THE INVESTMENT CASE

Demand for protein, be it animal or plant, is growing at a rate that is generally considered to be unsustainable for the natural environment. It is estimated that animal husbandry accounts for 18% of total greenhouse gas emissions globally – more than all forms of transport combined. Beyond this, animal husbandry utilises vast quantities of other scarce resources such as land (directly and via cultivation of crops for animal feed), water and energy, is a major user of antibiotics, while the slaughter of animals (fish included) on an industrial scale is a growing source of ethical concern for many.

Population growth, combined with a rising middle class in emerging markets, are the primary reasons driving this increased demand for animal protein. US consumption of meat in 2018 was close to its highest in decades, with total production up 2.4% from 2017. Meat production in the US in 2019 is expected to reach 105,570 billion lbs, up 3% on 2018.This pattern of consumption is similar in other developed nations and there are no credible forecasts suggesting that demand for animal protein is going to either stop or decrease.

To date, the agriculture and aquaculture industries have been able to satisfy this demand through increased production capacity and productivity gains. Notwithstanding, there is an increasing concern that the projected consumption will surpass the industry’s production capabilities, leading to irreversible environmental damage as producers struggle to keep up, and which, in turn, could jeopardise future productive capacity.

Until now, these issues have not had any feasible solutions, but recent technological advances mean we are on the cusp of being able to significantly reshape the supply chain through replication, simulation or substitution of animal protein: -

  • Replication – Animal tissue derived from slaughtered animals / carcases versus Clean Meat / Cultured Meat, generated via cellular agriculture and cellular aquaculture by the production of muscle, fat and connective tissue cells in bioreactors (cell cultures);
  • Simulation – Protein alternatives utilising specialised recipes to closely simulate the taste, texture and flavour of major protein and other animal (eggs and diary) products; and
  • Substitution – Increasing use of alternative proteins/biomass such as insects.

Clean Meat

Clean Meat or cultured meat is produced by in vitro cultivation (in bioreactors) rather than derived from slaughtered animals. The techniques used for the culturing of meat in this way are derived from those used in regenerative medicine.

In 2013, Mark Post of Maastricht University demonstrated proof of concept by serving the first lab-grown burger patty. This was funded by Sergey Brin, go-Founder of Google and cost US$ 325,000 - "it wasn't bad, and it wasn't great," said one food critic. This prototype was pure lean muscle, which did not have any fat content, blood or connective tissue etc. Since then, numerous companies have unveiled prototype products from other species such as the cultured fish cakes from Finless Foods Inc. which incorporated their cultured carp fish cells.

Clean Meat benefits: -

  • Greenhouse gas reduction: gasses generated by animal husbandry could be reduced by between 78% – 96%;
  • Land usage: land use could be reduced by approximately 99%. For every indoor acre farmed, 10 – 20 acres of farmland could be returned to its original ecological state;
  • Energy saving: leading to a reduction of between 7% - 45% in energy usage;
  • Antibiotics usage: reduced to zero because the bioreactors are a sterile environment;
  • Ethics issues: no slaughtering of animals. In the case of fish, no risk of inadvertent bycatch and poor labour practices reduced;
  • Food safety: imported seafood suffers relatively high rejection rates due to health concerns, particularly seafood, which suffers from a bioaccumulation of toxins;
  • Risk of food-derived illness significantly reduced. In the US alone, 47.8 million people per annum are reported with food-related illnesses, resulting in 127,000 hospitalisations and 3,000 deaths;
    Food category Illness Death
    Fresh produce 46% 23%
    Meat and poultry 22% 29%
    Dairy and eggs 20% 15%
    Fish and shellfish 6.1% 6.4%
  • Overfishing reduced: minimizing the depletion of fish stocks, illegal fishing and habitat damage.

Challenges

The key challenge for Clean Meat producers is production cost, hence affordability. The first burger cost USD $325,000. A number of companies, however, are already reporting significantly lower production costs. For example, Memphis Meats are now at USD $2,400 per pound. Some companies project that they will a have commercial product that is cost competitive by the end of 2019. The broader industry, however, is more conservative than this.

Other related challenges include: -

  • Growth media for cells: at present, companies cannot grow cells at commercially viable speeds in a media without animal sourced serum;
  • Cost of media: large volumes of expensive media are required. This means recycling techniques will be an important cost reduction driver;
  • Structure: cells are currently grown in a slurry / soup with no structure. It is possible that muscle, skin, blood, fat cells, etc. could be grown together and mixed in an appropriate ratio for taste and texture. Growing steaks (or the equivalent) will likely slow down growth rates, as cells typically need to be millimetres from nutrients which are normally diffused via vasculature;
  • Cell lines: the use of cell lines which are immortal, meaning a capability of doubling indefinitely, would be preferable. Finless Foods believe that they have selectively bred immortal cell lines from juvenile blue fin tuna. The ability to transform adult stem cells into muscle, fat and connective tissue is critical; and
  • Regulation: for example, in the US, a framework only has been announced. Notwithstanding and for reasons which are not clear, especially considering that the same technology is used for cultivation of cells across species, generated seafood will be regulated solely by the FDA, whereas generated meat and poultry will be regulated jointly by the USDA and FDA.