investment viewpoints
A disruptive festive menu: jellyfish, bean burgers
As we look forward to gathering with friends and family over the holidays, it is worth considering how our festive meals may change in decades to come. Given the environmental, social and technological forces disrupting global food systems, what dishes might we serve up in the future?
The answer largely depends on decisions we make today. Staying on our current course could lead us to a doomsday scenario. Alternatively, we might move toward an increasingly synthetic way of life. Or, will we start collaborating more with nature to bring about a regenerative existence?
| Doomsday path: collapse of nature |
A disruptive festive lunch
In this insight, we guide you through a `disruptive festive lunch’, featuring dishes that could feature more widely in future diets, depending on which path we take.
At LOIM, we recognise the magnitude of these disruptive forces. Our New Food Systems equity strategy is designed to capture shifting profit pools as the world transitions away from an industrial food system that no longer makes sense.
We need a new system that can feed 25% more people (up to 10 billion) with 20% less land (under 4 billion hectares) by 2030, while also helping to protect and restore planetary boundaries.2
What’s on the menu?
The festive culinary adventure begins in the ocean in Asia for the starter, then moves across the grassland in America for the main before ending up in the jungle in Africa for dessert.
| Welcome tastes Sparkling English wine with raspberry Chambord
Invader jellyfish spoons
Synthetic beef patty, melted plant-based cheese
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Source: Balance Point Advisory (2023)
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Which path?
Many of the foods we love and depend on are highly vulnerable. The changes in climate, and in environmental and social conditions, are unfolding in tandem with equally powerful changes in our informational and technological capabilities. The doomsday, synthetic and regenerative scenarios are all possibilities.
In the doomsday world, our continued reliance on the industrial food system contributes to the collapse of nature. Jellyfish are a clear contender for our dinner tables in this scenario. We might also use modern technology to take control of nature, moving toward a synthetic way of life. Or we could use that same technology to collaborate with nature, creating a more regenerative existence.
One thing is undoubtedly clear: our current food systems are damaging our climate, biodiversity, forests, oceans, fresh water and soil. After energy, food systems are the main contributors to climate change. They are also hugely inefficient. For example, it takes about 30 calories of animal feed to make 1 calorie of beef. Just 55% of the world’s crop calories are eaten directly by people, while 36% is used for animal feed.3
We are on course to run out of land to produce the amount of meat required given population growth and rising incomes. We have already cleared almost half of all habitable land on Earth to make way for agriculture.4 Among targets to be achieved by 2030 are 30% conservation of land, sea and inland waters; 30% restoration of degraded ecosystems; halving the introduction of invasive species; and a USD 500 billion/year reduction in harmful subsidies.5
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Huge opportunity
The New Food Systems strategy aims to capture the investment opportunities created as the world attempts to avoid the doomsday scenario. It focuses on three themes: 1) sustainable food production, featuring biological and synthetic inputs; 2) enabling solutions, such as smart-farming technology; and 3) sustainable food consumption.
There is an urgent need to produce fewer animal-based foods, replace industrial agriculture with more regenerative practices and technologies, and to increase efficiency in food distribution to reduce waste.
The resulting shifts will significantly alter the risks and return profiles of hundreds of businesses involved with food and agriculture, in our view. Innovation will disrupt existing profit pools and create new ones. By 2030, we estimate that new food systems will represent a USD 1.5 trillion annual profit pool (from 600 billion in 2021).
While it is too soon to predict exactly which foods will be on our tables, we do know that diets will include more plant-based proteins. Sustainable meat producers will stay in business, but the meat and dairy aisles in stores will shrink, as will meat options on menus. Costs for cultivated meat are dropping significantly, and this trend is likely to accelerate as frontrunners gain scale.
Food production is also changing, with innovations such as bio-based pesticides, data-enabled agriculture with precision application of fertilizer, and harnessing enzymes to increase shelf-life and reduce waste.
We see great opportunities for investors in the food space. Food systems epitomise our problematic relationship with the environment, but also hold immense potential for positive change.
Sources
important information.
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