Meat taxes are 'highly probable' says FAIRR Initiative

13-Dec-2017 - Last updated on 14-Dec-2017 at 10:20 GMT

Meat is on a similar pathway to tobacco, carbon and sugar and it is "highly probable" that some governments will begin to tax it, says the Farm Animal Investment Risk & Return (FAIRR) Initiative.

The FAIRR (Farm Animal Investment Risk & Return) investor network stated aim is to “raise awareness of the material impacts factory farming and poor animal welfare can have on investment portfolios”.

Over 180 countries tax on tobacco, 60 jurisdictions tax carbon and at least 25 tax sugar, and it’s “highly probable” that meat will be next, it says in a white paper entitled The livestock levy: Are regulators considering meat taxes?

“The pathway to taxation typically starts when there is global consensus that an activity or product harms society. This leads to an assessment of their financial costs to the public, which in turn results in support for some form of additional taxation.”

The decision of the World Health Organisation’s cancer research agency IARC to classify processed meat as a carcinogen has echoes in the negative health implications already associated with tobacco and sugar, they write.

Belgium has reshuffled its healthy eating pyramid to move meat in the same space as chocolate and sweets while the UK’s Eatwell Guide recommends plant-based proteins over meat and dairy.

Other countries have given signs of mulling a meat tax – Denmark’s advisory think tank Council of Ethics told the government a meat levy could “make a big difference” to climate change - although none has actually made the move to table a bill.

FAIRR writes: “Although no proposals have advanced into actual legislation, long-term investors should take note of the compelling arguments being made, especially in Denmark and Sweden. It was in the Nordics that the first carbon tax was introduced in 1990.”

Shadow price

The white paper authors are calling on companies to consider adopting an internal ‘shadow price’ of meat to account for future costs, “in the same way many use internal carbon pricing”.

It does not calculate what tax band would be needed to make meaningful reductions in meat intake, but points to proposals in Denmark that suggested a figure of around $2.7 (€2.30) per kilogram of meat.

A Swedish legislative proposal for a climate change tax on food tabled by three Green party MPs suggested around 20SEK (€2) per kilogram.

Dr Marco Springmann, senior researcher on environmental sustainability and public health at the University of Oxford’s Future of Food Oxford Martin Programme said:

“Taxing meat for environmental or health purposes could be a first and important step in addressing these twin challenges [to the environment and health], and it would send a strong signal that dietary change towards more healthy and sustainable plant-based diets is urgently needed to preserve both our health and the environment."

A global consensus?

Head of investor engagements at FAIRR Rosie Wardle said the FAIRR Initiative is not advocating meat taxes but does believe there is a global consensus that over-production and consumption of meat is harming human health, the environment and, therefore, society as a whole.

“We are not suggesting what the level of tax should be, or indeed that there should even be one,” she told FoodNavigator. “What we are saying is that – by looking at previous behavioural or ‘sin’ taxes and looking forward – trend spotting – we are predicting that in the medium to long term future, a meat tax of some kind, may well be on the agenda.”

Wardle said there are many examples of food industry players adapting their practices and addressing this issue through acquisitions, investment, product innovation and R&D.

US meat giant Tyson is increasing its 5% stake in plant protein company Beyond Meat while Cargill has shown support for lab-grown meat company Memphis Meat and dairy giant Danone bought WhiteWave.

“Change is afoot in the livestock and food industry,” Wardle said. “Whether this is due to a looming threat in terms of a meat tax, down to other risks such as environmental devastation and human health risks or realisation that there are market opportunities here – it is a change for the better.”

FAIRR gives a checklist of questions that concerned investors could ask food companies before parting cash:

• Has the company considered the implications of potential regulatory pressures on meat, including the possibility of a meat tax. What might the financial implications be in this scenario?

• Has the company considered diversifying its protein portfolio exploring more plant based products tapping into changing consumer demand on this issue

• Have targets been set to reduce meat content of certain composite product ranges?

• Has the company got clear meat supply standards to mitigate potential health and environmental risks. For example does its meat production supply chain seek to reduce its environmental impacts or reduce the use of antibiotics

• Are there opportunities for the company to promote healthier and more sustainable product ranges?

• Is the company using its brand equity to promote healthy and sustainable diets and lifestyles more broadly, and to educate consumers on making better choices?

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2 comments

Include meat and dairy under the coming carbon/methane tax

Posted by Stu, 13 December 2017 - 22:45 GMT

Instead of developing a meat tax, just include meat and dairy under the pending carbon/greenhouse gas tax. Since dairy cows and beef cattle belch enormous volumes of the green house gas methane out their mouths, that GHG should be taxed under the carbon tax regime that is coming shortly.

One issue is that methane is 25X as powerful a GHG as carbon at trapping heat, and therefore should be taxed at 25X the carbon price. While this carbon/methane tax may be challenging to implement due to the dairy/beef lobby, to charge less than 25X - say 5X or 10X - would not only be unfair, it would be another subsidy to this industry.

Lesson to food and beverage product developers: you need to factor in looming future rising costs of dairy, whey protein, caseinates, cheese and meat for costs in your current and future products. The carbon tax is coming and these will not be exempted. Of course you should switch now wherever possible to plant-based ingredients over dairy and meat. You will thank yourself later when your customers start checking your label for dairy and meat ingredients.

Suggestion to government: the sooner you implement a carbon/methane tax, the more gradual the rise can be and there will be less disruption to the food industry. If you wait, a sudden rise will affect the industry and food products manufacturers as they scramble to deal with sudden price rises of whey and dairy.

Suggestion to government: stop subsidizing the dairy industry to grow. The bigger they get, the harder it will be on them and society when we have to cut back due to climate change. Cap the size of the industry.

Whether meat or carbon taxes are implemented or not, once consumer realize the huge negative climate change impact of "methane milk" and "methane meat", they will cut back consumption enormously. Sadly, change is coming. Product developers and governments need to work now to get ahead of the trend to plant-based foods.

Note: I still consume milk, whey protein, cheese and meat. But I am cutting back and tens of millions of others will be doing the same. Imposing a methane carbon tax gradually will soften the blow.

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Let's eliminate subsidies first

Posted by Jennifer, 13 December 2017 - 20:04 GMT

I fully support the goal of replacing animal meat with plant- based alternatives. However, is slapping the consumer with a tax a fair, efficient and responsible way to achieve this goal? My suggestion is to start by eliminating subsidies for the meat industry. Subsidies are nothing but a hidden tax levied on all taxpayers- including vegetarians and vegans. So the current subsidies are already a tax on meat. In jurisdictions with food taxes, the meat is taxed again at the point of purchase. That is a second tax. Last, taxpayers must foot the bill for either cleanup or lost economic or recreational opportunities caused by environmental damage done by factory farming. That is a third tax. Levying a fourth tax on he consumer would be inappropriate while the government robs the consumer three other times to both create and sustain the problem! Anoth tax merely bloats government further and wastes money by using a portion of the revenues collected, to sustain the collection machine itself. I would propose to solve the meat problem by simply removing the meat supporting subsidies, charging fairly for the use, and cleanup, of ecosystem services required by the meat industry, mandating humane and species-appropriate clean treatment of all animals farmed for meat, and let the meat companies charge whatever is necessary to cover their true costs. The consumers will begin deciding for themselves whether he costs are worth it. The goal of moving people to choose plants over animals will be better accomplished through education and a fair and upfront pricing scheme that solicits consumer buy-in, rather than through heavy-handed government manipulation and income grabbing levied on consumers "for their own good".