Producing 1 kg of Meat Generates 3 kg of Carbon Dioxide
The authors are analysts of NH Investment & Securities. They can be reached at ys.hwang@nhqv.com. -- Ed.
Agriculture accounts for one-fourth of global GHG release
The World Meteorological Organization (WMO) estimates that GHG emissions from agriculture (excluding emissions from the transport of agricultural products/equipment), forestry, and other land use represent one-fourth of global GHG emissions. In Korea, agriculture accounts for around 3.2% of total GHG emissions, representing a relatively low portion versus other industries, as: 1) a large portion of agricultural products are imported; and 2) meat consumption/production is relatively low versus that in DMs.
Livestock industry directly linked with human life
However, this does not mean that Korea can ignore the agriculture industry’s impacts on the environment. The agriculture industry is directly linked to human life and is vulnerable to climate change risks caused by GHG emissions, and, at the same time, it also causes environmental pollution. Given such, environmental problems caused by the agriculture industry and their impacts on the human race need to be addressed. We note that the livestock industry generates the largest amount of GHG out of all agriculture-related industries, with enteric fermentation and manure from livestock comprising around two-thirds of overall agricultural GHG emissions.
Livestock industry activities represent 14.5% of global GHG emissions
According to the Food and Agriculture Organization of the United Nations (FAO), GHG from livestock product (including meat, raw milk, etc) production/consumption accounts for 14.5% of total global GHG emissions, out of which meat represents 61%. Of note, while industrial activities, transportation, and power generation mainly emit carbon dioxide, agricultural activities (including large-scale farming and the use of chemical fertilizers) typically release methane and nitrous oxides.
A rise in per capita meat consumption should drive up GHG emissions in the livestock industry. While livestock-related environmental impacts need to be addressed, we note that meat consumption remains largely necessary, as meat represents a major source of protein, a key nutrient for humans—a reason why eco-friendly methods of meat consumption/production are required.
Producing 1kg of meat generates 3kg of carbon dioxide
Large-scale livestock farming generally involves a significant amount of GHG emissions, in turn further worsening environmental problems such as global warming. The amount of GHG from meat production is comparable to that released from factories or vehicles. Carbon dioxide from producing 1kg of pork is almost on par with that from driving 1km in an ICE vehicle, and that from manufacturing 1kg of beef is even larger. In addition, producing 1kg of meat yields 0.1kg of GHG for pork and chicken, and 3kg for beef. Of note, methane from cow flatulence is about 23 times more potent than carbon dioxide in trapping heat in the atmosphere. Furthermore, it can be said that cows generate 10 times more GHG versus chickens, as: 1) cows require more feed; and 2) as they are ruminants, they release a great deal of GHG via belching and flatulence.
Meat alternatives consumption helping to cut GHG emissions
Meat alternatives market expanding at CAGR of 78.6% over recent three years
The conventional livestock and meat production industries have caused such serious problems as ecosystem destruction, climate change, natural resource degradation, animal abuse, and livestock-related diseases, and in response to such problems, meat alternatives are entering the spotlight. According to Euromonitor, the meat alternatives market is estimated to be expanding at a CAGR of 78.6% over the recent three years, from W4,862.8bn (US$4.2bn) in 2017 to W8,684.3bn (US$7.5bn) in 2020. Meat substitutes are broadly divided into five categories: plant-based, insect-based, seaweed-based, microorganism-based, and cultured meats. Plant-based meats take up the largest share (87.2%) of the total meat analogue market, followed by insect-based and seaweed-based meats.
Looking at GHG emissions generated to produce 1kg of meat analogue, soy meal- and insect-based substitutes produce the least amount of GHG. Edible insects (also referred to as mini-livestock) are considered good alternatives to traditional meat. Edible insects contain 50~60g of protein per 100g, which is more than twice that of beef, and contain 20 naturally occurring amino acids. The farming conditions are also eco-friendly. According to the FAO, the production of 1kg of protein from insects requires around 1.7kg of feed—a sixth that needed for cows.
Scientists foresee that if meat consumption rises 70% by 2050, GHG emissions will climb 92%. But, according to the Vegan Society, if global population (which currently exceeds 7bn) goes vegan, it could save 8mn human lives by 2050, reduce GHG emissions by two-thirds, and lead to healthcare-related savings and the avoidance of climate change effects totaling US$1.5tn (W1,785tn).
