Meat matters: the rise of veganism and its implications for investors

The climate crisis brigade are going vegan. But meat is still a huge industry worldwide. And its environmental impact depends on how the meat is produced. Free from the CAP, the UK will have a clean slate here, writes Victor Hill.

Veganism: not without consequences

The number of people who describe themselves as vegan doubled in the UK between 2015 and 2019. But as the farmer and writer Jamie Blackett has written, Vegan January in the UK (Veganuary – if you must) comes at the time of year when livestock farmers are most hard-pressed.

Mr Blackett thinks that veganism is the best thing that has ever happened to the processed food giants such as Nestlé (SIX:NESN) which specialise in turning cheap vegetable oils, sugars and carbohydrates into imitation meats and fake milk[i]. Just as margarine was developed in the 19th century as an oleaginous substitute for butter and later marketed as a health food – even though it has no nutritional value whatsoever – so consumers are now being conned into eating processed manufactures in lieu of natural meat under the delusion that they are doing something about climate change.

If veganism is being propelled by woke universities (such as Goldsmith’s College, London) and the disciples of Saint Greta, it is actually being commercialised by the multinational conglomerates that now effectively control global food supplies. As Mr Blackett argues, they see veganism as a way of prising production power from the livestock sector, which is largely privately and indeed family-owned, so that they can monopolise the manufacture of factory-processed substitutes.

In the UK the National Farmers’ Union (NFU) is finding it difficult to counter the information disseminated by the mainstream media. Even the BBC has shown bias in this discussion. Witness Panorama’s November documentary Meat: A Threat to our Planet? Presenter Liz Bonnin scoured the globe for the most polluting livestock farms, completely overlooking the high standards maintained in the UK where pasture-fed beef systems are the norm.

In grass-based livestock systems methane produced is re-absorbed by new grass. The Panorama documentary did not explain that grass-fed livestock farming increases top-soil through the re-cycling of dung and thus helps remove carbon from the atmosphere. This is achieved without the need for the chemical sprays or artificial fertilisers used in arable farming.

In contrast, when soya is industrially processed into fake meat and so-called “milk”, permanent greenhouse gases are emitted in the growing and production processes. And much of the soya used for vegan meat substitutes is grown on land recently cleared of rain-forest cover in countries like Brazil.

That said, the astonishing initial success of Beyond Meat (NASDAQ:BYND) and its plant-based burgers has prompted some of the world’s largest meat producers to jump on the vegan bandwagon. Traditional US meat groups such as Tyson Foods (NYSE:TSN), Smithfield (NYSE:SFD), Perdue Farms (private) and Hormel Foods (NYSE:HRL) have all rolled out plant-based alternative burgers, meatballs and nuggets. Note, however, that having soared from its offer price of $65 on 03 May last year to nearly $235 in late July, BYND’s shares are trading at around $110 as I write.

With the Phase I US-China trade deal now in place, China is expected to buy an additional $16 billion of US farm products this year – over and above the $24 billion it purchased in 2017. That will include a lot of (real) meat and poultry.

A sign of the times: Gaucho, the up-market chain of steakhouses, is planning to sell only carbon neutral beef by 2022. It will achieve this by means of a reforestation programme in South America to offset the greenhouse gases emitted in cattle ranching. Currently it sells 400,000 kilos of prime Argentinian beef every year. Gaucho is owned by holding company Rare Restaurants which is in turn owned by investment houses SC Lowy and Investec.

CAP RIP

Whatever the outcome of the UK-EU trade negotiations, the UK will leave the European Common Agricultural Policy (CAP). That means that from 01 January next year The UK government in Westminster, together will the devolved administrations in Edinburgh, Cardiff and Belfast, will be responsible for determining agricultural subsidies paid to farmers.

Under Mrs May’s ill-fated Withdrawal Agreement, the UK would not have been free to decide the levels of financial support for landowners; and the UK would have been obliged to maintain subsidies at their 2019 levels, while Brussels would be able to raise theirs as they sought fit.

But next year the UK will be able to tailor a bespoke system of agricultural support for British farmers. That support is essentially of two kinds. Firstly, there are production subsidies – a hangover from the days when the main purpose of agricultural policy was to ensure a plentiful supply of cheap food. Secondly, and now even more importantly, there are financial rewards for farmers who provide environmental and public goods – safe-guarding soil quality, protecting biodiversity, using water resources efficiently, maintaining footpaths and so forth.

While we all tend to moan about the British climate it is in fact almost ideal for cereals, all manner of vegetables and grass-fed livestock. British farms are amongst the most productive in the world. But yields continue to be improved by technology, for example gene-editing and robotics. The more productive the agricultural land, the more land can be given over to re-forestation, thus helping with carbon capture and storage (CCS).

By judicious application of gene science our New Zealand cousins have increased productivity hugely with easier, safer lambing and sheep that grow faster, yield more meat and are less susceptible to disease. The hostility of the EU to genetic modifications of all kinds has cost Europe dear. The maize yield per hectare is 4.5 tonnes higher in the US than it is in France.

UK food exports to the EU will remain important but the potential to sell into the US and Indian markets tariff-free is massive. Americans should be introduced to the delights of Welsh lamb.

Smart farming

According to the John Innes Centre in Norwich, climate change could actually boost food production in the UK. In a ground-breaking trial, researchers heated small plots of land to mimic temperatures that may be experienced in future centuries. The additional heat enabled oilseed rape crops to flower later, giving weeks of extra growth which raised yields by up to 30 percent. Cold Octobers in particular have a negative effect on yields, but are becoming rarer.

If temperatures are to rise permanently then all kinds of new crops can be cultivated. Vineyards in Southern England are now commonplace – yet half a century ago there were just a few vines grown in glass houses.

