Keith Woodford discusses agri-food disruption risks from synthetic food, seeing New Zealand product futures based on what high-end consumers want, rather than what we produce

By Keith Woodford*

It has become fashionable for agri-food commentators to talk of disruptive change. In particular, in recent months there has been much talk about industry disruption that will supposedly occur from synthetic food, with much of that grown in a laboratory. 

Until now, I have steered clear of discussing synthetic food, despite often being asked my opinion. But now, I have decided to venture forth.

The simple answer is that synthetic food does not need to be a big concern for New Zealand farmers. The important proviso is that New Zealand farmers, and the associated value chains connecting through to markets, need to focus on consumers who will pay premium prices for products that are the ‘real McCoy’.

One of my international clients suggested to me last year that food markets are going to bifurcate, with some markets being all about quality and others being all about cost.  The danger is in getting caught in no-man’s land in the middle.  I have thought a lot about that comment, and think it has merit.

In the main, synthetic foods will prosper based on competitive costing. Real food will struggle to compete if cost is its only advantage. 

Some of the comments I read about laboratory-grown foods (the so-called franken-foods) are off the mark. It is not possible to produce food without an energy source.

All food comes originally from photosynthetically-produced plants for which the energy comes from a wonderful source of nuclear combustion we call ‘the sun’. If that food is to be produced in a laboratory, then it is going to need its own energy inputs, which too will come originally from the sun, perhaps transformed into electricity or some other form of energy along the way.  

I read recently a claim by one commentator that food of the future might even be calorie-free. I don’t think that is likely! 

The human digestion system is not designed for calorie-free food. There are some exceptions which can be tolerated, such as artificial sweeteners, but all have their issues.  If something is digestible, then it is going to have calories. And if it is not digestible, then it is going to cause lots of pain together with embarrassing outcomes.

I have little doubt that synthetic meat, albeit with its share of calories and protein, is going to find a place in the market. Synthetic meat could be made in the laboratory, but more likely will be grown in the field as normal plant material from various species, and then processed into a product that looks and tastes like a meat burger.

The key scientific challenges associated with plant-based synthetic meats have already been overcome, and it is just a case of scaling up to produce a cheap product. It will be biologically more efficient than producing animal-based meat.

One of the strong attributes of synthetic meats will be uniform quality. Protein-rich legumes are likely to be the main source of the protein.

We could one day also have artificial meat made from algae, which can grow prolifically if fed a diet of carbon dioxide, water and heat.   The carbon dioxide might be piped in from a coal-burning power station. With some clever work by the food technologists, the product should taste ‘okay’, so for those who are driven by cost, it could be the answer. 

All of the above raises interesting questions for our beef industry, for which the main market is American burgers. This NZ-sourced beef, much of it from old cows, is an industrial commodity. It is then mixed with higher-fat mince from American beef animals.

From a technical perspective, a beef/soy burger should do the trick just as well as the ‘real McCoy’.  And for those who are uncomfortable about soy, there are other plant options. Most sausages are already a mix of animal and plant material, and consumers don’t seem to object to that.

Finding high-priced markets for quality New Zealand beef is going to be a challenge. Despite the drum-beating that we hear about the so-called benefits of grass-fed beef, most of our key Asian markets are yet to decipher the messages we are sending.  Most discerning Asian consumers, particularly those who are wealthy, currently prefer a grain-fed animal, and preferably one that carries unsaturated intra-muscular fat (as in Wagyu), rather than saturated extra-muscular fat.

Synthetic meat is unlikely to provide much competition for lamb, which already has a premium-market position well above other products. Once again, the big markets lie in Asia.

As long as we focus on the consumers - largely Chinese and including more than 25 million Muslim Chinese – then our sheep meat industry can prosper.  But we do have to focus on the top-end consumer and not the commodity trade. Of course, that is always easier said than done. And if we don’t like the dominance of China as a sheep-meat market, then there is nowhere much else to go except the Middle East.

 Plant-based milks are already with us. Their market share is growing, fanned by increasing numbers of vegetarians, and in part linked to milk intolerance issues.  I am working with one group that is actively pursuing opportunities for manufacturing and exporting such products from New Zealand. Currently, the almond, oats and rice milks here in New Zealand are all imported, largely from Australia.

I have gone on record many times trying to alert the New Zealand dairy industry to the risks we face from milk containing A1 beta-casein. At last, the industry is awakening to the emerging issue, but many farmers are still oblivious of the need to convert to A2.

