The Big Idea that is Almost Certainly Necessary to Eat Less Meat (Part 4 of 4)

Agriculture subsidies need to change, otherwise startups don't have a shot.

Photo by Taylor Siebert on Unsplash

I started writing this four-part series because I was hunting for a startup idea that would help the world eat less meat. I learned just how urgent it is that we scale back animal agriculture in the world. I learned about why the wave of “fake meat” has failed to reduce our meat consumption so far, and why future waves might struggle, as well. I found a few leads for startup ideas, though all of them need further research and development. 

But ultimately, my question in these essays is not only about startups. I am wondering about our collective future, and I am wondering how we can pragmatically get to a better place very quickly. And even though I wanted to find a startup idea as the answer, my research led me to a different place, a specific corner of lobbying and public policy.

Before I get there, I need to bring up one more subject that I’ve ignored until now: price.

How can non-meat compete with a $5 Big Mac?

When I was running Good Eggs in San Francisco many years ago (the online supermarket that specializes in locally-grown food), we knew that our meat sales were lower than they should have been. Our meat was just much more expensive compared to the alternatives. 

We were working with small farms that used planet-friendly ranching techniques and fair labor practices. When we worked with them on pricing, we realized that even with well-run operations, a little bit of scale, and very slim margins, they could not bring the price down enough to be competitive without going out of business.

The alternative kind of meat – the industrial, mass-market kind – is just super, super cheap. 

Today, a fast-food burger is one of the most affordable options for a filling meal in most places in America and Europe. At restaurants or in the supermarket, meat is frequently the lowest-priced centerpiece for a meal.

The fake-meat and fake-dairy industries are working hard on price parity, on being able to sell their products for the same price as the animal-based ones. I suspect that price parity will not help fake meat all that much, for all the reasons mentioned in the previous essays. But if fake meat was significantly less expensive than real meat, then yes, I do believe that sales would pick up.

This seems like common sense, but there is plenty of data to back it up – financial incentives (and disincentives) are super effective at getting people to change their behavior to be more climate-friendly. If meat and dairy prices were higher, then people would eat less of it. 

How is it possible that industrial meat, and industrial food in general, is so cheap? Part of the answer is their massive scale, which allows them to automate, optimize, and operate with slim margins. Part of the answer is their shocking mistreatment of animals to get factory-like efficiency. Part of their answer is their immoral labor practices and their underinvestment in people and safety, including a wide-spread use of migrant child labor in the US. 

And part of the answer – a really big part – is that our governments subsidize industrial meat and dairy via agriculture subsidies, especially to producers of the animal feed used in factory farming.

Without these subsidies, meat and dairy would not be able to support their existing low prices, which are almost certainly below the real cost of production. Prices would go up, people would naturally eat less meat, and innovative alternative-proteins (as well as plain-old vegetables and beans) would be less expensive by comparison.

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The elephant in the room is agricultural subsidies

I suspect that advocacy, as citizens, consumers and investors is a necessary piece of the puzzle in reducing our meat consumption.

There are many things to advocate for – more vegetarian options on restaurant menus and in supermarkets, better labeling requirements, less purchasing of meat by school cafeterias, hospitals, and major foodservice institutions, and much more.

But in researching this essay, it became clear to me that the biggest positive impact possible would be to eliminate, or seriously reform, the agricultural subsidies paid by our governments to industrial farms. In fact, if we set aside unreasonable optimism about a new meat-replacement technology, it seems to me that the only way we can reduce meat & dairy consumption by 50% worldwide is by eliminating subsidies.

World governments pay out about $500 billion per year in subsidies to farmers. In the US the number is at least $30 billion per year, which is equivalent to $100 for every man, woman and child in the country. In Europe, the EU pays out between 28-32 billion euros per year to animal farming via CAP direct payments, which represents 18-20% of the total EU budget – again, that’s 18-20% of the total EU budget just for agriculture related to meat & dairy, not even counting the remainder of agricultural subsidies for other uses.

This money is not paid out to farmers-in-general, and certainly not to the small family farm that you might imagine. It is almost entirely paid out to industrial farms producing certain foods at massive scale – including industrial crops for animal feed. In the United States, the advocacy group EWG has done a tremendous job of tracking subsidies and calling out the hypocrisy of the lobbyists who defend them. 

A massive fraction of the money goes to producers of animal feed for industrial meat, and producers of corn destined for high-fructose-corn-syrup and other processed food ingredients. In addition to environmental harm, these subsidies are terrible for human health.

We don’t talk about it nearly enough in the media, and certainly not in the startup world, but if we care about changing the way people eat, agriculture subsidies are the main issue.

