A livestock-free economy imminent?

BY TAFARA MTUTU

Less than five years ago, it would have been absurd to imagine lab-grown meat. Today, some restaurants have plant-based meat burgers that have been a hit with their target market. Burger King’s Impossible Whooper, whose patty is made up of various plant-based ingredients and boasts similar nutritional value than beef without any beef, has been noted as one of the most successful product launches in food-chain’s history. Despite criticisms at these plant-based meat alternatives, there is an unmistakable growing preference in sustainable food sources in developed countries.

These plant-based protein alternatives have also grown in favour among green investors in foodtech, who continue to back these ventures amid calls for an environmentally sustainable lifestyle. Companies such as Impossible Meats and Beyond Meat are some of the companies that have been leading the charge in this industry and are amongst investors’ favourites.

According to a report by Al Jazeera, Blue Horizon Ventures, a Zurich-based venture capital firm focused on making food more sustainable, closed a 183 million-euro ($222 million) fund in January 2021 that will invest in startups from alternative proteins to smart packaging.

fund attracted more than 100 investors and exceeded its initial target of raising 100 million euros. In a statement by Curt Albright, the founder of Clear Current Capital (an investment company focused on bringing animal-free food to a wide consumer base), several issues such as animal abuse issues, environmental issues, unsafe business practices, and dangerous working conditions within the legacy meat industry, were cited as chief drivers for the changing preferences in tastes among investors and consumers alike.

Livestock accounts for 14,5% of total green-house gas emissions. Cattle are the largest contributor to these emissions in all regions, and the Latin America & the Caribbean region is attributed with the most livestock emissions.

Global consultancy firm Kearney says that 60% of meat consumed will be replaced by plant-based and other protein alternatives by 2040. These changing preferences in livestock consumption have begun raising questions such as (i) what are other alternatives for protein? (ii) what is the impact on soft commodity markets, if any? (iii) How will Africa be impacted, if at all?

Besides plant-based meat alternatives, there have been reports of growing protein alternatives that are commonly known as super foods. Superfood is a term used for food with exceptionally high nutrient density, which mostly comprises greens, nuts, berries and even insects.

Kale and blueberries are some that have become favourites among foodies. China now offers Chilean blueberries as an alternative to popcorn and Woolworths now sells kale chips. Almond milk, which is made from almond nuts, is becoming a popular alternative for dairy milk. Insects, however unconventional, are becoming a favourite in western economies as they are arguably the most nutrient-dense protein alternative. Ingredients sourced from crickets, beetles, red ants, grasshoppers and even cockroaches are finding their way on food menus.

This, however, is not news to us who grew up eating ishwa (termites), hwiza (grasshoppers) and madzambarafuta (African thief ants).

If the uptake of sustainable protein alternatives plays out as forecasted by global consultancies and experts in the food industry, this could upend the global soft commodity markets in the future. Prices of livestock futures contracts could experience a similar fate to coal in developed markets, and new commodity futures contracts such as cricket flour could make their debut on global commodity exchanges as uptake increases.

We opine that these trends are not likely to expand into the African continent for several reasons that are hinged on the feasibility of having these alternatives on the continent. According to the Malabo Montpellier Panel, a group of international agriculture experts, the livestock sector accounts for about 40% of agricultural GDP in Africa, ranging from 30% to 80% in individual countries.

The sector has also been long considered as a catalyst to the continent’s achievement of the 17 Sustainable Development Goals set by the United Nations. Hence, any incentives to move away from livestock on the continent will not pass without resistance. The price of these alternatives is also high for the average African consumer, whose purchasing power is considerably lower than Western counterparts. Impossible meat retails for around US$36,74/kg and Beyond meat is sold for US$26,45/kg. In comparison, traditional beef in Zimbabwe retails for around US$8 — US$10 per kg. We opine that the adoption of these alternatives on a mass scale will likely be limited to niche markets in leading economies on the continent, like South Africa’s affluent populace.

In the meantime, investors in Zimbabwe can tap into the strong investment thesis for super foods by investing into listed companies in the Zimbabwe Stock Exchange that have export-oriented horticultural operations. Ariston Holdings is a horticultural business with operations in the eastern parts of the country that mainly produce macadamia nuts, tea, avocadoes, pome fruits, stone fruits and bananas. Innscor Africa also produces cherry, peppers, chillies, peas, passion fruit and raspberries under its PHL Horticulture business. In its latest annual report, the group alluded to production of 40 hectares of sugar snap and mangetout peas. TSL’s agriculture division also produces bananas on 25 hectares of land, in addition to traditional cash crops such as maize and soya beans.

Meikles Limited produces macadamia nuts and avocados under the Tanganda business, which is likely to be unbundled later this year as a standalone business. These listed firms’ long-term investment theses look strong on the back of the growing and shifting preferences towards sustainable alternatives by their respective export markets.

Mtutu is a research analyst at Morgan & Co. He can be reached on +263 774 795 854 or tafara@morganzim.com