it comes to the mass production of volumes that would be comparable with other productions?
  5. They are not the only food sources of omega-3

Unless someone can quantify the above, the story remains rhetoric. If insects are to become a large-scale production along the lines of other animal proteins, it is necessary to single out the species that will be the most efficient, technically and economically. It is also necessary to sketch the design and the magnitude of farms. There are a number of companies that have been venturing in the insect business but most of them are tiny, in the grand scheme of world food security. Aaron Dossey’s company produces 25,000 lbs of insect powder per year. That is 12 tonnes, and he does not sell them to the hungry of Asia and Africa. Compared with the world average meat consumption per capita per year, 12 tonnes of meat represents the yearly consumption of 250 to 300 people. If insects represented 1% of the world average meat consumption per person, his production would feed only 25,000 to 30,000 people, or less than 0.0005%! Clearly, even to cover 1% of the average animal protein need as it is on average per today, the magnitude of the challenge to set up a significant production is huge. The other challenge to overcome is to make insect production economically competitive, be it for human consumption of for animal feed purposes. Most businesses offering insect products today are operating in a small niche, just because there is little industrial production. The dominant part of the insects and worms consumed are picked in nature by those who eat them, as those animals are usually consumed when there is a seasonal shortage of other protein sources. The niche businesses sell their insect products at prices that even many people in wealthy country could not afford on a frequent basis. The insect products are offered to consumers at prices reaching several hundreds of dollars per pound.  Presenting such foods as helping the world feeding itself, which means mostly helping the world’s poorest to be able to afford nutritious food is at best delusional if not even plain cynical. Insects and worms can be contributors to future food security only if they are affordable and competitive against the other meat sorts. That cannot happen if they are limited to the treat sector.

Another aspect of insects as food is their attractiveness, or lack of it. Insects and worms are much more common in Asia and Africa, where the largest part of the world population is and will be in the future. In Western countries, insects and worms are perceived as repugnant by most people. In terms of marketing, it would make more sense to focus on the Asian and African markets instead of trying to convince Westerners to eat lots of insects, just because of the respective levels of acceptance.

However, there is communication to do and lessons to learn from the past. I would name two. First, escargots, which are so popular under their French name, are an expensive item on menus. Escargots are never sold as “snails” because that sounds gross for most people. Everything sounds tastier in French. Try presenting insects under a French names and the Anglo-Saxon population might be more tempted. Snails used to be, just like insects and worms in Africa and Asia today, food that the French were going to pick on walls after a rain in times of food shortages. My second example is lobster. Lobster used to be considered a bottom feeder that was only for the poor, and so it was. Clearly, the image of lobster has changed a lot. The other lesson about lobster, and I would add shrimp, langoustine and many other ugly crustaceans, is that there are expensive delicacies that actually look a lot like insects, and they are actually rather close to insects in their body structures.

When it comes to human consumption, I wonder whether people will still be tempted to eat bugs if the economic situation keeps on improving in Asia and Africa. Not that long ago, China was in situation of near famine. Anything that contained protein was food. They were roasted rats for sell. In France, during the privations of World War II, rats – and cats- were used to replace pork in many deli specialties. There is a big difference between having to and wanting to. Has rat meat consumption increased in China since the economic boom? Do the French since WWII ended have been asking their butcher for rat pâté? I may be wrong, but I really think that when people, wherever in the world, have the choice, they will go for a juicy steak or some chicken before looking for bugs.

Then, there is the possibility of using insects and worms for animal feed. The advantage of animals compared with humans is that they eat to satisfy their hunger, but there is no psychological side to what is in animal feed, at least from the animal perspective. A trial to feed live insects to chickens just started in The Netherlands. It will be interesting to see the results. What I am wondering about this trial is why use live insects instead of dead ones. When I worked in animal husbandry, one of the things farmers worked on preventing was the possible invasion of insects in the houses, in particular because of the damage to insulation material. Further, I hope they make sure the insects will not escape, and that at least, should that happen, they are not using species that could cause damage in the neighbourhood. Also, I hope that the insects chosen have been screened on the health safety in terms of passing on diseases. Especially, after all the problems caused over the past years by avian flu and contamination by migratory birds, one can never be too cautious.

