1 00:00:00,320 --> 00:00:02,920 Speaker 1: This is Tom Rowland's Reese, and you're listening to Switched 2 00:00:02,960 --> 00:00:05,480 Speaker 1: on the podcast brought to you by B and EF. 3 00:00:06,040 --> 00:00:09,639 Speaker 1: The agriculture transition is showing signs of stalling. Since twenty 4 00:00:09,680 --> 00:00:13,080 Speaker 1: twenty one, venture capital and private equity funding for agricultural 5 00:00:13,080 --> 00:00:16,000 Speaker 1: technologies has dropped by a wapping seventy six percent, with 6 00:00:16,160 --> 00:00:19,960 Speaker 1: numerous agtech startups and companies declaring bankruptcy. While we've also 7 00:00:20,000 --> 00:00:22,680 Speaker 1: seen some larger and established corporations going back on their 8 00:00:22,680 --> 00:00:26,000 Speaker 1: green commitments. It's not all doom and gloom, however, as 9 00:00:26,040 --> 00:00:28,880 Speaker 1: down on the farm, rising input prices for products like 10 00:00:28,920 --> 00:00:32,960 Speaker 1: fertilizers and pesticides has actually led to more sustainable practices 11 00:00:33,200 --> 00:00:36,159 Speaker 1: as farmers are forced to seek greater efficiencies to balance 12 00:00:36,159 --> 00:00:39,519 Speaker 1: their books. And while investment in alternative proteins has declined 13 00:00:39,600 --> 00:00:43,000 Speaker 1: eighty seven percent since twenty twenty one, consumers themselves are 14 00:00:43,040 --> 00:00:45,280 Speaker 1: leading a move away from high emissions red meat, with 15 00:00:45,360 --> 00:00:48,160 Speaker 1: growing numbers buying lower impact meats like chicken and fish. 16 00:00:48,520 --> 00:00:51,400 Speaker 1: To discuss the connection between agricultural markets and the climate 17 00:00:51,440 --> 00:00:55,360 Speaker 1: transition further today, I'm joined by a cohost, Bloomberg enief's 18 00:00:55,400 --> 00:00:58,960 Speaker 1: global head of Strategy, kobad bav Nagri and together we 19 00:00:59,080 --> 00:01:03,200 Speaker 1: review findings from our inaugural Food and Agriculture Transition Indicators 20 00:01:03,240 --> 00:01:06,520 Speaker 1: Report with Alexander Liddington, an analyst from our Food and 21 00:01:06,560 --> 00:01:09,840 Speaker 1: Agriculture Team bn theF clients find this report and other 22 00:01:09,880 --> 00:01:13,160 Speaker 1: agriculture related material at BNF go on the Bloomberg terminal 23 00:01:13,440 --> 00:01:15,720 Speaker 1: or on BNEF dot com. All right, let's get to 24 00:01:15,800 --> 00:01:19,360 Speaker 1: talking about the Food and Agriculture Transition Indicators with alex. 25 00:01:28,520 --> 00:01:28,600 Speaker 2: So. 26 00:01:28,720 --> 00:01:31,399 Speaker 1: I know if you've been listening to Switched On lately, 27 00:01:31,760 --> 00:01:33,920 Speaker 1: it will feel like I say this every single time 28 00:01:34,000 --> 00:01:37,760 Speaker 1: that today's episode is extra special. But in my defense, 29 00:01:37,760 --> 00:01:41,000 Speaker 1: there's always a reason that the episode is extra special. 30 00:01:41,040 --> 00:01:43,120 Speaker 3: It's always a different reason. And the reason. 31 00:01:42,840 --> 00:01:46,600 Speaker 1: Today's episode is extra special is for the first time 32 00:01:46,800 --> 00:01:48,640 Speaker 1: I have a co host, Cobad. 33 00:01:48,800 --> 00:01:50,120 Speaker 3: Cobad, do you want to say high quickly? 34 00:01:50,400 --> 00:01:52,880 Speaker 4: Well, thank you, Tom. That's one when hell of an 35 00:01:52,920 --> 00:01:56,120 Speaker 4: introduction and yes, hello to all the listeners out there. 36 00:01:56,240 --> 00:01:57,760 Speaker 1: So Cobat is going to be joining me for this 37 00:01:57,800 --> 00:02:00,520 Speaker 1: podcast on agon food as a co ho, but this 38 00:02:00,640 --> 00:02:02,480 Speaker 1: actually a topic he knows a lot about. And then 39 00:02:02,520 --> 00:02:06,840 Speaker 1: our main guest today Alexander Liddington, who focuses on food 40 00:02:06,840 --> 00:02:09,880 Speaker 1: and agriculture questions. So welcome on board. 41 00:02:09,760 --> 00:02:11,639 Speaker 2: Good afternoon, It's a pleasure to be here. 42 00:02:11,840 --> 00:02:14,840 Speaker 1: So, as the person on this podcast who is the 43 00:02:15,040 --> 00:02:17,520 Speaker 1: least knowledgeable on this topic, I'm going to start with 44 00:02:17,919 --> 00:02:21,840 Speaker 1: a very basic question about the report you've just published, 45 00:02:22,080 --> 00:02:24,200 Speaker 1: the Food and a Transition Indicator's Note. 46 00:02:24,240 --> 00:02:26,400 Speaker 3: What is it? Tell us a little bit more about it. 47 00:02:26,639 --> 00:02:29,520 Speaker 2: So this is our inaugural edition of the Food and 48 00:02:29,560 --> 00:02:32,959 Speaker 2: ag Transition Indicators Research Note, and it aims to bridge 49 00:02:32,960 --> 00:02:36,480 Speaker 2: the connection between egg commodity markets and the climate transition. 