The impact of Covid-19 on food—part 2: The rise of the new


In Part 1 we discussed why Covid-19 has impacted industrial livestock farming. Here we discuss the rise of the new protein industry in a post-Covid-19 world. Covid-19 is accelerating the collapse of the old system and the growth of a new one.

Will Covid-19 speed up the replacement of livestock with a new system of agriculture?

The short answer is yes. Aside from adding immense, crushing pressure to the farming industry, Covid-19 has highlighted the need for continuing food innovation as an essential component of a resilient food system. Early entrants have already proven that new production models are far more resilient than the existing system.

Sales of plant-based foods have skyrocketed, with sales of fresh-meat alternative in March and April 2020 tripling from the same eight weeks in the previous year.[1] Companies like Beyond Meat and Impossible Foods have been able to increase production rapidly to match increased demand while maintaining safe work environments for their employees through the pandemic. They rely more heavily on artificial intelligence (AI) and automation, which has proven safer, more flexible and more efficient, and they have not had to close down any production facilities due to outbreaks. Despite the pandemic, they have also been able to reduce their prices. Beyond Meat will be offering large value packs and discounts to some U.S. retailers in the summer,[2] and Impossible Foods cut prices by 15% to foodservice distributors.[3]

We predict a similar change across our whole food system to something we call Food-as-Software. Production will be based on the Precision Fermentation of proteins, fats and flavorings, it will be distributed instead of centralized, and it will capitalize on AI and automation. Production occurring closer to consumers will make markets easier to access and easier to match supply with demand.

Covid-19 is likely to accelerate some of these shifts faster than others. For example, by necessity, restaurants all over the world have shifted their focus to delivery and takeout as they return to business, most of them using platforms like Grubhub or Deliveroo to get their food to customers. Cloud or ghost kitchens are popping up and expanding as well. These kitchens effectively decentralize restaurant food and capitalize on platform-enabled distribution while also taking advantage of the closures of struggling restaurants and bringing service to communities that currently lack restaurants and/or grocery stores.[4] We expect these types of changes to stick and for other businesses to adopt this business model for good, even after the pandemic is over. We may perhaps see more of a focus on consumer-led food rather than chef-led food, as the smartphone-enabled platform model allows for more customization without a significant increase in cost.[5] Meanwhile, investments continue to grow across the whole food supply chain as investors see potential in companies with new visions for the future of food production that prioritize sustainability, flexibility, efficiency and resilience.[6]

The collapse of the old supply chain is accelerating these system changes. E-commerce and direct-to-consumer models are at the forefront. Impossible Foods have launched their direct-to-consumer sales through their website [7] and have sped up their expansion into the food retail space.[8] Smitten Ice Cream has partnered with Perfect Day to produce and sell direct-to-consumer vegan ice cream made with Perfect Day’s precision fermented whey protein.[9] Local companies are also benefitting–for example, in London, we have started getting coffee bean deliveries from a local coffee roaster who roasts the beans and delivers them to your door within days.[10] Even multinational companies are jumping on this model, with PepsiCo launching two new direct-to-consumer websites in just 30 days.[11]


What could derail the replacement of industrial agriculture by a new food system?

The main risk to the replacement of the old system is the temptation to double-down on an industry that is clearly collapsing by bailing out traditional businesses, at the expense of new technologies. Of course, this is already happening.

In April 2020, then-President Donald Trump issued an executive order declaring meat processing plants to be “critical infrastructure” under the Defense Production Act, and issued guidance for additional liability protection for companies operating amid the risk of outbreaks–essentially using the US taxpayer to underwrite the animal agriculture industry against the impact of Covid-19.[12] The president of the United States gave a direct order for the U.S. taxpayer to pay for the inefficiencies and externalities caused by the U.S. meat processing industry.

The federal government, through the Department of Agriculture, has pledged to give $100 million to support dairy, produce and meat industries respectively–on top of their already large subsidies. The Coronavirus Food Assistance Program consists of a $19 billion bailout for agriculture, and other assistance will be provided by the Small Business Administration through Paycheck Protection Program and Economic Injury Disaster Loans.[13] Notably, as is common with government intervention, there have been concerns raised by farmers about the accessibility of these funds.


How should companies move forward?

In Rethinking Food & Agriculture we predicted that how we feed the world will change. The technologies that enable the production of protein are coming down in cost and improving in capabilities rapidly and soon protein production will become a local, distributed network. This will be driven by improvements in resources and cost efficiencies so that this disruption becomes economically inevitable. Even if the existing industries are bailed out in the short term, the more economically efficient will eventually prevail.

This pandemic has served as a wake-up call. Even mainstream analysts are worried about the investment potential of the livestock industry.[14] The inefficiencies of the current system have been brought to light and they should not be ignored as society attempts to return to normal. The parts of the system that broke during the Covid-19 crisis broke for a reason. In the midst of the crisis, it is easy to see the ways in which a new system would be profoundly better. We need a localized, networked food production system so that there are no single points of failure or serious bottlenecks.[15] We need shorter production times for food-days and weeks rather than months and years. We need a system where supply can be quickly and easily matched to market demand so that there is minimal volatility.

As we move past the pandemic, these issues with the old system will be fresh in the minds of investors, consumers and producers. These new technologies can no longer be token investments as part of portfolio diversification. Companies cannot afford to sit on the fence. They will need to start making the choices that will stop propping up the old and accelerate the growth of the new.

















Read more blogs on this topic

Stay Connected

Join the community

Sign up with your email address to receive research, news and analyses from RethinkX.