So what will be a good production system for large-scale production? I do not know yet, and I cannot find much information on how insect husbandry of the future may look like. However, I remember a TV program I saw some 25-30 years ago on the Dutch channel VPRO. I am not sure about the title of the program, but here is what it was about. The documentary was presenting an old fellow living as a hermit somewhere in the wild. He was using meat offal from his farm animals to attract flies, by storing them in a large tank. The flies were colonising the offal and bones and used them to lay their eggs. Later, the maggots hatched and when he found they were large and ripe enough, the hermit harvested the maggots and boiled them in a large caldron. He used that mass of cooked maggots as feed for his pigs and so he recycled the carcasses leftovers of the previous batch of pigs to produce the next one. I found that it was a pretty smart feeding and recycling system. Perhaps, it could be a solution for the future. In his system there was no waste. Of course, it sounds a bit like a porcine version of the movie Soylent Green.

For as much as I can see potential for insects and worms, I also see a huge lack of number crunching and comparative trials to figure out which species to produce and in which productions systems to provide an abundant and affordable of safe insect and worm food for both consumers and environment worldwide. The generality talk about bugs is cheap and does not help me envision how insects would play a prominent role in feeding the future.

Beyond the merger Shuanghui-Smithfield

Last May, when the Chinese company Shuanghui announced it was buying Smithfield Foods, the world’s largest pork producer, I was very curious to read about reactions to the news, in particular from the US. The takeover did not surprise me. In my second book, We Will Reap What We Sow, I already told my expectation that the geography of corporations would change, following the shift of economic power around the world. I predicted that the new emerging powers would take over some of today’s agribusiness beacons, and hinted that eventually, headquarters of large corporations would also move to locations closer to the bulk of consumption. The Smithfield takeover quite fits in this scenario. My interest in the reaction of Americans came from some of my earlier speaking engagements. At the beginning of my activities with The Food Futurist, I presented in several occasions how the rise of the Asian middle class would affect markets. In particular the magnitude of the Chinese market always put things in perspective. When I showed my audiences how much volume an increase of 10 kg per capita per year of beef, pork and chicken would represent, there was usually a silence of surprise. Then, when I told that the evolution is not just about volume but also about the choice of cuts, that instead of being complementary to Western consumption by buying low quality cuts, the Chinese market would become a direct competitor for the same pieces of meat, the surprise usually turned into annoyed denial. The price of the meat that Americans would buy would be set by the consumers in Beijing and Shanghai at least as much as by those in New York or Los Angeles? That’s bold, isn’t it? I could understand the reactions. After all, the coming situation would mean the end of the undisputed dominance of American stomachs (and to some extent, their minds as well). The highest bidder will get the best product. It is not just a hunch about the future. It is the here and now. There are already examples of that in the seafood sector, where the top quality products are shipped to China instead of ending on French tables as it used to be, simply because the Chinese buyers are willing to pay more than the French to get the product, probably because they still make very good money at those prices.

However, many reactions from the US have been the ones I expected. I could find outrage at the idea that a Chinese company could dare buy an American one. I do not remember seeing such opposition when Brazilian meat companies would buy Western ones, but after all Brazil is not perceived (yet) as a contender to the US supremacy as China is. That would explain the double standards, I suppose. There were the extreme reactions such as those who decided and claimed they would not eat meat from Smithfield because, according to their simplistic conclusions, their pork would sink to the quality standard of what they think Chinese products are. Well, no… because applicable food standards in the US would still be those of the USDA and not from the Chinese government. How simplistic they may sound, such reactions are not from average Joe. They come from comments posted on professional meat magazines for which readers need to subscribe. The world is changing, but some still hope the old status quo will prevail. Good luck with that!

Yes, there will be competition for the attractive cuts of meat. Actually, it will shape the coming couple of decades of global agriculture, and of agricultural markets. Prices will depend on the ability to forecast and align production and consumption of animal products with commodities for animal feed. There is much work needed in that area. Those who attended my presentations in which I mention the dynamics of future markets know what I mean.

