News Rabobank
Animal protein will not suffer from substitutes until 2035
The impact of meat and dairy substitutes on the animal protein chains and the arable farming sector is still limited until 2035. Although the market for alternative proteins continues to grow, it will remain 'only' a niche market for the next 14 years. By 2035, meat and dairy substitutes will have a consumption share of approximately 4% and 9% in the European Union and the United Kingdom, respectively.
This is what Rabobank expects in the publication 'The protein transition has only just begun'. "It is true that the advance of meat and dairy substitutes will 'cost' the animal protein sectors a part of the expected turnover growth in the coming years. But we do not expect sales volumes to come under pressure. The same applies to the raw materials side," writes Sebastiaan Schreijen, Senior Analyst Consumer Food, and Harry Smit, Senior Specialist Farm Inputs & Farming at Rabobank.
Consumer behavior is slowly changing
Existing raw material suppliers benefit from additional sales of meat and dairy substitutes, but the expected volumes do not yet offer tangible opportunities for grain, oilseed and legume growers and processors to enter en masse. According to the researchers, that could all change if the growth curve of meat and dairy substitutes becomes steeper than expected.
"However, consumer behavior is slowly changing, especially since meat and dairy have been on the menu for centuries." A higher consumption share of meat and dairy substitutes requires government intervention and groundbreaking innovations (e.g. protein fermentation or soaked meat) to drive down consumer prices, according to the Rabobank specialists. "We don't see that happening in the short term."
Although the researchers do not expect that meat and dairy substitutes will meet 25% of the protein requirement in 2035, they have calculated this scenario. For that share, dairy substitutes in Europe have to grow an average of 15% per year to a consumption volume of 13.000 kilotons. Because approximately half of all European milk is processed into cheese, the growth of cheese substitutes will have a major impact on the amount of milk to be produced. Then the demand for animal dairy could fall by about 20% (24 million tons) of dairy products compared to 2020.
Pork sector most vulnerable
To get to a consumption share of 25% in Europe, meat substitutes have to grow an average of 30% per year towards 11.000 kilotons in 2035. The expected impact in that scenario is about the same as that for the dairy sector. In the 25% scenario, the impact is not limited to processed meat, but muscle meat is also partly replaced.
"We expect the pork sector to be the most vulnerable. Poultry is cheaper, flexible in supply and closely aligned with expected consumer trends. Fish may benefit from the focus on healthier diets. Finally, we expect beef to have a relatively stable base, thanks to dairy farming and the limited alternative uses of grasslands."
25% scenario would be bad news for arable farmers
The strong growth of plant alternative proteins in the 25% scenario is bad news for arable farmers. In contrast to a growing demand for raw materials, Rabobank expects a declining demand for animal feed due to the reduction in the number of animals. "This will release many of the 60 million hectares of grain and oilseed acreage in Europe. "We estimate the expected net effect of the two opposing movements to be at least 7,6 million hectares in the 25% scenario."
It is estimated that about 70% of the area released is related to the cultivation of grains, rapeseed and sunflowers in Europe. The other 30% are mainly soybeans grown outside Europe. The increased demand for pulses, oilseeds, oats and grains as raw materials for protein alternatives only covers part of the loss of sales in animal feed, the analysts report.
Government intervention not a ready-made solution
The falling demand for animal feed, dairy and meat products in the 25% scenario also has a negative impact on the rural economy in Europe. "Part of the livestock farmers and the agricultural acreage will become redundant. Some grain and oilseed growers will then have to look for new crops or a new business model. That is also the dilemma for national and European governments, which may contribute to climate goals and healthier populations." , can create the necessary social and societal unrest locally, so government intervention is not a ready-made solution."
Linda van Eekeres
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