To a significant extent, it is these beta-casein issues that are opening the door for plant-based synthetic milks. From a dairy industry perspective, I have major concerns as to how that is now going to play out. 

The emerging franken-notion of milk grown in an artificial udder, constructed from stem cells, and supported in a laboratory environment, is far too many steps along the franken-food pathway for me to be comfortable. It may indeed be feasible in the not too distant future and it will be biologically efficient. There will be no greenhouse gases, no urine and no poo. But social acceptability will be another issue.

I sense that there are other disruptive consumer-led food trends that will be influential, but these will be back to diverse simpler foods and away from technology-led synthetic products.  In particular, I see increasing interest in gluten-free grains.

I am myself intolerant to gluten, which, like A1 beta-casein, contains opioid peptides (fragments) which can affect digestion. However, these opioid peptides from gluten are less strong than those found in A1 beta-casein.

Our modern wheats are much higher in gluten than traditional varieties, and the gluten certainly enhances the physical characteristics of wheat for bread-making and cakes.  However, for some of us this gluten upsets our digestive processes, and also fans diverse inflammatory conditions.

It is sometimes stated in the media that gluten sensitivities are largely in the mind. Regardless of whether or not this is true, there is an increasing demand for gluten-free products which require grains other than wheat and barley.  I expect this trend to continue, led by a combination of consumer-led behaviours and emerging science. It will create opportunities for those who wish to seize them.


*Keith Woodford is an independent consultant who holds honorary positions as Professor of Agri-Food Systems at Lincoln University and Senior Research Fellow at the Contemporary China Research Centre at Victoria University.  His articles are archived at http://keithwoodford.wordpress.com. You can contact him directly here.

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14 Comments

While this is inevitable, the end result will be an even greater divide between the haves and the have nots. The have nots will be forced to eat the lab produce, they will no longer be able to afford the natural stuff (its starting to get that way now) while the wealthy will be able to access the best that nature can provide.

Thanks Keith your articles are always a good read

Agree very much Brendon. Always very compelling reads.

Interesting what some of these new foods are going to do to protein production.

http://www.startribune.com/cargill-s-quest-for-fish-food-grows-enriching...

Once they produce synthetic that cannot be distinguished from real but is better priced it will take off.
Compare with about 100 years of trying to build a steam locomotive until suddenly in 1830 it happened - a reliable, cheap steam locomotive on a firm railway. Everyone involved made a fortune and the railway age was born despite all the worries that the human soul couldn't keep up with its body, the major political issues with purchasing land, the then unique difficulties with financing such large projects. Big profits move all obstacles. The railways killed the canals (the only civil engineering project of equivalent size). Given synthetic milk and meat farming sheep, beef, dairy and pigs will almost disappear and the world will change yet again as it did with the railways.

The development of synthetic milk has the potential to solve intolerance associated with A1 beta casen, at the same time nullifying the advantages of breeding cows with the A2 gene.
It does seem NZ needs to positon itself to manage the oncoming 'disruption', and from what I've read sustainable (low stocking rate, non confinement) pasture sourced nutrition is where it is at.

An opportune time to refer to previous opinion by Dr Mike Joy..

http://www.interest.co.nz/rural-news/60810/opinion-long-term-poisoning-o...

Heard him recently highlighting how many of our soils, namely dairy areas, will not be able to grow the raw product (eg peas) to convert to milk alternatives - due to cadmium poisoning. Instead of listening to him, he gets labelled as a radical.

It's turning into a real tragedy of the commons/privates

Plant protein is New Zealands future, not trying to feed the world with milk powder...we can efficiently grow more protein with plants than we can with animals. Legume crops can make their own nitrogen fertiliser and the land can be fallowed over the winter with a green manure crop to dig in at spring planting.......no animals....life is simple

Changes happening in Agriculture, the the end of the cold war, China and globalisation, still have unknown outcomes for the old producers.

Russia has become a huge grain producer but it intends to be a big producer in the Ag export market across the board.

The world is a wash in grains and the surplus is huge.

http://www.businessinsider.com/global-corn-wheat-rice-soybeans-surplus-s...

The problem today is Russia is the low cost producer. Brazil is huge in markets and has full beef access back after a glitch earlier this year

http://www.agrimoney.com/news/brazils-beef-exports-to-return-near-to-rec...

But the grain market is so over supplied, countries are turning to the feed market and that includes Russia, the group of countries forming the CIS group of exporters is going to keep developing because the return on investment is high in a low returning world.

