New Report: Major disruption in food and agriculture in next decade
Projects collapse of dairy & cattle industries by 2030 as animal meat is replaced by cheaper, higher quality food made from manufactured protein.
LONDON and SAN FRANCISCO — The fastest, deepest, most consequential disruption of food and agriculture in history, driven by technology and new business models, is underway. By 2030, modern food products will be higher quality and cost less than half the price of the animal- derived foods they replace, the dairy and cattle industries will have collapsed, and the rest of the livestock industry will follow. That’s according to a new report, “Rethinking Food and Agriculture 2020-2030 -- The Second Domestication of Plants and Animals, the Disruption of the Cow, and the Collapse of Industrial Livestock Farming,” released by RethinkX, an independent think tank that analyzes and forecasts the scope, speed and scale of technology-driven disruption and its implications across society.
“This is primarily a protein disruption, driven by economics, “ said Tony Seba, RethinkX co-founder and report co-author. “This is not one disruption but many in parallel, with each overlapping, reinforcing, and accelerating the others. “
“Technology we call precision fermentation and a new production model called Food-as-Software are dramatically driving down the costs and driving up the quality of manufactured proteins,” said report co-author Catherine Tubb. “The industrial livestock industry is one of the oldest, largest, and most inefficient food-production systems in the world. Modern ingredients and the foods are about ten times more efficient across the board – from land and water use, to feedstock consumption and energy use.”
Precision fermentation (PF) is a process that enables the programming of micro-organisms to produce almost any complex organic molecule. Its costs are dropping exponentially because of rapid improvements in underlying biological and information technologies. The cost to produce a single molecule using PF has fallen from $1 million per kilogram in 2000, to about $100 today. Assuming existing technologies and using well-established cost curves, the report projects that these costs will fall below $10 per kilogram by 2025, and that these proteins will be five times cheaper than traditional animal proteins by 2030 and 10 times cheaper by 2035.
By 2030, modern food products will cost less than half as much to produce as the animal-derived products they replace. At the same time, this new production system has the potential to spur competition and fast iteration of products that are ever cheaper and ever better: more nutritious, healthier, better tasting, more convenient, and more varied, as long as open markets and nutritional standards are protected.
The report details the way different parts of the cow (collagen, milk, meat and leather) and the markets they serve will be disrupted separately and concurrently by different technologies and business-model innovations that overlap, reinforce and accelerate each other.
The authors refer to this disruption as “death by a thousand cuts.” As product after product that comes from cows faces competition from cheaper, higher quality modern foods, demand for cow products will decrease, triggering a death spiral of increasing prices for the industrial livestock industry, decreasing demand and reversing economies of scale.
“The key to understanding the disruption of the cow is that PF only needs to disrupt
3.3% of the milk bottle (the key functional proteins) to bring about the collapse of the entire cow milk industry. This is a B2B disruption, not just a simple one-for-one substitution of end products, and does not hinge on changing human behavior,” said Seba. “PF proteins are already being produced commercially. Costs are decreasing exponentially while quality and variety increase exponentially. Industrial cattle farming industry will collapse long before we see modern technologies produce the ‘perfect’ cellular steak at a competitive price.”
The report analyzes the way technology and new models of production flip the current food production system on its head. Instead of growing a whole cow to break it down into products, PF designs and customizes individual molecules to build products. Development is done in a manner similar to the software industry: companies and individuals will build components within layers of the equivalent of a software stack that can be used according to individual needs. The food developer is like an app developer, using the stack that is most appropriate according to market needs.
All aspects of the Food-as-Software model are distributed: building biological parts databases (biobricks), designing molecules/ingredients, designing microorganisms to produce these molecules via PF, and designing molecular cookbooks to integrate them into end-user products. Like craft breweries, food producers will produce food locally, using locally grown feedstock. But with the new Food-as-Software system, they will download microorganism designs, protein designs, and molecular cookbooks from global databases.
Highlights of the report findings include:
By 2030, the number of cows in the U.S. will have fallen by 50%. At current prices, revenues of the U.S. beef and dairy industry and their suppliers, which together exceed $400bn today, will decline by at least 50%.
By 2030 the market for ground beef by volume will have shrunk by 70%, steak market by 30% and dairy market by almost 90%. The markets for other cow products (leather, collagen, etc.) are likely to decline more than 90%. All together, demand for cow products will fall by more than 50%.
By 2030, the U.S. dairy and cattle industry will have collapsed. Conventional farming production costs will double.
By 2035, U.S. demand for beef and dairy products will be down by nearly 90%, leaving only local specialty farms in operation. Industrial farmland values will collapse by 40-80%.
The volume of crops needed to feed cattle in the U.S. will fall by 50% from 155 million tons in 2018 to 80 million tons in 2030, causing cattle feed production revenues to fall by more than 50% from 60 billion in 2019 to less than $30 billion in 2030.
Other livestock industries will suffer similar disruptions, and the knock-on effects for crop farmers and businesses throughout the value chain will be severe.
Food Cost Savings
The cost of modern foods and products will be at least 50% and as much as 80% lower than animal products they replace, which will translate into substantially lower prices and increased disposable incomes. The average U.S. family will save more than $1,200 a year in food costs, keeping an additional $100 billion a year in Americans’ pockets by 2030.
Jobs Lost and Gained
Half of the 1.2 million jobs in U.S. beef and dairy production (including supply chain), along with their associated economic output, will be lost by 2030, climbing toward 90% by 2035.
The emerging U.S. modern foods industry will create at least 700,000 jobs by 2030 and up to 1 million jobs by 2035.
The dramatic decrease in the cost of food will increase disposable income, resulting in increased consumer spending that will create jobs. Global technology leadership will generate wealth, jobs and taxes.
