Analysis: Major Players In Protein Sector Are Also The Major Players In The Alt Protein Sector

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by Phillip H. Howard, Civil Eats

“As consumers are given the appearance of more choices, actual ownership of these brands is held by a decreasing number of firms behind the scenes,” including Cargill, Tyson, and Nestlé.

early every week a major media outlet publishes a headline announcing that a giant meat or dairy processor has acquired full or partial ownership of an “alternative protein” firm—such as JBS buying the Dutch firm Vivera, which competes with Beyond Meat in the European market, earlier this year. These new companies are making plant-based meat, dairy, or fish substitutes, working to commercialize lab-grown meat, and incorporating insects into foods like pasta and energy bars.

What is motivating these investments, and what impacts will they have? The emphasis on protein—a single macronutrient, to the exclusion of all others—has been an effective strategy for the largest firms to break through current barriers to growth, even though most people eat more protein than their bodies need.

In a recent research article, my colleagues and I found that this trend is placing control of the food system into a shrinking number of hands, while presenting an illusion that there are numerous, competing alternatives. In the case of products that are designed to present an alternative to industrial agriculture and reduce harm to animals and the environment—or at least cultivate that appearance—this poses a complex dilemma for many consumers.

Breaking “ownership envelopes” is a key approach for firms that seek to grow faster than their peers. The size of our stomachs is limited, so there is only so much we can eat. In addition, when a small number of firms dominate a particular market, such as the four firms that control well over 70 percent of beef processing in the U.S., there are few takeover targets remaining. Strategies to increase firm size when internal growth is deemed too slow by top executives therefore include acquisitions of upstream suppliers, downstream customers, related industries, or firms in new geographic regions.

“Protein” is emerging as a rationale for giant firms to combine in all these directions, creating bigger and more centralized organizations. The largest firms that focus on higher protein foods globally are shown in the figure below, with the size of the rectangles proportional to annual food sales.

Graphic: Largest global 'protein' firms by food sales, headquarters, and commodity focus

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Firms with an initial focus on processing one species of livestock, for example, are now dominant in multiple species, as well as plant-based alternatives to these products. Many leading meat firms now describe themselves as “protein” companies: JBS recently proposed to acquire a salmon aquaculture firm, Cargill has invested in pea protein and insect production, and Tyson has even trademarked the term “The Protein Company.” The largest dairy processors, such as Nestlé and Unilever, have also acquired plant-based meat substitute brands (Sweet Earth, The Vegetarian Butcher).

Lab-grown or “cultured” meat and fish are currently sold in just a few outlets globally, but start-ups are attempting to widely commercialize these products. Investors in these firms (see diagram above) include some of the largest meat processors in the world—Tyson and Cargill—as well as companies owned by numerous prominent billionaires, including Bill Gates, Peter Thiel, Marc Benioff, and Sergey Brin. These companies wouldn’t be making these investments if they didn’t expect that the intellectual properties held by these start-ups will lead to monopoly profits.

And while the companies promoting lab-grown products claim that they will be eaten as substitutes for foods that have greater environmental impacts, the current energy requirements—and carbon footprint—of lab grown meat are substantial. The marketing of these products could even increase meat and dairy consumption by reinforcing perceptions that these foods should be at the “center of the plate,” rather than a potential ingredient.

As consumers are given the appearance of more choices, actual ownership of these brands is held by a decreasing number of firms behind the scenes. JBS, for example has expanded from a single beef processing plant in Brazil to the top ranked meat processor in the world, after buying out key competitors on nearly every continent. This growth has resulted in ownership of a dizzying number of brand names, nearly 100 of which are listed in the middle of the map below. These include multiple brands that focus on what might be perceived as alternatives, such as organic meat (Acres Organic, Just BARE, Spring Crossing), grass-fed meat (Grass Run Farms, Little Joe), and plant-based substitutes (OZO, Incrível).

Once acquired, these brands pose little threat to business as usual and are likely to further reinforce the concentration of power. Industry consolidation has resulted in higher prices for consumers, lower incomes for factory workers, farmers, and ranchers, and decreasing agricultural diversity, among other impacts.

Graphic: JBS ownership changes and brands, 2005 to 2020

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Leading meat processing firms, including JBS, Tyson, WH Group/Smithfield, and Perdue, have also paid hundreds of millions in government fines and class-action lawsuit settlements in recent years. These payments stemmed from allegations that they used a firm called Agri Stats to coordinate their actions and more effectively manipulate prices for customers, workers, and suppliers. In addition, JBS agreed to pay a $3.16 billion fine in 2017, after admitting to bribing 1,829 politicians in Brazil—the preferential treatment the firm received as a result helped fuel acquisitions on nearly every continent, as shown on the map above.

Despite these impacts, regulators in the U.S. allowed JBS to acquire a lamb processing facility, from the cooperative Mountain States Rosen, at a bankruptcy auction last year. JBS, which imports all of its lamb products in the U.S., immediately announced it was converting the plant to beef processing. This action removed one of the few remaining processors for sheep producers in Colorado and the surrounding states, which is expected to drive many of them out of business.

Giant meat, dairy, and aquaculture firms are all sourcing from increasingly larger-scale livestock operations, which are populated by highly genetically uniform animals. One reason is to meet the demands of massive processing plants, which require very specific animal sizes at very specific times. This contributes to the loss of small livestock farms with more diverse breeds and timing, which increases the likelihood of epidemics, such as avian influenza and African swine fever. Along with the chokepoints created by allowing so few processors to control so much of our food supply, these trends could contribute to even more severe food shortages than the one we experienced near the beginning of the COVID-19 pandemic.

What can we do to reverse these trends? There are no easy answers, but to start with, policymakers should face more pressure to dismantle government subsidies to giant firms, block additional mergers and acquisitions, make it easier to identify and support independent producers with high values, and more difficult for corporations to engage in greenwashing.