50 00:02:36,680 --> 00:02:39,480 Speaker 2: Through that, we aim to provide an annual update on 51 00:02:39,560 --> 00:02:41,840 Speaker 2: the sort of status of the food and agg transition 52 00:02:41,919 --> 00:02:44,400 Speaker 2: to a low carbon, nature positive food system. And within 53 00:02:44,440 --> 00:02:47,280 Speaker 2: the note we drill down on each of our research 54 00:02:47,360 --> 00:02:50,880 Speaker 2: pillars within the food and ag world and dive into 55 00:02:50,960 --> 00:02:57,640 Speaker 2: emerging technologies, startups, corporate initiatives, policy development, and financing boot. 56 00:02:57,720 --> 00:02:59,400 Speaker 4: So, Alex, do you want to start at the high 57 00:02:59,480 --> 00:03:02,880 Speaker 4: level for us? What are the big challenges facing the 58 00:03:02,919 --> 00:03:05,760 Speaker 4: agricultural system? What's the landscape for this piece? 59 00:03:06,080 --> 00:03:08,960 Speaker 2: So, the food and agg industry as a whole is 60 00:03:09,120 --> 00:03:13,280 Speaker 2: responsible for around thirty thirty five percent of global emissions, 61 00:03:13,320 --> 00:03:16,040 Speaker 2: depending on how and where you draw your boundaries. And 62 00:03:16,080 --> 00:03:19,680 Speaker 2: there are some key contributors to those global emissions, and 63 00:03:19,720 --> 00:03:25,120 Speaker 2: they are fertilizers, the protein system, rice and on farm transport, 64 00:03:25,400 --> 00:03:30,160 Speaker 2: and the agricultural system is showing signs of climate vulnerability. 65 00:03:30,320 --> 00:03:33,560 Speaker 2: USK coffee drinkers will know that coffee and cocoa prices 66 00:03:33,800 --> 00:03:37,600 Speaker 2: have been skyrocketing. That's as a result of poor harvests 67 00:03:37,640 --> 00:03:40,160 Speaker 2: brought along by drought. US who are a fond of 68 00:03:40,840 --> 00:03:43,240 Speaker 2: an eggs on toast for breakfast will know that the 69 00:03:43,640 --> 00:03:46,480 Speaker 2: cost of eggs has risen over the last twelve months 70 00:03:46,640 --> 00:03:50,040 Speaker 2: due to predominantly a spread of Avian flu and droughts 71 00:03:50,080 --> 00:03:52,360 Speaker 2: across the US are leading to a surge in insurance 72 00:03:52,560 --> 00:03:54,760 Speaker 2: issuances for farms for crop insurance. 73 00:03:55,120 --> 00:03:57,160 Speaker 1: I just want to clarify something in what you're saying. 74 00:03:57,200 --> 00:03:59,600 Speaker 1: So there's kind of there's two sides of this coin 75 00:03:59,760 --> 00:04:02,400 Speaker 1: that we're looking into. Is both the food and agricultural 76 00:04:02,440 --> 00:04:06,880 Speaker 1: system as a source of emissions and more broadly environmental 77 00:04:06,920 --> 00:04:10,080 Speaker 1: stress on the planet. And then there is the impact 78 00:04:10,240 --> 00:04:13,040 Speaker 1: that climate change and other environmental stresses are having on 79 00:04:13,120 --> 00:04:15,760 Speaker 1: food and agriculture system. Are you saying that in the 80 00:04:15,800 --> 00:04:18,320 Speaker 1: report you're looking at both of those facets. 81 00:04:18,720 --> 00:04:21,400 Speaker 2: Absolutely. I think that's something key to take note of 82 00:04:21,760 --> 00:04:24,640 Speaker 2: about the agricultural system as a whole. Is it not 83 00:04:24,680 --> 00:04:27,440 Speaker 2: only there are emissions and a heavy amount of emissions 84 00:04:27,560 --> 00:04:30,520 Speaker 2: that are hard to abate within the agricultural sector, but 85 00:04:30,600 --> 00:04:34,000 Speaker 2: also the industry is potentially one of the most prone 86 00:04:34,120 --> 00:04:37,120 Speaker 2: to changes induced by climate change and global warming. 87 00:04:37,440 --> 00:04:39,719 Speaker 4: And then I mean the broader swite of impacts that 88 00:04:39,760 --> 00:04:43,760 Speaker 4: the agricultural system has apart from climate or an enormous 89 00:04:43,760 --> 00:04:44,160 Speaker 4: aren't they. 90 00:04:44,560 --> 00:04:47,599 Speaker 2: So when we talk about what inputs go into cropping 91 00:04:47,720 --> 00:04:51,440 Speaker 2: and into growing protein like beef or chicken or pork, 92 00:04:51,760 --> 00:04:55,320 Speaker 2: we talk about deforestation for opening up pastures, We think 93 00:04:55,360 --> 00:04:59,640 Speaker 2: about pollution into waterways by crop chemicals, be it fertilizers 94 00:04:59,680 --> 00:05:02,000 Speaker 2: or pests the sides. So the impacts are heavy, both 95 00:05:02,080 --> 00:05:04,719 Speaker 2: on the emissions front but also the nature front. 96 00:05:04,880 --> 00:05:07,880 Speaker 1: This is really interesting because in the time I've been 97 00:05:08,279 --> 00:05:10,800 Speaker 1: involved with bn EF, there's always been this kind of 98 00:05:10,880 --> 00:05:14,360 Speaker 1: narrative around climate change that, you know, if you don't 99 00:05:14,360 --> 00:05:17,600 Speaker 1: believe the environmentalists think of it in terms of the 100 00:05:17,760 --> 00:05:21,320 Speaker 1: dollar cost of dealing with this, this climate change versus 101 00:05:21,480 --> 00:05:25,280 Speaker 1: the dollar cost of avoiding climate change, and that was 102 00:05:25,320 --> 00:05:28,960 Speaker 1: always a slightly abstract idea because it's so hard to quantify. 