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Commodities

Coming soon: A tax on meat to cut down on emissions in global warming

PUBLISHED : Wednesday, 13 December, 2017, 1:41am
UPDATED : Wednesday, 13 December, 2017, 1:41am

Move over, taxes on carbon and sugar: the global levy that may be next is meat.

Some investors are betting governments around the world will find a way to start taxing meat production as they aim to improve public health and hit emissions targets set in the Paris Climate Agreement.

Socially focused investors are starting to push companies to diversify into plant protein, or even suggest livestock producers use a “shadow price” of meat – similar to an internal carbon price – to estimate future costs.

Meat could encounter the same fate as tobacco, carbon and sugar, which are currently taxed in 180, 60, and 25 jurisdictions around the world, respectively, according to a report from investor group the FAIRR (Farm Animal Investment Risk & Return) Initiative.

Lawmakers in Denmark, Germany, China and Sweden have discussed creating livestock-related taxes in the past two years, though the idea has encountered strong resistance.

Greenhouse gas emissions from livestock are about 14.5 per cent of the world’s total, according to the Food&Agriculture Organisation, which projects global meat consumption to increase 73 per cent by mid-century, amid growing demand from economies like India and China.

That could result in as much as US$1.6 trillion in health and environmental costs for the global economy by 2050, according to FAIRR, a London-based initiative created by Coller Capital.

“Investors are starting to consider this in a similar way to how they have considered climate risk,” said Rosie Wardle, who manages investor engagements at FAIRR. “It’s kind of accepted now that we need to address livestock production and consumption to meet that 2 degree global warming limit.”

FAIRR’s sustainable protein engagement plan, currently supported by 57 investors with US$2.3 trillion under management, plans to ask 16 major food multinationals this year to “future proof” their supply chains by diversifying their protein sources.

Is this the food of the future? It’s meat, but not as you know it

The possible impact of a meat tax could be similar to sugar taxes. While sugar taxes aimed at fighting obesity in the US have faced some resistance, similar levies have been implemented in 18 countries and six US cities.

When Mexico imposed a special tax in 2014 on sugary drinks, it lowered per capita consumption of those beverages by 6 per cent in 2014, 8 per cent in 2015 and 11 per cent in the first half of 2016, according to Mexico’s National Institute of Public Health.

The idea of taxing meat has been hamstrung by fears of creating a political backlash by taxing farmers, FAIRR said in the report.

Plant protein, however, is already capturing a sizeable amount of demand for protein, pushed partially by millennials and a trend toward incorporating more vegetarian food into Western diets. About 4 in 10 Americans and Canadians are actively trying to incorporate more plant-based food into their diets, according to a Nielsen Co global survey.

A venture capital fund owned by Tyson Foods made its second investment last week in Beyond Meat, which creates a plant-based burger that is also backed by billionaire Bill Gates and actor Leonardo DiCaprio and sold in thousands of US grocery stores and restaurants. Tyson took an initial 5 per cent stake in the burger creator last year.

Green Century Capital Management asked the poultry powerhouse in an August 2016 shareholder proposal to explore more plant-based protein opportunities.

Tyson started work on the Beyond Meat deal several months before receiving the proposal amid growing“consumer interest in all forms of protein,” said Gary Mickelson, a spokesman for the Springdale, Arkansas-based company.

“Besides all of the risks that are in the meat industry, where you are talking about huge amounts of emissions and water pollution, this is about diversifying and figuring out what areas can lead to growth,” Marissa LaFave, shareholder advocate at Boston-based Green Century, said in an interview.