Hybrid tomato seed more expensive than gold. Image: David Silverman/Getty Images

Disrupting dinner? Food for the future

Feeding future generations and avoiding dangerous climate change will require new technologies that decouple food production from land, as well as new business models that profit from disrupting consumption trends, writes Rob Bailey.

Research Director, Energy, Environment and Resources, Chatham House

18 May 2017  •  19 min read

Research Director, Energy, Environment and Resources, Chatham House

In his 1968 book The Population Bomb, Paul Ehrlich predicted that global overpopulation would soon lead to mass famine. But this never came to pass. Ehrlich was being proved wrong as he sat at his typewriter, by a small group of donor organizations, agronomists and crop scientists that was busy rolling out new, high-yielding cereal varieties around the world. In the decades that followed, the global population did explode as Ehrlich predicted, but the Green Revolution meant agriculture kept pace.

Fast-forward to today, and it looks as though the Green Revolution may be running out of steam. Yields have plateaued1 in a worrying number of producing regions for rice, wheat, maize and soybean, with ‘hotspots’ of stagnation including China and India. On 24–39 per cent of the world’s most important cropland, yields are no longer improving. At the global level, yield growth is too slow2 to meet forecast needs without agriculture expanding into land we do not have: by 2050 we could need an extra 219 million hectares of cropland for maize, rice, wheat and soybean alone. That’s more than two-and-a-half times the cropland the US dedicates to these crops.

Current rates of yield improvement compared to rates needed to double crop production by 2050

Source: Ray et al 2013, author’s calculations

The world is not going to add another two-and-a-half United States to global crop production in the next few decades. If anything, the land area devoted to food production needs to decrease if climate goals are to be reached. Most viable carbon sequestration is land intensive. Accommodating negative emissions at the scale needed to hold global temperature increases below the 2 degree guardrail could require up to a quarter of global agricultural land3.

Quite simply, if future generations are to be fed and catastrophic climate change averted, humankind has to radically transform the way land is used.

Can yield improvement be accelerated?

Although agricultural innovation has maintained incremental yield growth over the last half century, it looks doubtful that it will deliver the step change in productivity needed on current trajectories. Most agricultural R&D is targeted at continuous marginal gains rather than the kind of high-risk, high-return innovations that might plausibly deliver step changes in yield growth across the main crops. Perhaps new gene editing techniques like CRISPR4 will provide opportunities for quantum leaps, but it’s worth remembering that two decades of conventional genetic modification has made no appreciable difference to global yield trends.

Yield trends are insufficient to double global crop production by 2050

Source: Ray et al 2013, faostat.fao.org, author’s calculations

Compared to other sectors, food and agriculture attracts low levels of private investment in R&D (see chart below) of which an increasing proportion is being spent not on agricultural productivity, but on consumer product development by companies such as PepsiCo, Kraft Heinz and Nestle. And although public investment in R&D has been increasing in emerging economies5, it has stagnated in the developed world.

Research and development intensity by sector

Source: European Commission (2014)

A sector ripe for disruption

The linear yield growth of the last half century is symptomatic of the high degree of corporate concentration in food and agriculture. With the exception of farming itself, the food value chain is dominated by a small number of large firms at each point – in seeds and inputs, processing and trading, and manufacturing. In such circumstances private innovation tends to focus on incremental improvement for existing products and customers rather than high-risk, high-return opportunities.

Market concentration in the food chain

Sources: IPES-Food (2016), USDA (2016), FT (2017), Oxfam (2013), Renwick et al. (2012)

Although the incumbent food and agribusiness giants are unlikely to innovate for radical change, it does not mean leaps forward are impossible. Disruption nearly always comes from outside a sector, typically when new players introduce new technologies, often developed elsewhere, and apply them to create new business models and new markets. Often this happens without government involvement, but sometimes governments can help catalyse disruption, for example by supporting new technologies and using regulation to create scarcity or reform markets – the European electricity sector6 being a case in point.