103 00:05:29,160 --> 00:05:32,320 Speaker 4: But the hemic rationalists view of the world right now. 104 00:05:32,320 --> 00:05:34,720 Speaker 1: Yeah, exactly, the economic rationalist, the people who are sort 105 00:05:34,720 --> 00:05:36,719 Speaker 1: of ignored, like, you know, who'd want to dismiss the 106 00:05:36,760 --> 00:05:39,160 Speaker 1: environmentalists as a bunch of hippies. You know, there was 107 00:05:39,200 --> 00:05:41,480 Speaker 1: this case being made to the the as you say, 108 00:05:41,520 --> 00:05:44,400 Speaker 1: the economic rationalist, and it sounds like in the food 109 00:05:44,440 --> 00:05:48,120 Speaker 1: and agg system that is now becoming a reality or 110 00:05:48,320 --> 00:05:51,000 Speaker 1: you know, economically it's a Canarian the coal mine in 111 00:05:51,120 --> 00:05:54,960 Speaker 1: terms of these impacts being felt and in a way 112 00:05:55,000 --> 00:05:59,480 Speaker 1: that is costing money. And it sounds very cold to 113 00:05:59,520 --> 00:06:01,440 Speaker 1: put it like, but is that a fair way of 114 00:06:01,480 --> 00:06:02,120 Speaker 1: looking at it? 115 00:06:02,400 --> 00:06:05,520 Speaker 2: So we mentioned coffee and coco earlier. Some of the 116 00:06:05,600 --> 00:06:09,080 Speaker 2: key players in the confectionery industry like Mondolez are looking 117 00:06:09,080 --> 00:06:12,719 Speaker 2: towards coco alternatives as a solution, and they've put millions 118 00:06:12,760 --> 00:06:16,839 Speaker 2: of dollars of funding towards seeking out alternatives for grown coco, 119 00:06:17,080 --> 00:06:20,479 Speaker 2: be it through cellular agriculture or through alternatives that may 120 00:06:20,520 --> 00:06:23,200 Speaker 2: provide a substitute in chocolate. 121 00:06:23,360 --> 00:06:23,560 Speaker 3: Yeah. 122 00:06:23,760 --> 00:06:25,880 Speaker 4: So what we're saying is that consumers are already paying 123 00:06:26,080 --> 00:06:28,720 Speaker 4: for climate change in their food prices in coffee and 124 00:06:28,760 --> 00:06:30,400 Speaker 4: cocoa eggs. 125 00:06:30,760 --> 00:06:34,600 Speaker 2: Absolutely, and not only that, but also through the subsidies 126 00:06:34,600 --> 00:06:37,960 Speaker 2: that underpin the agricultural system. This year saw a record 127 00:06:37,960 --> 00:06:42,320 Speaker 2: amount of insurance insurance premiums taken out by farmers in 128 00:06:42,360 --> 00:06:45,279 Speaker 2: the US raising cattle, and a vast majority of those 129 00:06:45,320 --> 00:06:49,039 Speaker 2: insurances are backed by subsidy. So the taxpayer is paying 130 00:06:49,080 --> 00:06:52,159 Speaker 2: to ensure the farming industry against these climate shocks. 131 00:06:52,520 --> 00:06:55,120 Speaker 4: And so what's being done about this in the industry 132 00:06:55,480 --> 00:06:57,640 Speaker 4: is what are we seeing in the data? Is there 133 00:06:57,720 --> 00:07:01,760 Speaker 4: money flowing, are their new technologies being developed? Where's the 134 00:07:01,800 --> 00:07:03,000 Speaker 4: progress at well? 135 00:07:03,120 --> 00:07:06,760 Speaker 2: To answer that, the case is slightly different from what's 136 00:07:06,760 --> 00:07:10,239 Speaker 2: happening on farm to what's happening in the boardroom. On farm, 137 00:07:10,280 --> 00:07:14,920 Speaker 2: we're seeing efficiencies delivered by precision technology, by better agronomy 138 00:07:14,960 --> 00:07:18,040 Speaker 2: that's growing crops, and by smarter choices that cost the 139 00:07:18,080 --> 00:07:21,480 Speaker 2: farmer less. As we have these sort of price shocks 140 00:07:21,520 --> 00:07:24,720 Speaker 2: within both from crop inputs but also the price of 141 00:07:24,800 --> 00:07:26,160 Speaker 2: the crop that's produced itself. 142 00:07:26,240 --> 00:07:28,320 Speaker 1: But the opposite I just ask, I just want to 143 00:07:28,360 --> 00:07:30,960 Speaker 1: understand that a bit better, because everything you've described sounds 144 00:07:31,000 --> 00:07:35,360 Speaker 1: to me like coping mechanisms rather than solving the problem 145 00:07:35,440 --> 00:07:40,440 Speaker 1: of this uncertain climate scenario. Is that a fair reflection 146 00:07:40,600 --> 00:07:42,880 Speaker 1: or is we're going in a bleak direction right now. 147 00:07:42,880 --> 00:07:45,240 Speaker 1: I'm sure we're going to turn around with some good news. 148 00:07:45,320 --> 00:07:48,120 Speaker 1: But am I right in saying that that's just how 149 00:07:48,120 --> 00:07:51,560 Speaker 1: they're coping with the problem, or are they actual adaptations 150 00:07:51,600 --> 00:07:54,440 Speaker 1: that make those farms more resilient climate change? 151 00:07:54,840 --> 00:07:55,080 Speaker 3: Yes. 152 00:07:55,560 --> 00:07:59,080 Speaker 2: In short, reducing the amount of fertilizer that's spread on field, 153 00:07:59,200 --> 00:08:02,360 Speaker 2: reducing the amount pesticide that is used on crops, and 154 00:08:02,480 --> 00:08:06,800 Speaker 2: integrating smarter agronomy practices like no or local agriculture or 155 00:08:06,880 --> 00:08:09,640 Speaker 2: using a cover crop actually do improve the quality of 156 00:08:09,640 --> 00:08:12,720 Speaker 2: the soil that you're cropping on and hence extending the lifetime, 157 00:08:12,760 --> 00:08:17,400 Speaker 2: the usable lifetime of that soil and its inherent nutrient richness. 