We Need More Stuff

November 2, 2018

I was just asked to participate on a panel in 2019 to discuss developments in the emerging field of alternative proteins. Honored by the invite, I was taken aback by the proposed title which to summarize was something to the tone of “Why my protein is better than yours”. While the session was clearly trying to stir a bit of lively conversation, it struck me that the organizers might not fully get the macros in play with that question. We are headed towards an all-of-the-above scenario as the population approaches 10B in 2050, and developing countries demand to consume protein roughly on par with their western counterparts.

 

Calculating the protein demands and the typical sources of a standard diet for the top 10 farmed species and mapping that over time, there is an important insight to be had. Assuming growth with incumbent protein sources (which is not necessarily a given), and the aquaculture industry growing at 5% CAGR (rather than historical 7-11%), there is an impending deficit of ~15M tons looming by 2025 for aquaculture alone. Of the future sources of alternative protein, contributions from insects (i.e. Black soldier fly), algae and non-traditional sources (i.e. duckweed) are all possible. Admittedly biased, SCPs are the most exciting of all the options available given the potential quality of the product, use of biotechnology and the miniscule resource requirements needed like land and water. IF the entire SCP sector is successful in scaling up to match today’s approximate fishmeal output (~5M tons), we will need >100 plants requiring ~$20B of total capital investment. That’s a lot!

 

Having the good fortune to participate in the annual IFFO (International Fishmeal & Fish Oil) meeting held in beautiful Rome Italy, I met with some of the most senior executives from several of the largest primary fishmeal producing firms in the world. The interest level in “fishmeal from a fermenter” was very high. There is a general recognition that while fishmeal is not going away, it is clearly a finite resource and the ability to secure product reliably is becoming increasingly challenging. Previously, where KnipBio Meal might have been seen as a competitive product, it is now being seen as a potential opportunity for growth.    

 

As you can see, it CAN’T be a question of only one winner, or we as a society will likely lose. I believe the question is more “how do we streamline the market adoption process” (including regulatory, public perception and properly incentivizing early adopters) so that we can have multiple successes in parallel. Perhaps the question might be better phrased: “How are we preparing for the ensuing protein crunch?”

 

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