Looking at things another way, the high incumbency and incremental innovation that characterize food and agriculture make it a sector ripe for disruption. There are two promising sources of disruption. The first consists of new technologies to decouple food production from land. The second could combine new business models and data-driven technologies to interrupt seemingly unstoppable consumption trends.

Decoupling land and food

Meat is already the target for a new breed of disrupters. Globally, the livestock sector7 accounts for around three-quarters of agricultural land use – for pasture and feed crop production – and global consumption of meat is increasing as people become richer. Innovative start-ups are developing and marketing meat alternatives with smaller land footprints.

First among them are those using plant protein to produce imitation meat such as Impossible Foods and Beyond Meat. They produce beef-free burgers that look like beef, sizzle like beef and bleed like beef. Proof that these businesses are viewed as disruptive by incumbents came when Tyson Foods – one of the world’s biggest meat processing companies – announced plans to invest in the latter. Analysis8 suggests that replacing half of global animal product consumption with imitation meat could reduce agricultural land use by 35 per cent.

Next are those seeking to introduce insects into diets. In many parts of the world, this is already the case, but in Western countries, where levels of meat consumption are generally highest, there tends to be an aversion to eating bugs. This is a pity, as they provide an excellent source of fat, protein and micronutrients. They are also a highly efficient food source: they can be produced from food waste, grow rapidly and breed quickly, and one eats the whole thing meaning waste is minimal.

Street food stalls, fried insects, Bangkok, Thailand. Image: Education Images/UIG via Getty Images

History provides some hope that consumer acceptance may increase. In North America for example, lobster was originally considered unpalatable, fit only for fish bait, slaves and prisoners. Until crickets and mealworms attain luxury status, they can be processed and used as ingredients in all manner of foods. Displacing half of global animal product consumption with mealworms could reduce9 agricultural land by 34 per cent.

A final alternative to conventional meat is cultured meat – that is meat grown in vitro, from stem cells, rather than from animals grown on farms and feedlots. Efficiency in this case comes from the fact that only edible muscle tissue is grown, minimizing waste, and growth rates faster than those achieved by conventional animal rearing. Current processes favour cell culture mediums produced from animals, such as bovine serum, however alternative plant-based sources are also possible. Estimates10 suggest that using algae for the culture medium could reduce the land footprint of meat by 99 per cent. Although costs are currently high, they are falling rapidly and commercial production is expected within the next five years.

Algae bio-fuel research at Sapphire Energy Research Facilities. Image: David Maung/Bloomberg via Getty Images Restrictions

The opportunities to disrupt agriculture are by no means limited to alternative meat. Other innovators are literally decoupling crop production from the land. Hydroponics grows plants in nutrient rich water rather than soil, whilst its close cousin aeroponics suspends plants in the air and sprays the roots with nutrient mist. In theory, hydroponics and aeroponics can be used to grow any plant, though in practice the high costs associated with maintaining a controlled environment mean these approaches are typically used for high value fresh produce such as salad vegetables. Various start-ups are applying these techniques to so-called vertical farming, where plants are grown indoors layer upon layer, under LED lights. Some are seeking to create new urban markets for vertically grown fruit and vegetables by converting abandoned factories or warehouses. Others are looking to sell the vertical farms themselves – offering structures ranging from the size of a fridge-freezer for domestic use, to converted freight containers for community use.

Innovation may also help us reduce our dependency on crops for feed and biofuel which together account for around 45 per cent11 of crop use. Industrial scale cultivation of algae could12 potentially meet global liquid fuel demand from an area three times the size of Texas, while additionally supplying 10 times as much feed protein as global soybean production. Crucially, this land need would not need to be agricultural because arid subtropical regions are best suited to algae production.

As with cultured meat, vertical farming and algae have high energy needs. But energy will become less of a constraint as the costs of renewable technologies continue to collapse and opportunities for decentralized generation are harnessed: algae farms in sunny deserts could utilize off-grid solar for example.