158 00:08:17,720 --> 00:08:20,720 Speaker 1: Got it so anyway, I interrupted you. That was part 159 00:08:20,760 --> 00:08:23,280 Speaker 1: one that you were about to say. Then in the boardrooms, 160 00:08:23,640 --> 00:08:26,520 Speaker 1: the opposite cannot be said. For what's happening in boardrooms. 161 00:08:26,560 --> 00:08:31,720 Speaker 1: We're seeing a reversal in climate and sustainability targets from 162 00:08:31,800 --> 00:08:34,800 Speaker 1: some of the key players in the food and ag world. 163 00:08:35,200 --> 00:08:38,080 Speaker 1: We are also seeing a receding in the amount of 164 00:08:38,480 --> 00:08:42,600 Speaker 1: venture capital that's being plowed into emerging technologies that may 165 00:08:42,720 --> 00:08:46,080 Speaker 1: solve the climate crisis that we were currently experiencing. 166 00:08:46,200 --> 00:08:47,800 Speaker 4: Yeah, you've got you've got a nice chart on that 167 00:08:47,840 --> 00:08:50,560 Speaker 4: in the report Alex where you step through some of 168 00:08:50,559 --> 00:08:53,160 Speaker 4: the food company targets. And when we look at that, 169 00:08:53,480 --> 00:08:56,360 Speaker 4: it seems like, I mean, the company is not walking 170 00:08:56,640 --> 00:09:00,559 Speaker 4: away altogether, right, They're not saying to hell with, we're 171 00:09:00,600 --> 00:09:04,079 Speaker 4: done trying to be sustainable. They're just recalibrating them. Is 172 00:09:04,120 --> 00:09:04,920 Speaker 4: that read correct? 173 00:09:05,240 --> 00:09:08,360 Speaker 2: That's true. So they're dropping some of the trickier targets 174 00:09:08,400 --> 00:09:11,880 Speaker 2: to achieve a lot of the recycling, sustainably sourced ingredients targets, 175 00:09:11,920 --> 00:09:15,400 Speaker 2: but actually really drilling down on things like regenitive agriculture. 176 00:09:15,480 --> 00:09:19,120 Speaker 2: So PepsiCo has up to their regenerative agriculture targets from 177 00:09:19,160 --> 00:09:22,000 Speaker 2: seven million acres to ten million acres by twenty thirty. 178 00:09:22,080 --> 00:09:25,440 Speaker 2: So that's five crops left until that deadline. And what 179 00:09:25,480 --> 00:09:28,880 Speaker 2: regenaive agriculture is is it boils down to improving the 180 00:09:28,960 --> 00:09:31,680 Speaker 2: health of your soil and that's through a number of 181 00:09:31,720 --> 00:09:35,600 Speaker 2: different interventions, both agronomic in terms of how you farm, 182 00:09:35,679 --> 00:09:39,520 Speaker 2: but also in terms of technology, so utilizing precision technologies, 183 00:09:39,840 --> 00:09:43,840 Speaker 2: yield mapping, and many more to improve the health of 184 00:09:43,880 --> 00:09:44,800 Speaker 2: the cropping system. 185 00:09:45,160 --> 00:09:47,200 Speaker 1: One of the things that I also noticed in the 186 00:09:47,280 --> 00:09:51,200 Speaker 1: report is that although the investment in new technologies as 187 00:09:51,240 --> 00:09:53,440 Speaker 1: you talk about, has gone down, there's also been more 188 00:09:53,480 --> 00:09:54,920 Speaker 1: investment in land itself. 189 00:09:55,040 --> 00:09:56,920 Speaker 3: Can just talk us through what that's all about. 190 00:09:57,360 --> 00:10:02,040 Speaker 2: We are seeing more and more futional investors plowing capital 191 00:10:02,200 --> 00:10:05,960 Speaker 2: into buying up agricultural assets, growing assets, whether they be 192 00:10:06,160 --> 00:10:09,520 Speaker 2: cropping or to a lesser extent, livestock farms. A lot 193 00:10:09,920 --> 00:10:13,320 Speaker 2: of this capital globally is coming from Europe and North America, 194 00:10:13,480 --> 00:10:17,920 Speaker 2: and it's being spread amongst farms across Latin America, North 195 00:10:17,920 --> 00:10:21,800 Speaker 2: America and Australia, where the size and scale of these 196 00:10:21,840 --> 00:10:26,160 Speaker 2: farms really allows for a good investment opportunity. They also, 197 00:10:26,520 --> 00:10:30,600 Speaker 2: investment into farmland is not strongly correlated with equities, and 198 00:10:30,640 --> 00:10:34,559 Speaker 2: therefore it provides a hedge against inflation to these investors, 199 00:10:34,760 --> 00:10:35,120 Speaker 2: and so. 200 00:10:35,040 --> 00:10:38,280 Speaker 4: That's one of the bright spots really in the investment picture. Right. 201 00:10:38,600 --> 00:10:42,880 Speaker 4: We're seeing this a growing share of investment from institutional 202 00:10:42,880 --> 00:10:46,120 Speaker 4: investors into land, but we're also seeing a real downturn 203 00:10:46,200 --> 00:10:49,480 Speaker 4: in venture capital investment into the new technologies which are 204 00:10:49,520 --> 00:10:52,200 Speaker 4: really needed to make the food system more sustainable, right, 205 00:10:52,360 --> 00:10:54,440 Speaker 4: what's sort of driving that? What's happening there? 