A report, Rethinking Food and Agriculture, by independent United States think tank RethinkX predicts the dairy and cattle industries will have collapsed by 2030 as animal-derived foods are replaced by higher-quality modern equivalents costing less than half as much to produce.
Bosworth says it’s something farmers and the rest of the agriculture sector in NZ cannot afford to ignore.
Most of the primary sector here will see the report as alarmist with unrealistic time frames.
But while our pasture-based production systems produce some products targeted at high-end niche markets rather than lower-end ingredient markets, which might give us a short-term advantage over the US, they are not a get-out-of-jail-free card.
About 70% of NZ dairy exports are sold for ingredients as powders and formulas, which are the most easily replaced by new systems producing synthetic products.
It’s that bottom end of the market that will fall out in the next five years, which calls into question Fonterra’s recent refocus on ingredient-based products, she says.
And though Beef + Lamb’s continued push into premium markets, illustrated by its Taste Pure Nature campaign in California, will provide more time for the red meat industry, a significant amount of NZ beef still goes into processing rather than high-value cuts and it’s that market Bosworth says will come under threat first.
RethinkX report co-author Catherine Tubb says technology called precision fermentation (PF) and a new production model called Food-as-Software are rapidly driving down the costs and driving up the quality of manufactured proteins.
PF is a process that enables programming of micro-organisms to produce almost any complex organic molecule.
Its costs are dropping exponentially because of rapid improvements in underlying biological and information technologies. The cost to produce molecules using PF has fallen from US$1 million a kilogram in 2000 to about US$100 today.
Assuming existing technologies and using established cost curves, the report predicts the costs will fall below US$10 a kilogram by 2025 and the proteins will be five times cheaper than traditional animal proteins by 2030 and 10 times cheaper by 2035.
“The industrial livestock industry is one of the oldest, largest and most inefficient food-production systems in the world,” Tubb says.
“Modern ingredients and foods are about 10 times more efficient across the board – from land and water use to feedstock consumption and energy use.”
Bosworth says with those predictions in mind there are a few challenges NZ agriculture needs to deal with sooner rather than later.
For dairy farmers relying on milk powder exports much of the future change will be driven by business-to-business deals. Large multi-nationals are spending huge sums on future food research and development, which is increasing in scale, and when it comes to consumers, she questions how many people will consult the back of a soup packet to see whether the milk powder extract is produced naturally and whether it will be important to them.
When it comes to the bulk ingredient market the natural, clean and green sales pitch won’t make a difference, particularly when synthetic alternatives have little environmental impact.
Synthetic ingredients are already used to produce medical products such as insulin and no one has batted an eyelid.
Then there’s the changing demographic of consumers.
Bosworth says while baby boomers still look forward to a Sunday roast, millennials’ eating habits are different. They eat less meat and snack more so are less attached to traditional food preferences.
The new technologies will also gain traction from the focus on the environmental impact of traditional farming methods: the output of greenhouse gases from livestock and their effect on freshwater.
Bosworth says while the paradigm shift in product might be driven by production, the environmental factor will also have an important role.
“It will start with cost but the hygiene factor, the more efficient use of land and water will come into play.”
Bosworth does not see too much of a long-term future for plant-based proteins because they are more of a stepping stone than a destination in what will be a revolution in food production.
That’s not to say it is all doom and gloom for NZ.
She says there will be huge opportunities in the biotech sector as new production systems are developed.
Countries that embrace the changes first will become the new leaders in food nutrition and will be able to sell that knowhow elsewhere so it can be upscaled.
NZ has a proud history in developing food and selling it to the rest of the world and the cashflow that’s been generated by the country’s pasture-based agriculture systems can help fund the transition to new technologies.