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The New Zealand example

Only one wealthy Western nation has succeeded in eliminating agricultural subsidies: New Zealand, in a difficult political process in the 1980’s. New Zealand is now one of the only wealthy countries in the world in which meat consumption per-capita is going down, especially beef consumption, which has gone down by over 50% in the past 20 years. 

The link between eliminating subsidies and reduced meat consumption in New Zealand is complicated, but the numbers are clear at the end of the day. Without subsidies, prices went up – that was the immediate, short-term impact. Much of the subsidies were related to animal feed – so the price of animal feed goes up, and therefore the price of meat goes up, and therefore sales decline. All of that happened in New Zealand in the 1980’s and 1990’s, before the data points on that graph.

In the US, slight fluctuations in meat consumption do seem to be tied to the price of animal feed, as prices of feed drive the prices of meat.

In the medium- and long-term, the food industry starts to become more closely driven by consumer preferences, instead of by perverse incentives. In New Zealand that’s exactly what we saw happen, which is why beef consumption went down after 2000. Without subsidies to artificially incentivize eaters and producers of beef, the market just started adapting to changing preferences.

Without subsidies, the market creates virtuous cycles for meat alternatives. As the price of industrial meat goes up, the scale of production goes down, which drives prices up even further. As the alternatives (including vegetables) seem more affordable by comparison, their scale of production goes up, which drives down prices even more. So in the long-run, even though people might continue to prefer meat, they have increasingly strong incentives to eat something else, at least some of the time. 

Without an elimination of subsidies, all of our innovations, advocacy, and efforts to education will struggle, because they’re competing in a rigged game.

• • • 

This might just be a winnable battle

Changing agricultural subsidies has been a taboo subject for decades, because the forces that support it – farmer lobbyist groups, rural populations – are just too powerful politically. 

But the more I read about the question of ag subsidies these past weeks, the more I started to believe that significantly reforming them is potentially a winnable battle in the coming years. Something has changed, or is now changing.

At the end of 2022, world governments at the COP15 conference in Montreal passed a historic agreement to protect biodiversity, and one of the key points was to reduce by $500 billion the government subsidies that are harmful to the environment – including agriculture subsidies. In the wake of the COP15, more and more articles are talking about the possibility of reforming or eliminating subsidies. The New Zealand example is being studied closely.

The British investor and philanthropist Jeremy Coller has been gaining traction with his efforts to end ag subsidies, via his FAIRR initiative that has gathered a huge number of the largest investors in the world to advocate against factory farms. In a little-noticed but very significant move a few weeks ago, his alliance of investors (including BNP Paribas) issued a call for governments to remove subsidies to red meat and dairy. That’s a big deal. 

It’s early, but I think the coalition is coming into place.

In the United States, agriculture subsidies are determined every five years in a highly technical, opaque, lobbyist-driven process called the “farm bill”.  It is happening now in 2023, and ag subsidies will almost certainly remain in-tact. But perhaps with a concerted effort, in addition to the efforts of EWG and others, a change could be made in 2028.

I believe that startup techniques could be extremely useful in the effort to overturn subsidies:

• User-research and quick prototyping can help identify the best messages to rally public support – ideally messages that appeal to national values and pride

• Networks of small donors can be built with great digital tools

• Publicity campaigns on social media can be launched regularly

• Networks of small farmers could be mobilized with startup sales techniques to show that farmers, too, support an significant reform of subsidies 

And of course classic advocacy techniques need to be used, too: building coalitions, drafting white papers in every language, engaging with politicians at every level.

What if the farm subsidies were transformed into a cash payout to households so that individuals could choose which foods they want to buy, instead of the governments deciding for them? The price of Big Macs and Pepsi would almost certainly go up, but a family of five would get a check every year for $500 instead.

What if farm subsidies could be used to help farmers in the animal-agriculture-complex transition to growing vegetables, or to compensate them for rewilding their land?

In the startup world, alternative protein startups have attracted about $2 billion of investment per year over the past several years. If a fraction of that money could go towards a sustained campaign towards eliminating subsidies, the positive impact would be significantly higher than any startup success (and good for the startups, too).

• • • 

The challenge is daunting, but I remain optimistic. There are startups to build. There are campaigns to launch. But to be successful, we need to stay focused on the eater, deeply understand why people make the food choices they do, and find the rare opportunities to reach the mainstream.

I will continue researching and looking for startups to build, so please don’t hesitate to get in touch to talk about that.

Yet the biggest battle may be civic and political, even for startup-ers like me. So I’ll also be on the lookout for opportunities to help with the subsidies-reform campaigns that I know are necessary.

I see some momentum, and I hope it continues, because we need some big changes in the food industry if we want to live in a net-zero world anytime soon.