Veggie Meals Won’t Kill Your Feed Business: The Impact of Alternative Proteins on Livestock Feed

Demand for vegetarian food products is moving higher, and despite a lack of tangible consumer data, it is obvious that in many European and US metropolitan areas vegetarian alternatives are becoming mainstream and are appearing on the menus of an increasing number of restaurants. Even the staunchest lovers of meat at times seem to be considering a flexitarian (i.e. part-time vegetarian) diet. In this article, we evaluate the impact this will have on the livestock and animal feed sector, be it potential demand shifts, contraction, growth, or no measurable impact at all.

image of veggie hamburgers

Outlook for Alternative Proteins versus Meat

Flexitarians are often looking for meat-free meals that don’t skimp on taste and texture, leading to a notable rise in demand for meat substitutes—meatless products that resemble the look, feel and taste of meat or meat products. But those are not the only alternative proteins. We’re seeing a range of novel alternatives to regular animal protein, e.g. algae protein, insects, and lab-grown meat products. In percentage terms, the growth rates of alternative proteins are massive and will probably result in a doubling of consumption within the next five years. However, for G&O companies concerned about their future feedstuff sales volumes, it is important to see the absolute volumes of these alternative proteins in perspective. 

As outlined in ‘Watch out… or They Will Steal Your Growth’, Rabobank forecasts that the combined use of alternative proteins in the EU and North America—both in finished products and as food ingredients—will amount to a volume of less than 1% of the combined meat market size, around 90m tonnes, by 2022 (see Figure 1). So we do not expect the current trend of rising alternative proteins to destroy existing feedstuff demand for the livestock sector. However, the future growth of meat production in the EU and the US will be slowed by these competing products. 

Still, Rabobank forecasts a growth of EU meat demand of another 250,000 tonnes approximately out to 2022, as well as a combined 2.9m tonnes in the US & Canada, which will benefit the domestic meat production and ultimately sales volumes of feedstuffs. In addition, we note growth for alternative proteins in the developing world, although the future growth of meat will also there by far outpace the rise of alternative proteins. This means that the demand for livestock feed will grow further and the impact of alternative proteins on the feed demand forecast should be small and only curb the growth rates slightly. 

Figure 1: Despite strong consumption growth of alternative proteins, volumes are forecast to stay below 1% of meat production volumes, 2016-2022

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Implications for pulses and other crops

Meat replacements are often made using proteins derived from soy, wheat, dairy or pulses, raising the question what the impact on those commodities will be. As discussed in ‘Checking the Pulse’, Rabobank does not expect the rise in demand for alternative proteins to have a significant impact on the availability of pulses. Even though the demand for certain protein crops as a raw material for the production of alternative protein products and ingredients will rise, the impact on pulses will be marginal. Even if the demand for pulses to be used in the production of alternative protein products would grow 400% by 2025, this would still only represent less than 3% of total global pulse use.

Opportunities for G&O companies

The rise of alternative proteins might slow the future growth of meat production a bit, but we still see further opportunities for G&O companies from the growing—be it in developed economies slightly slowed—global feed demand. In addition, the rising demand for protein concentrates from pulses, soybeans, wheat and dairy as ingredients of meat substitutes will provide opportunities for F&A companies to invest or expand in this industry.

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