206 00:10:54,600 --> 00:10:57,480 Speaker 2: So in terms of the downturn in venture capital, private 207 00:10:57,520 --> 00:11:01,240 Speaker 2: equity flows into sustainable ag tech, essentially we've seen on 208 00:11:01,320 --> 00:11:04,920 Speaker 2: two parts a real poor performance from some of these technologies. 209 00:11:05,080 --> 00:11:08,840 Speaker 2: So sustainable proteins, that being plant based and sustainable and 210 00:11:08,880 --> 00:11:12,760 Speaker 2: cellular agriculture have not performed on the global level. Companies 211 00:11:12,880 --> 00:11:16,520 Speaker 2: like eat just, which delivered a cell cultivated chicken protein 212 00:11:16,679 --> 00:11:20,160 Speaker 2: for Singaporean consumers, actually pulled that out of the market 213 00:11:20,240 --> 00:11:24,040 Speaker 2: and has pivoted towards a plant based egg substitute, signaling 214 00:11:24,200 --> 00:11:26,960 Speaker 2: a poor performance of the end product. So it really 215 00:11:26,960 --> 00:11:30,319 Speaker 2: hasn't tantalized the taste buds of consumers who would otherwise 216 00:11:30,480 --> 00:11:32,559 Speaker 2: make them move towards a more sustainable diet. And on 217 00:11:32,640 --> 00:11:36,000 Speaker 2: the flip side, we also have poor performance from controlled 218 00:11:36,040 --> 00:11:40,840 Speaker 2: environment agriculture, so that is growing crops indoors in racks 219 00:11:41,000 --> 00:11:44,600 Speaker 2: scaled high to the ceiling. They're incredibly costly to run. 220 00:11:44,720 --> 00:11:47,080 Speaker 2: They require a lot of energy, ideally that would be 221 00:11:47,080 --> 00:11:49,760 Speaker 2: sourced from renewable energy, but currently connected to the grid. 222 00:11:49,840 --> 00:11:51,960 Speaker 2: They really are a high cost base and they're not 223 00:11:52,040 --> 00:11:55,000 Speaker 2: able to solve the real problems which I mentioned earlier 224 00:11:55,000 --> 00:11:59,240 Speaker 2: in the podcast, being rice, being protein and being fertilizer. 225 00:11:59,520 --> 00:12:01,680 Speaker 2: And that's because they can only grow a really small 226 00:12:01,679 --> 00:12:04,880 Speaker 2: selection of crops, something like a lettuce or a strawberry. 227 00:12:05,040 --> 00:12:07,800 Speaker 2: A company called Plenty went from being a one point 228 00:12:07,840 --> 00:12:12,680 Speaker 2: nine billion dollar valuation to simply double digit million dollar 229 00:12:12,760 --> 00:12:16,680 Speaker 2: company and has pivoted to solely growing strawberries from henceforth. 230 00:12:16,800 --> 00:12:20,160 Speaker 2: They emerged from Chapter eleven bankruptcy around two or three 231 00:12:20,160 --> 00:12:20,560 Speaker 2: months ago. 232 00:12:20,600 --> 00:12:22,720 Speaker 4: Now, so that sort of dream that we often see 233 00:12:22,800 --> 00:12:26,960 Speaker 4: in the futuristic visions of a sustainable future of food 234 00:12:27,160 --> 00:12:31,120 Speaker 4: grown in skyscrapers with the no land footprint is not 235 00:12:31,280 --> 00:12:32,360 Speaker 4: the one that is emerging. 236 00:12:32,440 --> 00:12:32,679 Speaker 1: Is it. 237 00:12:32,960 --> 00:12:36,800 Speaker 2: That's simply not played out. And some nations, those land 238 00:12:36,840 --> 00:12:39,280 Speaker 2: scarce nations, have poured a lot of capital into it, 239 00:12:39,880 --> 00:12:43,080 Speaker 2: so sovereign wealth funds in Singapore, for example, they have 240 00:12:43,280 --> 00:12:45,920 Speaker 2: a thirty x thirty target that is to reach thirty 241 00:12:45,920 --> 00:12:49,760 Speaker 2: percent food security by twenty thirty. These technologies just simply 242 00:12:49,800 --> 00:12:52,400 Speaker 2: haven't scaled, they haven't taken off, they haven't been economical. 243 00:12:52,480 --> 00:12:56,679 Speaker 2: When we're competing against broad expansive open field agriculture. 244 00:12:57,440 --> 00:12:59,280 Speaker 1: I'm going to ask a dumb question about this because 245 00:12:59,320 --> 00:13:01,600 Speaker 1: I mean, I think you've highlighted all the reasons why 246 00:13:01,800 --> 00:13:05,320 Speaker 1: vertical farming doesn't work and why it struggled, But then 247 00:13:05,600 --> 00:13:08,679 Speaker 1: why was at one point this company what was it 248 00:13:08,679 --> 00:13:11,520 Speaker 1: one point nine billion dollar valuation? Is it just the 249 00:13:11,800 --> 00:13:13,800 Speaker 1: entire point of it was just to save space and 250 00:13:13,840 --> 00:13:15,679 Speaker 1: reduce land, Like, what was the point? 251 00:13:15,960 --> 00:13:19,360 Speaker 2: So in terms of controlled environment agriculture, it was touted 252 00:13:19,360 --> 00:13:22,920 Speaker 2: as being a low emissions, low crop input, and space 253 00:13:22,960 --> 00:13:25,400 Speaker 2: efficient solution to growing crops. 