Far-sighted investors are looking beyond the constraints of today’s energy system when assessing the prospects for tomorrow’s technologies, but the broader point here is that cheap, zero carbon distributed energy has the potential to reshape food production. Suddenly food production becomes viable13 in desert regions – like Australia and the Gulf – where sea water can be extracted from below ground. Solar energy can be used to first pump and then desalinate water, and heat and cool greenhouses to optimal temperatures for food production.

Disrupting demand: from quantity to quality

The forecast14 that demand will double by 2050, as discussed above, is essentially a simple extrapolation of a historical relationship between per capita demand for crops and per capita income, reflecting the fact that, as people become richer, they eat more animal products and waste more food. But can these trends be interrupted? Can people in developed countries, who often consume two to three times more meat than is good for them and more protein than their bodies can utilize, be led towards diets based more on plants, whether for environmental, health or lifestyle reasons? Can populations in developing countries stabilize their meat consumption at sustainable levels as they become richer? Can people’s habits and companies’ business models change so that less food is wasted?

On the face of it, this doesn’t look easy. There is no toolkit for shifting diet at the population level. Businesses don’t necessarily want people to waste food, but they do want to sell as much as possible. Nor do people necessarily want to waste food, but as they get wealthier and it becomes a smaller share of their expenditures, they end up doing so anyway.

A confluence of data-driven innovations could see this start to change. First, the business model for food retail in wealthy economies is evolving. Purchasing is already migrating from large superstores to online platforms, and now a new breed of companies such as HelloFresh is taking things one step further. By offering online customers a daily delivery of fresh ingredients and recipes tailored to their preferences, these lifestyle companies are shifting the value proposition from volume to service. Because ingredients are just-in-time, the risk of food waste is reduced. And because portions are controlled, overconsumption is minimized.

Building on this, nascent blockchain15 technology provides an opportunity for businesses to build trust with consumers by providing a faster, cheaper, more transparent and more robust means to track produce from farm to fork. Consumers’ confidence in the provenance, safety and environmental impact of their food choices will grow as it becomes easier to demonstrate that a meal contains, for example, no vegetable oil responsible for deforestation, or only beef from grass-fed cows raised on land unsuitable for crop production.

Crucially, these advances will make it easier for well-intentioned consumers to reflect environmental concerns in their food choices. The well-established ‘value-action gap’ means that, although customers often say the environment is important to them when asked, they fail to reflect this in their purchasing behaviour. Choices are primarily automatic and shaped by cues in the retail space, with conscious reasoning dominated by immediate concerns of price, safety and taste rather than the environment. But what if customers only needed to consider the environment just once, when registering for an online food lifestyle service, for example by checking boxes requesting that their food meets certain sustainability criteria? After this, they could be confident of their food’s environmental footprint, with blockchain providing the means to verify it should they wish to do so. This would essentially close the value-action gap by removing action from the equation.

A similar process could be used to ensure customers’ health preferences are taken into account, possibly using big data analytics and genetics16 to help individuals screen out foods that increase their personal risk of non-communicable disease. In any case, healthier diets among developed country consumers would necessarily mean less meat and dairy products, greatly reducing pressure on land.

Ultimately, new technologies and a shift from food retail to food services, based on lifestyle choices and closer customer relationships, could provide the opportunity to disrupt dietary trends if businesses place health and environment at the centre of their customer offer.

The role of government

Of course, it is by no means certain that any of this will come to pass. If disruptive innovation was predictable it wouldn’t be disruptive. But the fact remains that disruption is urgently needed: without radical changes in diets and how land is used for food production, climate, food and nutrition security cannot be reconciled.

Ultimately these are public goods that governments should provide. But while governments have been willing to intervene in sectors such as power and transport to help unleash disruptive forces in pursuit of climate goals, they have been less willing to do so for food, particularly where diet is concerned. This will need to change. A managed transition in which governments and businesses work together to decouple land from food production and change consumption trends is not an easy proposition. It will be painful for businesses unable to adjust fast enough and involve difficult trade-offs for policymakers. But waiting for climate change, land scarcity and diet-related disease to force adjustment will be more painful in the long run.