At present the CIS member states are: Azerbaijan, Armenia, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Turkmenistan, Uzbekistan and Ukraine.

'Nadazhda Orlova, general director of the research company Abercade, said during his presentation at the conference that while official statistics estimate 2016 Russian feed production at 25.9 million tonnes, the country’s actual feed output may be closer to 40 million tonnes because of underreporting.'

I nthe States beef prices have improved mostly due to cheap feed costs. The grain glut is not going away, cheap feed for Poultry and pork will compete head on with us.

http://www.reuters.com/article/us-grains-supply-special-report/special-r...

So what your saying is the disruption is already here without the synthetics?
Sooner or later synthetics will become a problem but I see our real problems linked more with commodities reliance, but that's been pointed out by many people many times and still we struggle to change.
The way I look at it, as long as I'm living rurally I'll have access to beef, lamb and pork and probably milk and while my income and that of NZ may dive I'll still eat pretty good.

Yes, the disruption has been in the pipeline for a few years now, that last link is an interesting read.
This year I travelled around Scotland and was surprised at the mount of Maize being grown. Thats a small country compared to Russia or anywhere in Sth America. Also how much change has taken place in Spain and Portugal, not so much in livestock but in cropping yes, a revolution of no-till.
Wheat crops used to be rotated but now it's 9 years straight and still going strong.

But there is even more change in the pipeline
https://www.ft.com/content/5c1c61e6-a457-11e7-b797-b61809486fe2

As long as we have Russia farming changing rapidly, if it's just reducing imports it's still affecting markets,China still running a command economy, Trump putting the USA first and a government in NZ that has allowed ludicrous cost increases in farming, then I don't know quite where we are supposed to go next.

From Bank of America

Bank of America's Global Ag Chemical team led by Steve Byrne, farmers shouldn't expect a reprieve any time in the near future.

As BAML points out, the grain commodity farmers of the U.S. are locked in a vicious cycle, the result of which is a perpetually oversupplied market. To summarize the key takeaways, farmers continue to plant so long as cash profits are positive (because depreciation isn't a real cost and who cares about returns on capital anyway...silly finance people) while yield growth continues to outpace demand growth which leaves markets perpetually oversupplied and commodity prices well below what would be required to provide a normalized profit level for farmers. Meanwhile, since farmers seem to be incapable of unilaterally reducing supply, an external supply shock (e.g. a weather-related event) seems to be the only hope of the industry ever normalizing again.

Meanwhile, in LatAm farmers are currently planting for the 2016/17 harvest and production looks even stronger, up 26% on presumed yield normalization and exacerbated by a 7% increase in acreage.

Having just viewed this dreadful sh*t, I feel now that I cannot wait for synthetic product to hit the market and stop this sort of thing dead. This is nasty, nasty, nasty
http://www.nzherald.co.nz/world/news/article.cfm?c_id=2&objectid=11928158
I hate how some people have zero regard for the welfare of animals.

China has our back, but what's it costing us?

China’s dairy product imports during August were impressive. China imported 15,018 metric tons
(MT) or 33.1 million pounds of butter and butter oil, up 102% from last year, and the highest
monthly imports on record. New Zealand accounted for 85% of the volume, with European
countries shipping most of the remaining product. China’s cheese imports totaled 11,613 MT or 25.6
million pounds, up nearly 41% from August 2016 and the second highest monthly tally on record.
Year-to-date cheese exports to China total 79,000 MT, or 174 million pounds, are running 24%
above 2016’s levels, which were 28% greater than 2015’s imports. Fresh cheese (primarily pizza
cheese and Mozzarella) represents 43% of total YTD volume. New Zealand has been the primary benefactor from China’s growing appetite for cheese. Through August 2017, New Zealand has accounted for 54% of China’s cheese imports, followed by Australia and the United States with market shares of 19% and 11%, respectively. Milk powder exports were equally impressive in August. China imported 35,402 MT of whole milk powder
(WMP), 91% more than last year and second only to 2012 for August monthly volume. Not surprisingly, the
lion’s share of WMP, 95%, came from New Zealand. China’s skim milk powder (SMP) imports also surged
compared to July. SMP imports topped 26,122 MT, or 57.6 million pounds, the highest monthly total for August
and 64% more than the prior year. Most of the increases came from European countries. The United States lost
ground on SMP exports to China, with volumes decreasing 52% vs. August 2016.