Red meat challenges: Tech, environment, demand and China

There's stormy weather ahead for the red meat industry but that doesn't mean there aren't opportunities as well.

THREE KEY FACTS

• Red meat faces challenges from declining consumption, health concerns, and environmental issues.
• New Zealand’s sustainable practices offer opportunities, but methane emissions and global trade pressures remain concerns.
• Tech disruptions such as cultured meat and precision fermentation could pose long-term threats to the red meat sector.

This article was first published in Future of Food in November 2024 by FoodHQ, written by Vincent Heeringa and FoodHQ chief executive Dr Victoria Hatton.

Part two of a three-part article, read part one here; Red meat – can it recover its glorious past?

It’s tough business farming cattle.

Spend any time on a farm and you soon appreciate the grit required to land that sirloin on your plate.

From fencing and drenching to battling storms, environmental regulations, labour shortages and high interest rates — farming is heavy weather.

For the red meat sector, the headwinds are getting stronger.

There are four storms.

Consumption decline

First, there’s evidence that many of our key trading partners may have reached peak meat.

Consumption has been declining since the early 1980s in the UK, Australia, Europe and the US, with a concurrent growth in pork, poultry and ready-made meals.

It seems the richer we get, the less meat we consume.

An Australian study found a strong correlation between national incomes and a decline in meat consumption.

Figure 1. Changes in total meat consumption and changes in GDP. Image / FoodHQ

As Figure 1 illustrates, developing countries trade up into meat as they get wealthier (for example Vietnam), but then there is a tipping point where this changes (for example Korea): “There was evidence of a tipping point around US$40,000 of GDP per capita, after which increases in economic wellbeing do not lead to increased meat consumption”.

The study attributes the decline to health and environmental concerns.

The correlation makes sense. The fall in per capita consumption coincides with women entering the labour force in the 1970s and the subsequent fall in home cooking and food preparation.

In 2013, Nutrition Journal reported home cooking had declined as much as 30% between 1965 and 2007.

That trend has continued.

Ready meals have experienced a concurrent growth – serving up far less meat content than a traditional meat-and-three-veg dinner.

Convenience is killing the cow.

Health and environmental concerns

And then there are the health concerns.

Rightly or wrongly, consumers have received a steady diet of criticism over their meat habits. We’re told we’re eating too much meat, too much protein and too much fat. Nutritionists link meat to cancer, diabetes and IBS.

The claims are exaggerated and can be damaging in the other direction.

Meat is high in nutrients including iron, zinc and vitamin B12. It’s a recommended source of protein for all ages and stages, especially for ageing populations. Many nutritionists still recommend meat in a modern diet.

The true culprits are downstream.

Yes, that sizzling rump steak is delicious but the very process of frying oils at high temperatures produces harmful compounds. It’s also the processing. But like all highly processed foods, processed meat like salamis, bacon and nuggets come with a health warning.

Add to that the environmental concerns. From a merely rational point of view, meat is an inefficient way to source protein.

Producing only 18% of the global food supply, livestock currently uses 77% of all agricultural land. Land is diverted from human consumption to feeding animals in intensive livestock systems globally. As a result, more than 90% of the proteins are lost.

Herein lies an opportunity for New Zealand farmers.

Our livestock are raised on pasture and free to roam and our farm systems are increasingly adopting nature-positive or sustainable practices. Indeed, by Northern Hemisphere standards, our farms are well ahead when it comes to sustainable agriculture.

“We believe many New Zealand’s sheep and beef farming practices naturally align with key pillars of sustainable production,” Beef + Lamb argued.

“This isn’t to say all farms are applying all principles all the time, but in general New Zealand is better placed than other countries to meet these requirements.”

The problem of methane remains unsolved, however.

Livestock farming is responsible for 11% of global emissions and combined with dairy amount to just under half of New Zealand’s greenhouse gas emissions.

In 2019 EAT-Lancet planetary health diet – described as the “first attempt to set universal scientific targets for the food system” – proposed a reduction of more than 50% in global meat consumption as essential to meet below two degrees of warming.

AgriZeroNZ, a partnership between the New Zealand government and major agribusiness companies, was established to drive down emissions from livestock.

Through greater investment, the partnership will drive a focus on game-changing emissions reduction solutions to help farmers reduce emissions and maintain their competitive edge.

While fast-tracking tools for New Zealand’s pasture-based farms will secure the future profitability of exports, global dissemination of tools will ensure global impact is made.

Australian scientist Katherine Sievert summed up the sentiment: “If you want a quick take-home, it’s this: eat less red meat, avoid processed meat and choose meat farmed under better conditions.”

New Zealand is those better conditions.

China crisis

Whatever declines we’ve witnessed in the Western world, they’ve been offset by growth in the developing world. Globally, red meat consumption is still predicted to increase by 50% by 2050.

That shift has not been lost on our industry and governments.

In response to the United Kingdom entering the EU in the 1970s, New Zealand set about creating free trade agreements, especially in Asia, opening new destinations for our meat.

Where once we relied on our friends in old Blighty, we’ve since made new friends in Korea, Japan, the US and the Middle East. None is more significant than China.

The Chinese middle class consumes 76 kg of meat per person each year, one of the highest consumers in the world.

Supporting meat production has been Chinese Government policy in recent decades and almost a third of the world’s meat is consumed there.