But there are more lessons from the Shuanghui-Smithfield merger, beyond the simple competition for the carcases and the geography of purchasing power. It sends a clear signal that the Chinese market is evolving towards more quality. The local suppliers want to be able to provide the market of the increasing affluent Asian middle class with the same standards as Western markets, which I have been also indicating as a growing trend both in my writings as in my presentations. Purchasing a company such as Smithfield offers Shuanghui the possibility to speed up the learning curve towards a better pork quality by also buying the processes and procedures that already exist in the production units in North America and Europe. Such a move is going to have interesting ripple effects. Normally, it should give Shuanghui a competitive advantage, as they should learn and implement better procedures faster and better than their Chinese competitors. This will give them a strong position in the urban centers, at least in the short term. In the long term, the side effect is that their competitors will also work harder at raising their own standards and improve food quality in China. This will also indirectly serve the Chinese governments by having market forces working in the same direction as government regulations to achieve better food standards. Finally, it will benefit the Chinese consumers, as they will be able to buy better quality foods. As they became wealthier, Chinese consumers have also become more critical and aware of environmental and food safety issues. They will not accept the current situation anymore and they want the same top quality as the Westerners. After all, the income in large Chinese urban center is quite similar to the one of Westerners. Why should they settle for less? And in the future, we will see the same trend growing in other emerging countries. That is where the best opportunities will arise in the coming decades.

Copyright 2013 – The Happy Future Group Consulting Ltd.

Finding your niche

One of the most common questions I get from my clients and audiences is how to find better markets. Regardless of whether I am addressing crop farmers in the Canadian prairies, food companies in the US, seafood producers in Ireland or local farmers here in British Columbia, the need to escape the undifferentiated commodity market is close to universal.

In my opinion, there is a simple reason for this. I usually explain it by joking about commodity markets being 95% price and 5% psychology, while niche markets are 95% psychology and 5% price. Of course, the percentages must not be taken literally. My point is that for commodities, since all the physical qualities of the offerings are similar, the (almost) only decision factor to choose between suppliers is price. All other arguments do not weigh much. For producers, this is often frustrating because it is a cold-hearted process in which the market decides. They feel that they have no control about the price setting, which is true for the most part. Although futures markets are there to help farmers limit the price risk, the lack of control in the actual price setting contributes to uncertainty, especially for producers in region with a relatively high production costs. In many developing countries, the disconnection between farmers and the markets presents similarities with the above. The lack of access together with the lack of control is a major impediment for the development of strong and successful farming operations.

Then, is niche marketing the way to go? Before answering this, it is useful to take a closer look at what a successful niche is about. Probably the best way to visualize it is to look at it from Maslow’s pyramid of needs, and look at which gradients we can define as we climb up the pyramid.

Niche &MaslowClick on the picture to view enlarged chart

The first one that comes to mind is that the bottom of the pyramid represent the need for generic cheap commodities and the top the exclusive luxury niches. The second one is directly derived from the previous one and from the content of the pyramid. It is the amount of emotion and psychology involved in the customer’s choice. This means that the level of quality also must increase as we go up the pyramid. Similarly, the level, and the quality, of service are also more important, as the target group lies higher in the pyramid. These differences clearly mean different way to conduct business. A solid niche is difficult to enter. If it is not, then many followers will rush into it, commoditize it and destroy it in no time. The difficulty can have very different reasons. It can be technical. It can be organizational. It can be commercial. It can be a matter of logistics or of planning. Whichever the reason may be, the message is clear for the producers: they must have the specific know-how to serve the niche well. They need to have the right set and the right combination of skills in-house. If done well, the development of a niche will also result in higher and more predictable margins, as well in the short term as in the long term. This has a lot of value to food producers, because they can plan ahead much better. Another important aspect of a solid niche is its growth potential. A good niche will grow. Of course, it will not become a commodity market, but that is what the producers want to avoid. If the niche has no growth potential, then as a producer you will be stuck and will need to find other solutions somewhere else for your business. This is why a niche has to be market-driven. There is no way that a production-driven approach will develop a niche successfully in the long term. It might work for a while, but putting production first will weaken the concept eventually.  Good niche management requires a deep connection between the producer and the customers. Developing a niche is not a marketing gimmick. It is not wrapping the old product or service in a new packaging. It is easy to make claims about sustainability, social responsibility or other concerns of consumers, but a good niche is not about the superficial stuff. It is about mutual dependence and shared value. To succeed in niche business, producers must be passionate about what they offer. They must believe in their vision, in their product and in their customers. They must commit to them and engage in a true partnership. If this is not the case or if it is not mutual, the honeymoon will be short-lived. Beyond the common vision and goals, what really counts is to speak the same language. Speaking the language of the customer is not enough. A good niche is one where customers want to buy from you, not having you hounding them for more sales. Good niche marketing rests on collaborative planning with the customers.

