Protein transition costs for farmers summary?
- Food systems produce one third global emissions driving protein transition concerns
- Shift from animal farming risks stranded assets harming farmer livelihoods
- About 78 percent food system fixed assets tied to animal sourced products
- 9.5 percent cut in animal sourced food consumption in EU and UK causes sixty one billion euros in stranded assets
- Phased asset retirement, policy support and repurposing can mitigate losses
With the food system linked to a significant chunk of global greenhouse gas emissions – by some estimates, around a third – it is important to transition towards a more sustainable form of food production.
Since much of this impact comes from animal agriculture, this is the sector that has garnered the most attention. Plant-based meat and dairy, cultivated meat and other animal-free alternatives have been developed partially in response to the need to find a more sustainable alternative to animal-sourced food.
But there has been a backlash. Many policymakers, commentators and farmers themselves view meat substitutes as a threat to the livelihoods of livestock farmers.
This has influenced legislation. Attempted bans in countries such as Italy have taken aim at cultivated meat, and a recent ban on ‘meaty’ names for meat substitutes was voted through the European Parliament before talks collapsed.
Now, a study in Nature Food suggests that a move towards plant-based diets really could impact farmers’ livelihoods.
The cost of stranded assets
Stranded assets are assets that, due to changing market conditions, can no longer be used, with their use-value cut off well before the end of their natural economic lifespan.
Often associated with the oil and gas sector and the potential for its infrastructure to go unused following a successful energy transition, stranded assets may also be created if the world successfully moves away from animal products.
It is difficult for a business to convert any stranded assets back into cash, for the simple reason that they are no longer in demand. This means that they essentially represent a loss for the business in question.
This poses a challenge for farmers. If meat and dairy consumption drops dramatically, that means farmers would have no use for expensive assets like buildings, farm equipment, machinery, and even livestock itself. A costly move.
How much a plant-based world could cost farmers
While farmers produce both plant-based and animal-based foods, around 78% of fixed assets in the food system are linked to foods of animal origin, either in meat and dairy production itself or the production of animal feed. The transition away from animal-sourced food could thus leave a lot of stranded assets.
If the consumption of animal-sourced food decreased by only 9.5% in the European Union and UK, this would result in around €61bn worth of stranded assets.
If animal sourced food consumption was reduced by 60%, stranded assets would be worth €168bn.
In the instance that animal-sourced food consumption disappeared entirely, this would result in €255bn of stranded assets.
Most significantly affected by this would be breeding livestock, although even in the scenario where animal-sourced foods disappear completely, around 2% of breeding livestock would still have use through niche roles in crop production.
While these losses will be partially offset by an increase in the value for assets used to create plant-based food, this would not be enough to replace the lost value.
How farmers can adapt to the protein transition
There are several ways in which the impact on farmers could be mitigated.
For example, non-land assets, which depreciate over time, could be phased out during a transition, mitigating the cost impact when paired with a complete halt on investment. Even in the scenario where all animal-source food production stops, such a phase-out would only take around 30 years.
Furthermore, targeted policy support could also help farmers. In regards to the EU in particular, Common Agricultural Policy (CAP) payments could be redirected away from livestock subsidies and towards helping farmers remain in liquidity and produce crops.
Some assets can also be repurposed for uses in the production of plant-based foods. Dairy barns, chicken sheds and pig barns can be converted into facilities for the production of specialty vegetables, mushrooms, hemp, microgreens, and herbs. Other infrastructure, such as cooling cells, watering systems, feeders, and computer systems, can be repurposed for use in greenhouses.
If such a transition does take place, it will no doubt be challenging for farmers. But hopes remain that the worst economic impacts could be mitigated. The real question is: will consumers give up dairy, meat and eggs?
