The Feed Factor: Why meat companies are looking at feed to reduce emissions

Like other sectors, it is becoming increasingly clear that the meat sector needs to take major steps to move towards the goals on greenhouse gas emissions set out in the European Green Deal and the Fit for 55 strategies. Since 2005, emissions in the agricultural sector have dropped by only 3% - a figure that is still very far from the 40% reduction in 2030, which the EU Commission aspires for sectors like agriculture that fall under the ‘Effort Sharing Regulation'.

Within agriculture, livestock has a substantial share (80+%) in total greenhouse gas emissions.

Emissions for different types of meat vary considerably.

Emissions to produce a kilogram of beef protein in Europe are 2.5 times higher than a kilogram of pork protein and 4.5 times higher than poultry.

A breakdown of the carbon footprint of European meat production shows that for every animal type, a large share of all emissions is linked to animal feed. Besides direct emissions from feed production, the type of feed also influences manure and enteric fermentation emissions. Although most emissions in the meat supply chain happen in the field and on the farm, the meat industry needs to help make a difference. Major meat companies can leverage their scale and dominant position in the value chain and industry knowledge to stimulate, reward and market the additional efforts that the millions of livestock farmers in Europe have to take to combat global warming.

Lowering the footprint of meat products is increasingly considered a strategic priority by a number of major European meat companies. But because most emissions take place outside of their direct sphere of influence meat producers will have to cooperate with other players in the value chain.

Having said that, an increasing number of major European meat companies also acknowledge they are, to a certain extent, accountable for the emissions that happen outside their operations in the field and on the farm (so-called ‘scope 3 emissions’).

In this process, several steps can be distinguished.

Some meat companies have formulated specific targets for their total supply chain (including scope 3 emissions), but we expect more companies to follow.

However, access to data in the supply chain is essential, especially for meat producers with a low level of integration, as it can pose a challenge to create willingness among farmers and feed companies to share data. That’s why more integrated meat companies are likely to have an advantage thanks to their long term relationship with many suppliers. Both the tools to measure emissions and the methodologies to determine the carbon footprint of individual products are rapidly evolving. Companies like like Danish Crown and Vion are rolling out tools to monitor emissions on the farm level to (some of) their suppliers.

However, for the bulk of livestock farmers, carbon emissions are currently not a key performance indicator.

Feed is responsible for a large share of the emissions because of the land use and the inputs needed to grow animal feed. To reduce the carbon footprint of animal feed, there are three options.

1. Increase the share of more sustainable sources of animal feed;
2. Make use of additives to reduce methane and manure related emissions;
3. Improve the feed conversion rate, so less feed is needed to produce a kilogram of meat.

The potential of each of these options is different for each animal. Better feed conversion rates are relevant for beef, pork and poultry alike and also provide a direct economic benefit. In the beef and dairy-sector there is much focus on what can be achieved with additives that help to reduce methane. In pork and poultry, lower emissions will mainly have to come from changes in the composition of the feed mix.

Several regulatory changes are helping to open up potential alternative sources for animal feed.

The ban on processed animal protein (PAP) in pig and poultry feed will be lifted later in 2021. It is generally expected that at some point (processed), insects will also be approved as feed material for livestock. Furthermore, an update on the EU regulation on feed additives is expected before the end of 2021. At the same time, there is a push towards the use of certified soy, which is grown on land that is not associated with deforestation and land-use change.

Eventually, this could reduce the carbon footprint of part of the soy used in feed.

While innovation and changes in public policy create opportunities for alternative feed sources the scale on which they are produced is still small and the impact on the total feed mix shouldn’t be overestimated. Nonetheless, in relative terms, strong growth is expected towards 2030 and optimal use of these feed sources is one of the solutions for the meat industry to reduce emissions per kg of meat.

Although changes in the feed mix can help reduce the environmental footprint, they can also have a major impact on the cost of feed and thus on farm profitability.

For pig farmers, feed generally makes up around 50% of total production costs; for poultry farmers, this is around 75%, and for cattle farmers, it can range from 15% to 50%. So changes in the feed mix will only be made if there is either a substantial upside in terms of feed conversion or if markets and/or governments compensate farmers for doing so.

Are consumers willing to pay for the additional efforts to lower the carbon footprint of meat?

That depends, and it will be tough to fetch a premium for those meat products that are exported outside of the EU. However, the growth of animal welfare concepts, like Red Tractor, Tierwohl or Beter Leven, has shown a certain willingness in the market to pay a premium for meat with added value. While consumers don’t consider carbon footprint as important as animal welfare, Dutch consumer surveys also show that four out of ten consumers would be willing to pay more for meat with a lower carbon footprint. Retailers pick up these signals and act on them by introducing products with ‘eco-scores’ and by asking suppliers to include more information on carbon emissions.

Within the EU’s Common Agricultural Policy budget for 2023 to 2027, between 7.5 to 9.5 billion euro a year is reserved for ‘eco-schemes’ intended to reward more sustainable farming practices. Feed additives, optimised feed strategies, and breeding of lower emission animals have all been named as examples of such practices, but they still have to find their way into national strategic plans that are currently being written.

It is in the interest of the meat industry to stress the importance of such measures to ensure they eventually end up in these national strategies.

Generally speaking, we expect a higher level of integration to put meat companies in a better position to reduce supply chain emissions.

Throughout Europe, poultry production is more integrated than pork, and pork is more integrated than beef. This means poultry producers are generally more involved in what happens on the farm, such as having a say in which feed a farmer uses. At the other end are beef producers, who have less influence on the farm as they mainly process cows from the dairy industry.

However, less integrated companies are also employing initiatives like creating strategic partnerships with a selection of their suppliers and customers (often retailers) in what can be seen as a kind of ‘soft’ integration.