Modern foods will be far more efficient than animal-derived products: up to 100 times more land- efficient, 10-25 times more feedstock-efficient, 20 times more time-efficient, and 10 times more water-efficient than industrial livestock. They will also produce an order of magnitude less waste.
By 2035, 60% of the land currently used for livestock and feed production for will freed for other uses. This 485 million acres equates to 13 times the size of Iowa, an area almost the size of the Louisiana Purchase. If all this land were dedicated to maximize carbon sequestration, all current sources of U.S. greenhouse gas emissions could be fully offset by 2035.
U.S. greenhouse gas emissions from cattle will drop by 60% by 2030, on course to nearly 80% by 2035. Even when the modern food production that replaces animal agriculture is included, net emissions from the sector as a whole will decline 45% by 2030 on course to 65% by 2035.
Water consumption in U.S. cattle production and associated feed cropland irrigation will fall 50% by 2030 on course to 75% by 2035. Even when the modern food production that replaces animal agriculture is included, net water consumption in the sector as a whole will decline 35% by 2030 on course to 60% by 2035.
Oil demand by the U.S. agriculture industry will decrease at least 50% (currently 150 million barrels equivalent a year) by 2030.
The modern food system will provide greater food security and reduced hunger due to price reductions, and a more stable and resilient distributed system of production that is less subject to volume and price volatility.
Nutritional benefits could have profound impact on health, both in reduction in foodborne illness and in conditions such as heart disease, obesity, cancer and diabetes estimated to cost the U.S. $1.7 trillion annually.
Trade relations and geo-politics will shift due to a modern decentralized food production.
At the same time, the opportunity to capture value associated with a trillion-dollar global industry will become available to any country.
The new report focuses on the food industry, but the same technology is poised to disrupt and blur the lines that separate food, cosmetics, healthcare and materials. The sheer scale of this market opportunity will create a virtuous cycle, attracting talent and investment, increasing research and development, improving products and processes and inventing new ones, accelerating market growth, driving down costs and driving up adoption.
“Mainstream analyses fail to account for the complex interactions of disruption, hence their failure to foresee its speed, scale and impact,“ said Tubb. “ Unlike other market analysts and think tanks, RethinkX does not take a linear approach, but instead accounts for the systemic, complex, dynamic nature of disruption. This includes the interplay among consumers, businesses, investors and policymakers as they drive parallel disruptions, and the impact of changes as they ripple across the rest of society.”
“This disruption is inevitable,” said RethinkX co-founder Jamie Arbib. “The positive impacts – from food security to climate – are profound. But policymakers, investors, businesses and voters have some power over this disruption’s speed, scale, impacts, and who benefits. One of the first and most critical decisions is to ensure an open market place. Will this be a market that promotes openness, transparency and competition? Or will it be a market — like the pharmaceutical industry — dominated by a few monopolies with the power to restrict or prevent realization of the enormous economic, social and environmental benefits?”
For policymakers, the report identifies critical choices that can accelerate or slow down disruption or impede its size and scale, and can expand or contract its benefits.
“We aim to start a conversation,” said Arbib. “We want to focus decision-makers’ attention, and fully vet the choices ahead. We are still early in the disruption cycle, and projections are just that, but we believe our framework, methodology and findings are more accurate than those produced by linear models, which risk locking in expensive, obsolete, and uncompetitive assets, technologies and skill sets. To unlock the full potential of this and every other technological disruption, we need to embrace an approach that better reflects the complex, dynamic and rapidly-changing world we live in.”
RethinkX is an independent think tank that analyzes and forecasts the scope, speed and scale of technology-driven disruption and its implications across society.
RethinkX produces compelling impartial data driven analyses that identify pivotal choices to be made by investors, business, policy and civic leaders. Headquartered in San Francisco and London, RethinkX’s founders, award-winning best-selling author and Silicon Valley entrepreneur Tony Seba and technology investor Jamie Arbib, are experts in finance and technology supported by a team of leading market sector analysts.
Rethinking Food and Agriculture is the second in a series of studies that analyze the impacts of disruption, sector by sector, across the economy. Report co-author Dr. Catherine Tubb is an expert on the agriculture, pesticide and fertilizer industries, formerly with the equity research firm Sanford Bernstein, with a PhD in Chemistry from Cambridge University.
The first in this series, Rethinking Transportation , continues to generate worldwide attention. Brian Stoffel of The Motley Fool wrote: "It's not easy to blow my mind. But earlier this week, I sat down and read a research report by RethinkX. I've been picking up the pieces of my consciousness ever since."
RethinkX reports are based on The Seba Technology Disruption Framework, which captures the complex and dynamic interactions of disruption and has been proven correct time and again. Using this framework, Tony Seba has forecast major industry disruption and collapse well before mainstream forecasters. In 2014, Seba predicted the disruption and decline of coal and natural gas industries, and, importantly, the reasons for their collapse, even when analysts were predicting a ‘golden age’ of growth. In 2009, Seba forecast that by 2020, the price of solar per kilowatt-hour would be 2.5 cents. Today it is two to three cents. In 2014, Seba was the only person in the world to accurately forecast the advent of a 200-mile range electric vehicle priced at $35,000 by 2019 as well as dramatic decreases in the cost of grid battery storage and peak new ICE car sales by 2020 due to the ride-hailing and transportation as a service disruption.
Follow-on analyses by RethinkX will consider the cascading and interdependent effects of these disruptions between and across sectors. RethinkX aims to facilitate a global conversation about the threats and opportunities of technology-driven disruption, and focus attention on choices that could lead to a more equitable, healthy, resilient and stable society.