254 00:13:25,440 --> 00:13:28,040 Speaker 3: And it just hasn't managed to deliver on that potential 255 00:13:28,120 --> 00:13:28,480 Speaker 3: so far. 256 00:13:28,720 --> 00:13:31,240 Speaker 2: Yeah, and it hasn't managed to deliver on that potential 257 00:13:31,400 --> 00:13:31,760 Speaker 2: so far. 258 00:13:32,000 --> 00:13:34,400 Speaker 4: It was a bit of a shiny object, right of 259 00:13:34,480 --> 00:13:37,559 Speaker 4: venture capital investors, something that sounded like it fixed a 260 00:13:37,559 --> 00:13:41,160 Speaker 4: lot of problems and looked like a novel and exciting 261 00:13:41,200 --> 00:13:44,120 Speaker 4: way to do things. But really it hasn't played out. 262 00:13:44,160 --> 00:13:48,080 Speaker 4: So we're going to need farmers in large fields forever, really, 263 00:13:48,120 --> 00:13:48,439 Speaker 4: aren't we? 264 00:13:48,840 --> 00:13:50,959 Speaker 3: I mean it is kind of cruel in a way. 265 00:13:51,000 --> 00:13:53,760 Speaker 1: The way the narrative has played out is that investment 266 00:13:53,800 --> 00:13:57,240 Speaker 1: in that has ebbed, just as investment in just buying 267 00:13:57,320 --> 00:13:58,080 Speaker 1: land is boot. 268 00:13:58,160 --> 00:14:00,880 Speaker 3: Meaning it seems like there's a vert in there. 269 00:14:00,720 --> 00:14:04,280 Speaker 2: Somewhere absolutely, and that's not to say that buying this 270 00:14:04,440 --> 00:14:07,640 Speaker 2: land is a dirty form of agriculture. We're seeing more 271 00:14:07,720 --> 00:14:11,080 Speaker 2: and more of these investment firms signing up to the 272 00:14:11,120 --> 00:14:14,680 Speaker 2: principles of Responsible Investments the UNPRI. They're also signing up 273 00:14:14,720 --> 00:14:17,559 Speaker 2: to frameworks on how to manage that land more sustainably. 274 00:14:17,640 --> 00:14:20,360 Speaker 2: So they really are bringing a professionalism to farming that 275 00:14:20,440 --> 00:14:23,040 Speaker 2: maybe isn't or hasn't been there conventionally. 276 00:14:23,360 --> 00:14:25,240 Speaker 1: One of the things I wanted to ask you about 277 00:14:25,360 --> 00:14:27,480 Speaker 1: just yeah, you touched on a little bit with eat 278 00:14:27,680 --> 00:14:31,000 Speaker 1: just is the alternative protein sector. 279 00:14:30,880 --> 00:14:32,080 Speaker 3: Plant based meats. 280 00:14:32,440 --> 00:14:34,760 Speaker 1: And this is the topic really close to my heart 281 00:14:34,920 --> 00:14:39,200 Speaker 1: because I'm vegan, was vegetarian actually most of my life, 282 00:14:39,280 --> 00:14:40,920 Speaker 1: and one of the things that I think helped me 283 00:14:40,960 --> 00:14:43,200 Speaker 1: take the leap into veganism was the sort of the 284 00:14:43,200 --> 00:14:46,280 Speaker 1: invention of based meats. So I'm in this like living 285 00:14:46,360 --> 00:14:49,320 Speaker 1: in this personal bubble of like the golden era of 286 00:14:49,360 --> 00:14:51,880 Speaker 1: being a vegetarian or vegan, and then I'm reading these 287 00:14:51,920 --> 00:14:54,560 Speaker 1: headlines and it's not just here that this whole sector 288 00:14:54,640 --> 00:14:57,280 Speaker 1: is failing and sales are sliding. 289 00:14:57,640 --> 00:15:01,920 Speaker 2: So venture capital flows and equity flows into the sector 290 00:15:01,960 --> 00:15:05,320 Speaker 2: have dropped eighty seven percent since their twenty twenty one high. 291 00:15:05,440 --> 00:15:09,320 Speaker 2: But we also have seen a stagnation in growth in 292 00:15:09,360 --> 00:15:11,040 Speaker 2: the sector, and I think a lot of this boils 293 00:15:11,040 --> 00:15:14,120 Speaker 2: down to how many consumers are willing to switch away 294 00:15:14,160 --> 00:15:17,120 Speaker 2: from meat products. What we haven't seen is a vast 295 00:15:17,160 --> 00:15:21,840 Speaker 2: swave of meat eating or flexitarian consumers switching as was 296 00:15:21,880 --> 00:15:25,720 Speaker 2: previously thought to these plant based meat or alternative proteins. 297 00:15:25,800 --> 00:15:28,160 Speaker 4: But is it just that these are not good enough yet? 298 00:15:28,520 --> 00:15:30,760 Speaker 4: They don't taste good enough, they haven't become cheap enough. 299 00:15:31,240 --> 00:15:35,480 Speaker 2: The performance of plant based meats in particular hasn't really 300 00:15:35,760 --> 00:15:38,320 Speaker 2: been good enough to win over the hearts of a 301 00:15:38,400 --> 00:15:41,920 Speaker 2: meat eating consumer. However, we are seeing a shift away 302 00:15:41,960 --> 00:15:45,640 Speaker 2: from beef towards a less emitting protein source, and that 303 00:15:45,720 --> 00:15:48,920 Speaker 2: protein sauce is chicken and fish white meats. 304 00:15:49,160 --> 00:15:53,120 Speaker 4: Alex Is that a conscious move. Are consumers moving away 305 00:15:53,160 --> 00:15:55,720 Speaker 4: from red meat to white meat because they're looking to 306 00:15:55,840 --> 00:15:57,840 Speaker 4: reduce emissions or what's behind that trend? 