Although the comparison with Maslow’s pyramid of needs is useful, it is also important to realize that it does not necessarily means that a niche be tiny. Niche marketing is not the same as local and/or micro business. Especially in a world where purchasing power is evolving and where a huge middle-class with increasing disposable income, as well as a growing upper-class, are rising in populated emerging countries, niches may actually be quite large in comparison with the traditional Western markets.

Because there is such a need for niche developement, I am offering a specific program here at my company to help producers who want to walk the niche path. In my professional life, I have had many jobs and projects that were about getting away from the undifferentiated market and develop specialty markets that generate higher margins. The reason is that the production units where in countries with so-called uncompetitive production costs. Despite that, I successfully turned around difficult situations by setting up adequate strategies that capitalized on the strengths of the businesses and took them away from their areas of weakness.

Developing successful niches takes time and perseverance. For instance, it took me three years to get the poultry company I was working for to be approved as a supplier to Marks & Spencer. It also took some painful human resources decisions to turn around the sales activities I inherited in Germany. It took a lot of energy to lead for change here in British Columbia in an organization that was all about production and with no marketing skills, just as it took a lot of energy to convince the market that our new strategy would work (focusing on Chinook salmon instead of Atlantic Salmon) because many tried before and finally gave up. Yet, we did it and in half the time from what was stated in our supposedly very ambitious plan, and both the company and the customers benefited greatly from this move. I must also state clearly that to achieve such outcomes, I had set up teams with the mix of the right skills and talents to execute my vision. Nobody can do everything alone. That is valid for yours truly just as well. I am quite thankful for the great people who joined me in these endeavours and made it happen.

The difficulty to enter the niche protects you from the competition, but you also must pass the hurdle yourself. This means that you need to have the capacity to be stronger than your competitors. If you are not, realize that you will have difficulties to stay in business anyway.

Copyright 2013 – The Happy Future Group Consulting Ltd.

What more demand for meat means for the future

Here is an excerpt from We Will Reap What We Sow, the book I published in May 2012. The recent difficult climatic conditions for agriculture and their impact of agricultural markets have made the issue quite relevant. Here it is then:

As the economy in emerging countries is improving, their population becomes wealthier. Just as it happened in Western countries during the 20th century, the increase in wealth translates into dietary changes. The consumption of animal protein, especially the consumption of meat, increases.

To realize what the consequences of a higher consumption of meat might be, it is interesting to make calculations for China. When 1.5 billion people eat on average one more kg of chicken meat per person, world production needs to increase by about 750 million chickens. That represents about 2% of the world’s production. Similarly, when each Chinese consumes on average one more kg of pork, the world must produce 15 million more pigs. That number represents 1.5% of the world pig production. For beef, an increase of consumption of one kg per capita per year means the need for a production of 2.4% higher than today.

Meat consumption in China has already passed the milestone of 50 kg per capita per year, and projections indicate that it should reach 80 kg per capita per year in 2030. Clearly, consumption will increase by much more than just one kg.

An increase of 10 kg of chicken meat per capita per year in China means that the world’s chicken production would have to increase by 20% to meet the new demand! This represents almost the entire US chicken production volume, and more than Brazilian production. In the case of pork, an increase of consumption of 10 kg per capita means that the world’s pig production would have to increase by 15%. That is five times the current pig production of Iowa, USA. That is 60% of the EU production. For beef, the world’s production would have to increase by 24% to meet an increase of 10 kg per capita per year! This number also represents about 125% of the current total US beef production.