Smart farming refers to applying technology to bolster food production while minimising pollution. For example, drones can be used not just for imaging but also for spraying. Satellite imaging helps farmers to know when to rotate crops. Robots are now available that can plant seeds and detect pests. In 2017 researchers at the National Centre for Precision Farming (part of Harper Adams University in Shropshire) completed an entire harvest using only robots. Automated tractors, drones and picking machines completed the task without any human graft.

Shadow Robot Company, based in North London, is developing a range of new farm robots, including robots that can pick soft fruit and vegetables without harming them. In China XAG, based in Guangzhou, manufactures drones that help farmers to combat pests.

Drones have even been used to round up sheep; though currently most British sheep farmers prefer the traditional technology: sheep dogs.

Pigs in the woods

Woodland-raised livestock is an ancient method of animal husbandry which seems to have died out in the late middle ages, probably due to various Enclosures Acts. But in recent years the practice has seen a revival under the general banner of agroforestry. In Swaffham, Norfolk, farmer Steve Hart has released his pigs back into their natural habitat – woodland – where they can forage for acorns, hazelnuts, chestnuts and insects (supplemented, of course, by feed). Steve keeps about 480 pigs on 27 acres of woods.

This practice doesn’t just benefit the pigs. The grazing benefits the forest fauna by dispersing seeds, transferring nutrients and mulching. Research shows that these effects can actually improve plant bio-diversity. Pork from these happy pigs is now available at selected branches of Waitrose. (The Swaffham Waitrose is one of the best, by the way.) The meat is exceptionally succulent, nutty and rich.

Since we need to plant more forest and rear more meat, this agroforestry is win-win. Expect more like this. Bravo, Mr Hart. But it’s not just beautiful Norfolk leading the way. There is a lady by the name of Sophie Bagley in Yorkshire who drives around the county picking up unwanted pheasants left over from shoots. Her outfit now plucks up to 100 a day and sells the lean high-protein gamebirds online. Waste not, want not.

Sick pigs

From fortunate pigs to sick ones. Alas – horrible statistic – about one quarter of the world’s pigs died in 2019 having contracted “African” swine fever. China, where the animal pandemic was most severe, lost about half of its pigs. Now I’m sure many of my readers will be thinking what I’m thinking. I am no virologist, but it is legitimate to ask if there is any linkage between the swine flu epidemic (which did not affect humans) and the current corona virus epidemic, which threatens to become a global pandemic. Animal welfare standards in China are, to put it mildly, unacceptably low – and for that reason alone I would never buy a Chinese meat product. There is a correlation between animal welfare and human health.

China has had to buy in a lot more poultry from abroad and this has been good news for Brazil. Shares in Brazilian meat producer Minerva (BVMF:BEEF3) were up by 160 percent last year and its competitor JBS (BVMF:JBSS3) rose by 125 percent. US poultry producers such as Sanderson Farms (NASDAQ:SAFM) and Pilgrim’s Pride (NASDAQ:PPC) have been cleared to ship American birds to China.

US meat producers have also been buoyed by the decision by the European Parliament at the end of November to triple US beef imports into the EU – so long as it is hormone-free. Tyson Foods was up by 67 percent last year.

Supermarkets: greener than thou

Recently the leading UK supermarket chains have all tried to out-green one another, with pledges to cut plastic packaging, food waste and CO2 emissions. Sainsbury’s (LON:SBRY) has a target to become carbon neutral by 2040 – ten years before the UK government’s target of making the country net carbon neutral. The plan involves halving plastic food packaging and introducing a bottle deposit scheme. Tesco (LON:TSCO) announced last month that it was ending the use of plastic wraps for tinned food multi-packs which will eliminate an estimated 350 tonnes of plastic a year. Waitrose (John Lewis Partnership – private) aspires to having a carbon neutral trucking fleet by 2050.

Environmental campaigners have highlighted CO2 emissions by supermarkets: store lighting and refrigeration consume massive amounts of power; delivery trucks often belch out diesel fumes; and most of the plastic that we throw away comes from food packaging.

Some of the biggest-selling brands in UK supermarkets will soon display their carbon footprints on the product label alongside nutritional information. Nestlé (makers of Nescafe and innumerable other brands) and Premier Foods (LON:PFD) (which makes Mr Kipling cakes) are seeking new ways to inform customers about the environmental impact of their products.

Labelling is just one strategy under consideration. Though how easy it will be for consumers to interpret that information is another question. There is also the matter of carbon accounting which is highly problematic – especially so in the case of meat products. Would it really impact consumer behaviour if a good steak rated a higher carbon value than a pack of sausages?

By the way, Coca-Cola estimates that each of its 330 millilitre cans is responsible for 170 grams of CO2 emissions – so a return flight from London to New York is equivalent to drinking 588 cans of Coke! Something to ponder.

Meat and trade

I am generally a free-trader, though not a globalist. But the most ethical and environmentally preferable course for Global Britain would be to become a meat autarky (i.e. self-sufficient) – with the highest animal welfare standards in the world (and thus the best pandemic-preventing hygiene) and the lowest food miles. Traditional local abattoirs, strangled by the EU CAP and by unfavourable regulations, should be reinstated.

But if we want to sell Welsh lamb to the Americans they will want to sell us their (trope alert!) chlorinated chicken. At least the Americans will be able to supply all the soya they can spare (more sustainable than Brazilian) to feed our growing tribe of hungry vegans. Clearly, Boris will not be able to please everybody.

[i] See: https://www.telegraph.co.uk/news/2020/01/02/vegan-craze-self-serving-corporate-con/ {Paywall}