307 00:15:58,080 --> 00:16:00,400 Speaker 2: So the story is different all over the world, but 308 00:16:00,440 --> 00:16:03,680 Speaker 2: it really boils down to a few things. Firstly, price 309 00:16:04,000 --> 00:16:07,640 Speaker 2: chicken has stayed relatively low cost, and in fact that 310 00:16:07,680 --> 00:16:10,480 Speaker 2: gap is widening when you compare it to beef over time, 311 00:16:10,600 --> 00:16:13,480 Speaker 2: so beef is becoming more expensive and chicken is providing 312 00:16:13,520 --> 00:16:16,200 Speaker 2: a cheaper source of protein for the consumers. The second 313 00:16:16,320 --> 00:16:18,680 Speaker 2: is health it's perceived to be healthier. We see a 314 00:16:18,720 --> 00:16:21,480 Speaker 2: lot of consumers in China and an Asian market switching 315 00:16:21,480 --> 00:16:24,960 Speaker 2: away from pork meat towards chicken or fish. And the 316 00:16:25,000 --> 00:16:28,720 Speaker 2: third is to do with ethics, so particularly consumers in 317 00:16:28,760 --> 00:16:31,120 Speaker 2: Europe switching away from what used to be the pork 318 00:16:31,200 --> 00:16:34,600 Speaker 2: bastion of the world, high levels of pork consumption, away 319 00:16:35,000 --> 00:16:38,440 Speaker 2: from pork and towards either plant based or chicken meats. 320 00:16:38,800 --> 00:16:40,640 Speaker 4: It's one of the most impactful things we do as 321 00:16:40,680 --> 00:16:43,840 Speaker 4: human beings on the planet actually is eating meat, and 322 00:16:44,160 --> 00:16:47,080 Speaker 4: we're still seem to be pretty far away from reducing 323 00:16:47,120 --> 00:16:48,520 Speaker 4: our footprint. There is is. 324 00:16:48,400 --> 00:16:52,920 Speaker 2: That, right, I would say so, the alternatives to conventional 325 00:16:52,960 --> 00:16:56,960 Speaker 2: meat consumption are just not there yet and we haven't 326 00:16:57,000 --> 00:17:00,720 Speaker 2: seen that adoption. As we've previously mentioned, there are an 327 00:17:00,800 --> 00:17:05,280 Speaker 2: emerging class of methane inhibitors that reduces the emissions that 328 00:17:05,720 --> 00:17:09,080 Speaker 2: ruminant animals like cows and sheep have and as they 329 00:17:09,119 --> 00:17:14,200 Speaker 2: digest release These products are being delivered slowly rolled out, 330 00:17:14,240 --> 00:17:17,320 Speaker 2: but they also have had a backlash from consumers. Many 331 00:17:17,320 --> 00:17:19,960 Speaker 2: of you will remember a few months ago a trial 332 00:17:20,000 --> 00:17:24,119 Speaker 2: with a product called Bovia, which was a methane inhibitor 333 00:17:24,359 --> 00:17:26,879 Speaker 2: that was fed to cattle. Now, I won't judge the 334 00:17:26,920 --> 00:17:29,720 Speaker 2: science there, but consumers don't like it when you play 335 00:17:29,720 --> 00:17:32,960 Speaker 2: with their food. The term franken food is thrown around 336 00:17:33,080 --> 00:17:35,720 Speaker 2: quite a lot, and I think the same sort of 337 00:17:36,080 --> 00:17:39,960 Speaker 2: impression is placed upon a lot of the alternative proteins 338 00:17:40,119 --> 00:17:41,160 Speaker 2: that are available today. 339 00:17:41,280 --> 00:17:44,600 Speaker 4: That's when we saw that sort of social media craze 340 00:17:44,680 --> 00:17:46,880 Speaker 4: of people pouring milk down their drains. 341 00:17:47,119 --> 00:17:52,440 Speaker 2: Right, absolutely absolutely backlash the world over for the introduction 342 00:17:52,720 --> 00:17:55,200 Speaker 2: of methane inhibitors in our milk. 343 00:17:55,400 --> 00:17:59,200 Speaker 1: So let's talk about regenitive AG. So that's been talked 344 00:17:59,200 --> 00:18:02,439 Speaker 1: about for years. Funny enough, during the pandemic, me and 345 00:18:02,480 --> 00:18:05,439 Speaker 1: my wife stayed in Italy at a vegan hotel. There 346 00:18:05,400 --> 00:18:08,320 Speaker 1: this brief window where you could go go places. There 347 00:18:08,320 --> 00:18:10,480 Speaker 1: are a few red flags about this place. They also 348 00:18:10,640 --> 00:18:13,359 Speaker 1: said they signed a special contract that none of their 349 00:18:13,480 --> 00:18:16,440 Speaker 1: energy came from nuclear, which, as a power sector guy, 350 00:18:16,480 --> 00:18:19,160 Speaker 1: I was like, there isn't any nuclear energy in Italy anyway. 351 00:18:19,240 --> 00:18:20,960 Speaker 3: But they also made a huge deal. 352 00:18:20,880 --> 00:18:23,840 Speaker 1: About their regenerative ag that they were doing on the farm, 353 00:18:24,040 --> 00:18:28,760 Speaker 1: and it seemed at the time very performative. So what 354 00:18:28,800 --> 00:18:31,560 Speaker 1: real progress has been made that is just beyond the 355 00:18:31,640 --> 00:18:33,760 Speaker 1: talk and the performative aspect of this. 356 00:18:34,359 --> 00:18:36,840 Speaker 2: So we've looked at around one hundred and fifty five 357 00:18:36,920 --> 00:18:40,919 Speaker 2: companies that have either regenitive or sustainable agriculture targets and 358 00:18:41,119 --> 00:18:44,520 Speaker 2: there's an area of around seven point five million hectares 359 00:18:44,560 --> 00:18:48,359 Speaker 2: that are currently being deployed under these regenitive agriculture projects. 