Image / FoodHQ

We’ve enjoyed the upside. From almost zero in the 1990s, China now accounts for approximately 45% of New Zealand lamb, 88% of mutton and 48% of beef exports.

But even here, habits are changing.

After a recent trip to China, Dr Victoria Hatton, FoodHQ chief executive, reported seeing a shift in consumer behaviour like Western countries: an ageing population, a rise in conscious consumers, a decline in home cooking, concerns about health and wellbeing and a slowing of demand for traditional meat, pork especially.

Beef is seen as a healthy alternative to pork and New Zealand is prized for its food safety.

“The Chinese Government is actively promoting the shift from pork to beef,” Hatton said.

“Pork is considered to be a poor man’s meat, produced and consumed when China was going hungry.

“Now China is wealthy, they are moving from an eat full policy, to an eat well policy.”

But China is not the saviour.

After a solid annual growth of 4% between 2107-2022, the growth of beef is forecast to halve by 2026.

According to Farmer’s Weekly: “Word out of China is that it could be another 12-18 months for prices to recover and when they do it won’t be at levels enjoyed in 2021-22.”

“China will be seeking more reciprocity in the trading relationship with New Zealand. It won’t continue to take our meat without expecting something in return. It will be interesting to see what this might be,” Hatton said.

Image / FoodHQ

Much success for New Zealand relies on our free trade agreements.

They’ve been so successful they’re one of the few policies all the main parties agree on. Storms are gathering, however. Protectionism is reversing the gains made in previous decades.

Despite the rhetoric, President Biden continued with Trump-era tariffs, with a second Trump term now ahead of us, and a hike in tariffs on Chinese imports of another 60%, dragging 2.5% off China’s GDP growth. Given our reliance on China that decline would hurt.

The meat trade is under pressure.

Globally, red meat trade fell 1.5% in 2023.

The Food and Agriculture Organisation said that “much of the decline in the global meat trade in 2023 was reflected in lower exports from a few leading exporters, more prominently the European Union, Turkey, the United Kingdom, the United States and Canada, among others”.

Tech disruption

The fourth threat to the red meat sector comes not from consumers or trade wars but from the lab.

Two tech platforms are at play.

On the distant horizon is cultured meat, sometimes called lab-grown or cellular meat.

Working with animal cells, scientists have successfully grown chicken, beef, fish, pork or unusual meats, including elk, lamb, bison, and Wagyu beef.

In 2013, Mark Post created a hamburger patty made from tissue grown outside of an animal.

Since then, other cultured meat prototypes have gained media attention: the “world’s first commercial sale of cell-cultured meat” occurred in December 2020 at Singapore restaurant 1880, with cultured meat manufactured by United States firm Eat Just. Meanwhile, SuperMeat opened a farm-to-fork restaurant in Tel Aviv called The Chicken to test consumer reaction to its cultured chicken burger.

Olivia Ogilvie, co-founder and chief executive of Auckland-based Opo Bio Aotearoa, is an entrepreneur making the most of the trend.

Her company is producing cell lines for cultured meat makers around the world. She’s not predicting a demise.

“We don’t see it as either or. We think there’s room for both.”

What’s more, Ogilvie said it wouldn’t be happening tomorrow.

The challenges of scaling cultured meat to compete with conventional meat are enormous.

“I think it’s at least 10 if not 30 years before the industry could genuinely threaten red meat,” she said.

There’s subtlety here.

The second disruptive tech is precision fermentation – the production of proteins in vats in a process like brewing beer.

Unlike cultured meat, this tech has been established for decades – insulin is produced this way – and is used at commercial scale.

Here, the threat to the red meat sector is less direct and comes via its cousin: dairy.

Whereas meat is complex tissue, consisting of muscle, fats and collagen, dairy protein is comparatively simple.

Under 4% of a bottle of milk is protein. Some 87% is water. Hence, we hear talk of “milk solids” and why we export milk powder.

It’s possible to produce dairy proteins using precision fermentation.

In fact, it’s happening already in Auckland’s Daisy Lab, a start-up developing dairy-identical proteins to be used as food and beverage ingredients at a pre-commercial scale.

Around the world, precision fermentation products are on the shelf.

Nestlé uses it to produce a whey protein for its Orgain brand protein powder labelled “Better Whey”.

Fonterra co-founded a start-up called Vivici that, within one year, commercialised a precision fermentation whey protein as a B2B ingredient.

Image / RethinkX

The cow is being disrupted.

“The cow is by far the most inefficient food production technology on the planet,” said Tony Seba, the futurist from RethinkX, which predicts the collapse of traditional agriculture in the 2030s.

This is one person’s opinion, and as a nation that produces superior quality livestock protein, many New Zealanders are likely to disagree with this comment.

After all, a cow takes grass and turns it into a nutritious food.

But Seba believes the collapse will come not just from a like-for-like replacement of milk or meat but by nibbling away at the margins.

It has already started with ingredients or protein powders and is slowly moving to ice cream and yoghurt.

The “cow” industry is a highly integrated ecosystem, made up of verticals – meat, leather, offal, milk, ingredients and so on.

Dry-stock farming is entwined with dairy. Abattoirs, feedstocks, freight, retail, housing, labour and rural communities – meat and dairy rely on each other.

If dairy suffers, red meat suffers and vice versa.

“Just a small fall in profit can lead to extreme financial challenge across the sector and challenge the future viability of this sector for many,” Seba said.

Part two of a three-part article - read part three, The future of red meat - reasons for optimism, tomorrow.