By DJ Rippert
Chow time. Agriculture is Virginia’s largest private industry. No other private industry is even close. The Virginia Department of Agriculture and Consumer Services (VDACS) claims that agriculture has an economic impact of $70 billion annually and provides more than 334,000 jobs in the Commonwealth. Virginia’s top agricultural products and their cash receipts are:
- Broilers (chicken) – $935M
- Cattle and calves – $413M
- Greenhouse / nursery – $306M
- Dairy products, milk – $306
- Turkeys – $236M
Of Virginia’s five top agricultural products four are under possible attack from a revolution in food technology – meatless meat. McKinsey & Company just issued the latest version of The Next Normal: Perspectives on the future of industries journal. The title? The future of food: Meatless. Some of the commentary in that journal ought to have Virginians wondering about the future of the state’s largest private industry.
Got Milk? An NBC article entitled, “Best advice to US dairy farmers? Sell out as fast as you can” chronicles the sad state of America’s dairy farms. Dairy farms in the U.S. went from 650,000 in 1970 to 40,219 in 2017. The farms that remain are getting bigger. As the article states, “In 1987, half of American dairy farms had 80 or fewer cows; by 2012, that figure had risen to 900 cows.” Dairy farmers blame milk surpluses, debt, unstable export markets and ineffectual government subsidies. While these points are probably accurate, there is a macro trend at play as well. American per capita milk consumption has dropped from 78.3 liters per person per year in 2011 to 65.2 liters per person per year in 2017. Meanwhile, plant based “milks” have been exploding. Nielsen reports that almond “milk” sales alone grew by 250% between 2011 and 2016. Soy, coconut and rice “milks” also contributed to the challenges facing cow milk makers. Virginia’s 450 dairy farms are struggling. A recent article says,
According to USDA statistics, the cost of production per hundredweight of milk in Virginia is $25.11—so the state’s dairy farmers are losing on average $5.91 per hundredweight sold.
Smaller dairies are feeling the effects even more. Dairies with between 100 and 199 cows—the size of most of Virginia’s dairy farms, Banks said—lose an average of $7.18 per hundredweight of milk.
As a result, Virginia’s dairies are dropping like the flies on their cattle.”
As far as I know we can’t economically grow almonds, coconuts or rice in Virginia. That leaves soy, I guess.
Where’s the beef? While the Dairypocolypse is fully underway there may be even worse news on the horizon for the beef industry. In the McKinsey & Co report Ron Salpeter – CEO of plant protein company Hinoman – predicts that eating meat will be seen as immoral by 2030. While he is paid to think such thoughts, the reality is that per-capita red meat consumption in the U.S. fell from just under 150 pounds a year in 1971 to 109.5 pounds a year in 2018. Yet the most devastating news may come from David Lee, the CFO of Silicon Valley based Impossible Foods. When asked why Impossible burgers cost more than beef burgers, Lee made a chilling statement, “Pricing for us is a strategic choice. We use a fraction of the resources the incumbent industry does to make its products, so with that comes the ability to choose. Could we have a much higher profitability and offer a lower price in the market? Absolutely. But to achieve that, we need scale—we need to actually have the size of the business that the incumbent industry has.” A fraction of the resources? How will Virginia’s beef industry fare if Impossible gets to a scale where their beef replacement costs half as much as genuine hamburger? Then Lee gets even more chilling ….
“Anything the meat eater can imagine will eventually be launched by this company. We do 100 prototypes a week. We’re working on technology that creates prototypes for plant-based pork. I’ve had a chicken noodle soup and a fish risotto that were both entirely plant based.
We already have platforms under way to develop what we call a whole cut—a great piece of steak, a whole cut of chicken breast, a whole fish filet. We’ve been shy about offering specific time frames, but we’re hard at work on all of those.”
Chickening out. Per-capita chicken consumption in the U.S. has skyrocketed over the past few decades, more than doubling from 1971 to 2017. Good news for Virginia chicken farmers. But clouds are on the horizon In Feb, 2019 Tysons Foods named its first-ever head of alternative protein – Justin Whitmore. Today Tysons Foods announced that its alternate protein-based line of foods, called Raised and Rooted, is in 7,000 stores. Tyson shares rose 7%.
Rounding ’em up. America’s food tastes have been shifting away from beef and dairy for years. Virginia’s farmers seem to have rolled with the punches just as they did when tobacco became the modern equivalent of a dirty four letter word. However, the changes of the past have been animal-to-animal substitutions. Beef to chicken, for example. Now the pointy heads in Silicon Valley (Impossible Foods) and Israel (Hinoman) are turning plants into meat. Meanwhile, younger Americans see traditional livestock production as somewhat unhealthful, bad for the environment and cruel to the animals being slaughtered. This could be the fulcrum of a fiasco for farmers in Virginia and elsewhere. Even if alternate protein takes a 10%, 20% or 30% bite out of animal protein the results will be devastating. Conversion of feedstock into animal protein varies from about a ratio of 7:1 for beef to 2:1 for chicken That ratio is essentially 1:1 for alternate protein. If alternate protein continues to taste more and more like the meat it imitates and the prices continue to drop we may have a significant amount of overcapacity in our farms. Does our General Assembly have a plan for this disruption?