GHG emissions are reduced by 2.7kg per 113g of plant-based burger patty produced, compared to meat-based burger patty
If meat is replaced with meat substitutes, GHG emissions could be reduced by nearly 90%. Looking at GHG emissions per 1kg of protein produced, the figures for gluten and soy meal-based meats are less than a ninth of that for beef. The production of animal protein requires 4~25x more water and 6~17x more land than the production of vegetable protein. According to an FAO report, 26% of the planet’s ice-free land is used for grazing livestock, and 33% of cropland is used for livestock feed production. Assuming the average weight of a burger patty is 113g (of note, burger patties used for fast-food chains typically weigh between 100 and 120g), the production of a meat-based burger results in a 2,500 liter water footprint, around 1.8kg of corn feed consumption, and roughly 3kg of GHG emissions (57g of methane gas, feces, and transportation considered). A study found that from cradle to distribution, the Beyond Burger (plant-based burger from meat substitute producer Beyond Meat) generates 90% less GHG emissions and requires 46% less energy, 99% less water, and 93% less land compared to a quarter pound of US beef. GHG emissions are reduced by 2.7kg per 113g of plant-based burger patty produced, compared to a meat-based burger patty.
Alternative meats: Could they really replace real meat?
Meat alternatives as healthy as real meat
In our view, among the various meat alternatives under development, plant-based meat has the highest chance of being widely accepted among consumers, considering not only nutrition and environmental aspects, but also consumer tastes and prices.
When compared with burger patties made of real beef, Beyond Meat and Impossible Foods’ soybean protein isolate-based patties are similar in terms of calories and content of protein and saturated fat. We note that plant-based burger patties could be seen as superior to those made of red meat in terms of nutrition, given that they have 0mg of cholesterol compared to the 80mg cholesterol content of real meat patties. In addition, the price gap between real meat and meat alternatives has been narrowing. In the past, alternative meats were far more expensive than real meats due to R&D expense and limited production capacities. However, thanks to technological advancements, production costs for alternative meat have been declining steadily, with retail prices also falling in line. Today, the price difference between real beef and alternative beef is only about US$1. Going forward, as production volume rises to meet growing demand, the production cost of alternative meats should continue to decline. Meanwhile, for the alternative meat industry to grow further, we believe that it needs to resolve consumers’ qualms regarding cultured meat and meats made of edible insects.
Related players
Leading players: Beyond Meat and Impossible Foods
The global alternative meat market is broadly divided into: 1) plant-based meat, led by Beyond Meat and Impossible Foods; and 2) lab-cultured meat, led by Memphis Meats (US) and Mosa Meats (Netherlands). Established in 2009, Beyond Meat attracted investment from Bill Gates and Tyson Foods, and was listed on the Nasdaq in May 2019. Its sales have risen 4x since 2017. Global fast-food chain McDonald’s is selling burgers made of Beyond Meat’s patties at some of its stores. Also supplying its products to KFC, Pizza Hut, and Alibaba Super (China), the firm has established its presence as a global company. Impossible Foods was founded in 2011 by Patrick Brown, a biochemistry professor at Stanford University and also a vegan. In 2019, Burger King began selling an Impossible Whopper containing Impossible Foods’ meat-free burger patties. Turning to the cultured meat market, major market producers include Mosa Meat (Netherlands), Memphis Meats, Just (US), and SuperMeat, and Aleph Farms (Israel). We also note that the development of a tuna alternative has been underway at US-based Ocean Hugger Foods (tomato based) and Finless Foods (cell-cultured).
We have witnessed of late that global food companies are entering into the alternative food market via M&As of small ventures in the sector. At the forefront of such movements are Unilever, Nestle, and Danone, and China’s Beijing Sanyuan Foods.
In Korea, although R&D on alternative meats has been underway, we have yet to see news of tangible R&D achievements or the emergence of market leading companies. The first to enter the market in Korea is Zikooin Company, a food tech startup for plant-based meat development. And, Cellmeat and SeaWith are food technology firms developing lab-cultured meat. Among domestic listed food companies, Lotte Foods is the only one currently producing alternative meat in-house. We also draw attention to iNtRON Bio (ingredient R&D), Kyung Nam BioPharma, and Dongwon F&B (exclusive contract with Beyond Meat).
