How Meat-Diets Costs Billions and the Investment Opportunity in Food Innovation

How could our food system based on animal proteins be costing us so much?

The FAO paper, published during COP28 in which investing in sustainable and healthy food systems advancements took a head seat at the table, noted that 73% of the $12.7T cost to society is due to dietary pattern-induced productivity losses.

This is in-line with a 2018 Milken Institute report stating that the $1.1 trillion in U.S. health care costs for chronic diseases such as heart disease, cancer, diabetes, and obesity, as determined by the Center for Disease Control (CDC), is actually $3.7 trillion when lost economic productivity is included. “This is equivalent to nearly 20 percent of the U.S. gross domestic product (GDP).”

So why does meat cost society so much?

Many studies link meat consumption to the chronic diseases the Milken Institute and CDC mention. The Journal of American Medicine (JAMA) and The National Library of Medicine link our major meat consumption of unprocessed and processed meat (bacon, sausage, deli slices, hot dogs) to heart disease. The World Health Organization links processed meats to cancer and meat is also linked to diabetes and obesity, per the National Library of Medicine. It seems our massive meat consumption is costing the global taxpayer dearly: debilitating personal illness, skyrocketing healthcare costs, severe environmental damage and considerable economic loss.

Another societal cost, perhaps not even reflected in the $12.7 T, from a diet focused on animal proteins is the growing antibiotic resistance in the human population due to ingesting the mass antibiotics fed to factory animals through their by eating meat. These antibiotics are known to have also contaminated our water. In addition, animals in cramped, unclean factories is also the leading cause of the next pandemic, according to the United Nations. And we all know the heavy societal cost of a pandemic.

The environmental costs, which are likely underestimated per the FAO, “have an expected value corresponding to about 20 percent of total quantified hidden costs [$2.6 T] caused by agrifood systems. Of these, more than half pertained to nitrogen emissions (mostly from runoff to surface waters and ammonia emissions to air). These were followed by the contributions of greenhouse gas emissions to climate change (30 percent), land-use change costs (14 percent)

and water use (4 percent). Social hidden costs associated with poverty and undernourishment were smaller, accounting for just 4 percent of total quantified hidden costs.”

So it isn’t that we can’t feed people, it is that we feed people inefficiently with much health, environmental and economic damage.

So, why do taxpayers bear the burden of these costs? Shouldn’t it be the producers of these damaging products?

Meat lobbyists are hard at work to make sure this doesn’t happen. Through intensive marketing similar to the Fossil Fuel and Big Tobacco industries, the average person is led to believe that meat is good for them, part of their identity and that they couldn’t live without it. However, if made aware of the costs and burden, it is likely that most people would say they could live without subsidies, rising healthcare costs, feeling ill, and paying through the nose for environmental damage and loss of GDP.

Alas, the duping of society by the meat lobby is quite seductive. Take, for example, a Big Mac. It may seem cheap, but upon further review it is quite costly. In fact, this exact sentiment was explained by the American Institute for Economic Research which noted in April of 2022 that “The United States federal government spends $38 billion every year subsidizing the meat and dairy industries. Research from 2015 shows this subsidization reduces the price of Big Macs from $13 to $5 and the price of a pound of hamburger meat from $30 to the $5 we see today.” In short, taxpayers subsidize the companies that make the food that makes them sick and then they subsidize their environmental damage while footing the healthcare bills for their illnesses. Taxes, taxes and more taxes.

For a nation that espouses capitalism, watching the U.S. government, through its taxpayers, subsidize the meat industry by tens of billions a year, not including the FAO’s externalized costs to the consumer for the health and environmental clean-up from these monopolies, is puzzling.

The practice is also fiscally irresponsible.

How much longer will taxpayers carry the crushing costs of the industry that is significantly contributing to making them, and the planet they live on, sick…all for a short-term, mediocre burger?

Perhaps there is a silver lining. Per the U.N.E.P., 18% of global greenhouse gas emissions come from animal factories, but Food and AgTech gets only 2.5%-4% of the clean tech investment according to the World Bank. Protein diversification gets only a sliver of that. Yet, as food innovation become the low hanging fruit for reaching 2030 sustainability goals when fossil fuel reduction alone won’t do it, funding is expected to rise to be in line with the problem. This is a potential jump of over 700%.

The investment opportunity here is that the public markets haven’t yet priced in the fact that food innovation funding could skyrocket. Thus, investing now, before the markets catch up, could be a golden opportunity.

Is this an investment opportunity?

There is more positive news. Where there is inefficiency, there is disruption through Innovation. Innovations scale and prices come down. Markets thrive on this, and this mean mass adoption in the end by consumers. Think how the horse and buggy gave way to the car, the film developing industry gave way to digital imaging and the landline gave way to the cell phone. Food innovation is making animal factories look like the dark-ages torture relics they are, a fact understood by anyone over the age of seven despite marketing efforts by the meat industry.

Indeed, innovation for efficient protein diversification through protein innovation including, plant-rich, precision fermented and cultivated protein is growing, and the benefits are multi-fold. With these alternatives, society can produce more protein for a growing population using less resources, like land and water, while creating less damage through healthcare costs and climate damage, as notes the former UAE Minister of the Environment Her Excellency Mariam Almheiri.

In addition, innovation is also a path for wealth creation. Investors looking for innovative secular trends with mass adoption potential are seeing the opportunity of investing in food systems transformation.

We can see the path to food system change is already taking shape. The Department of Defense is now investing approximately 20% of the R&D grants in food innovation, as is the Bezos Earth Fund has pledged $1 billion in food systems transformation. On the ground, Aleph Farms in Israel, for example, has received approval by the Israeli government for the public sale of cultivated beef. Their colleagues at Upside Foods and Good Meat received the equivalent U.S. approval for cultivated chicken earlier this year. Beyond Meat has launched low saturated fat, no cholesterol, high protein steak tips and Oatly has launched low-sugar Oat milk. Blended meat/plant options are also on the horizon to make everyone at the table happy.

It is an exciting time to be investing in a sector that is on the heels of addressing many environmental ills, while improving the health of the planet and people. As the sector grows, it may also improve the potential performance of portfolios.

About the author

Elysabeth Alfano is the CEO of VegTech™ Invest, Advisor to a food innovation ETF. She is a consultant to C-Suite of multinational companies and speaks internationally on the intersection of investing, sustainability and food systems transformation. Elysabeth is also the host of the podcast, Upside & Impact: Investing for Change.

Please note this article is for information purposes only and does not in any way constitute investment advice. It is essential that you seek advice from a registered financial professional prior to making any investment decision.