Different animal productions have different feed conversion ratios (FCR). The FCR is the quantity of feed needed to produce 1 kg of meat. For chicken meat, the FCR is of 1.8. For pig meat, the FCR is about 3. For beef, depending on the proportion of grass in the cattle’s diet, the amount of grain used to produce 1 kg of beef varies. With an average FCR of 3 for the various types of meat productions, an increase of meat consumption of 30 kg in China would result in the need to produce three times 30 kg times 1.5 billion. Depending on the consumption of which type of meat will grow the fastest, the need for feed, excluding grass, would vary between 100 and 150 million tons.

The world’s second largest population, the Indian population, is still largely vegetarian. Although India is among the countries with the lowest meat consumption, with less than 4 kg per capita per year, Indians are gradually changing their eating habits. Meat consumption is increasing in India, too, but not in proportions as dramatic as in China. Nonetheless, with a growing population, any incremental meat consumption will have physical consequences. Some simple math can show the magnitude of the higher demand for meat.

Between 2010 and 2050, the world’s population will increase by 2.2 billion, from 6.8 billion to nine billion. If everything stays equal, the consumption would increase by about a third (2.2/6.8). According to the FAO, the average consumption of meat per capita in the world in 2010 was of about 47 kg. The population growth alone would represent a meat consumption increase of 2.2 billion times 47, or 103 million tons. This number represents about a third of the 2010 meat consumption.

In the example of China mentioned earlier, the predicted increase of 30 kg per person represented an increase in meat consumption of 45 million tons.

Even if the world average meat consumption per capita remained stable between 2010 and 2050, the need for additional meat production would be of 2.3 (103/45) times the numbers in the China example. This represents an additional need for animal feed, excluding grass, of between 230 and 345 million tons compared with 2010.

The situation becomes even more interesting when the average consumption per capita increases. For every 10 kg increase of individual consumption, the need for additional meat production increases by nine billion times 10 kg, or 90 million tons of meat. For each 10 kg increase of average meat consumption, an additional volume of 600 to 900 million tons of animal feed is necessary. The following table presents the effect of the population increase to nine billion people and its meat consumption on production volumes.

Average individual meat consumption increase from 2010 (kg/capita/year)

0

10

20

30

40

50

Average individual meat consumption(kg/capita/year)

47

57

67

77

87

97

Total meat consumption(million tons)

423

513

603

693

783

873

Total meat consumption increase from 2010 (million tons)

103

193

283

373

463

553

Percentage of increase from 2010

32%

61%

89%

117%

145%

173%

An average meat consumption of 97 kg per capita per year would be about the current average of developed countries. If the average meat consumption per capita per year in the world were to meet such a number, meat production would have to almost triple from 2010 volumes.

Most of the gloomy scenarios about the challenge of feeding the world are based on the assumption that the diet model would have to be the Western diet, and in particular the American diet. This is far from certain. Actually, it probably will not be the case. As the world’s population increases, one of the sensitive issues, especially in the overfed world, will be what to eat and how much of it. Higher food prices will also force people to indulge less. It is important to understand the difference between nutritional needs and consumer desires. Today, the world produces enough calories and protein to meet the actual nutritional needs of nine billion people. If the nine billion people expected for 2050 all want to have a Western diet, the amount of calories needed would be equivalent to the nutritional calorie needs of 17.5 billion people.

It would be normal to expect feed conversion efficiency to improve in the future. Nonetheless, the production for animal feed would then increase with 3,000 to 4,500 million tons above the volumes necessary in 2010. Since a third of grain production goes to animal feed, a tripling of meat production means that grain production would have to double, just because of the desire for more meat.

Clearly, the challenge of feeding the world will depend increasingly on meeting the demand for meat. The challenge for producers of agricultural commodities will be to keep up with the demand for animal feed. As demand for meat increases, there is no doubt that more and more questions will arise about how much meat the world can afford to eat. The world food situation will depend on how much meat people want to eat, not on calorie count.

How much meat should we eat?…

The rest of the text for this topic and much more is in the book.

Copyright 2012 – The Happy Future Group Consulting Ltd.