360 00:18:48,640 --> 00:18:50,879 Speaker 2: But one thing that we've really got a question is 361 00:18:51,160 --> 00:18:55,080 Speaker 2: what is regentitative agriculture? And that question is really tough 362 00:18:55,320 --> 00:18:59,240 Speaker 2: to understand and to draw consensus upon, because every single 363 00:18:59,240 --> 00:19:02,320 Speaker 2: one of these companies that has a regentive agriculture project 364 00:19:02,440 --> 00:19:05,680 Speaker 2: defines regenitive agriculture differently. Some of them look at it 365 00:19:05,760 --> 00:19:10,520 Speaker 2: as a method of achieving an emissions reduction in their 366 00:19:10,560 --> 00:19:13,560 Speaker 2: carbon accounting. Others look at it as a establishing a 367 00:19:13,560 --> 00:19:16,280 Speaker 2: more resilient supply chain. And one of the crops that 368 00:19:16,280 --> 00:19:20,520 Speaker 2: we see a lot of attention towards from regentiave agriculture 369 00:19:20,520 --> 00:19:24,840 Speaker 2: projects is potatoes, and potatoes are really hard to replace 370 00:19:25,400 --> 00:19:28,440 Speaker 2: in a supply chain should the impacts of climate change 371 00:19:28,440 --> 00:19:31,320 Speaker 2: take hold. And we lose some of their hectes of 372 00:19:31,359 --> 00:19:34,520 Speaker 2: potato crop to drought or to floods, as it may be. 373 00:19:35,200 --> 00:19:39,320 Speaker 1: Right now in twenty twenty five, every podcast around any industry, 374 00:19:39,359 --> 00:19:42,360 Speaker 1: someone asks the question, what about Trump and what about tariffs? 375 00:19:42,520 --> 00:19:44,879 Speaker 1: How are they impacting the thing that you are an 376 00:19:44,960 --> 00:19:48,199 Speaker 1: expert in? So alex that question to you, what is 377 00:19:48,280 --> 00:19:50,200 Speaker 1: your version of this story? 378 00:19:50,600 --> 00:19:53,720 Speaker 2: The picture is ever changing as new tariffs are brought in, 379 00:19:54,000 --> 00:19:57,439 Speaker 2: the amount of tariff is being changed, but essentially we 380 00:19:57,480 --> 00:20:00,600 Speaker 2: can see really strong impacts on the global beef and 381 00:20:00,680 --> 00:20:03,720 Speaker 2: the global soy supply chains. On the soy front, the 382 00:20:03,800 --> 00:20:06,600 Speaker 2: vast majority of US soy goes to China, where it 383 00:20:06,640 --> 00:20:09,840 Speaker 2: is processed. Further, in twenty eighteen, there was a similar tariff, 384 00:20:09,920 --> 00:20:13,360 Speaker 2: albeit lower tariff, put in place on US exports, and 385 00:20:13,760 --> 00:20:19,120 Speaker 2: China switched their suppliers to the Brazilians. Under these new tariffs, 386 00:20:19,359 --> 00:20:22,840 Speaker 2: By our calculations, a large amount of that soy that 387 00:20:23,000 --> 00:20:25,720 Speaker 2: is grown in the US will be left unprocessed. There 388 00:20:25,760 --> 00:20:28,760 Speaker 2: is not enough processing capacity to turn that soy into 389 00:20:28,800 --> 00:20:32,840 Speaker 2: soybean oil and soybean meal. That oil is really important 390 00:20:33,040 --> 00:20:36,879 Speaker 2: for not only feeding us, but also for powering some 391 00:20:36,960 --> 00:20:40,840 Speaker 2: of our renewable fuels, so a disruption in both the 392 00:20:40,880 --> 00:20:43,320 Speaker 2: food and the fuel supply chain, and that meal that 393 00:20:43,400 --> 00:20:46,200 Speaker 2: I mentioned before goes to livestock to help them grow 394 00:20:46,240 --> 00:20:50,720 Speaker 2: on to slaughterable weight. The beef situation is slightly different. 395 00:20:50,800 --> 00:20:54,680 Speaker 2: The US has placed tariffs on Brazil and Australia, who 396 00:20:54,720 --> 00:20:57,960 Speaker 2: are some of the biggest beef exporters too the United States. 397 00:20:58,080 --> 00:21:00,520 Speaker 2: The US herd of beef cattle is actually shrinking at 398 00:21:00,560 --> 00:21:03,480 Speaker 2: this is lowest points since the nineteen seventies, So all 399 00:21:03,480 --> 00:21:07,240 Speaker 2: they are doing is increasing the cost of beef for 400 00:21:07,480 --> 00:21:08,840 Speaker 2: the consumer in the US. 401 00:21:09,240 --> 00:21:11,720 Speaker 4: So familiar story with many of the tariffs, though, isn't 402 00:21:11,720 --> 00:21:15,080 Speaker 4: it where really just the cost of things is likely 403 00:21:15,119 --> 00:21:18,560 Speaker 4: to go up for little domestic benefit, it seems. So 404 00:21:18,920 --> 00:21:22,840 Speaker 4: what are the signs that climate change is already affecting 405 00:21:22,840 --> 00:21:25,199 Speaker 4: the agricultural system and farmers. 406 00:21:25,600 --> 00:21:29,680 Speaker 2: So one of the oldest climate indicators on record, starting 407 00:21:29,720 --> 00:21:34,919 Speaker 2: from the early eight hundreds, is actually the Kyoto cherry 408 00:21:34,920 --> 00:21:38,840 Speaker 2: blossom maturation. So that's when the cherry blossoms in Japan 409 00:21:38,920 --> 00:21:42,560 Speaker 2: are at their peak, and that the average date of 410 00:21:42,880 --> 00:21:46,800 Speaker 2: that occurring has become earlier and earlier and earlier. As 411 00:21:46,800 --> 00:21:50,320 Speaker 2: we've seen the concentration of CO two arriving in the atmosphere. Now, 412 00:21:50,320 --> 00:21:53,199 Speaker 2: what that means is that crops, if they start to 413 00:21:53,280 --> 00:21:57,200 Speaker 2: mature earlier, they're at risk of shock from frosts, they 414 00:21:57,480 --> 00:22:00,359 Speaker 2: may not reach the full yield potential, and this has 415 00:22:00,400 --> 00:22:04,240 Speaker 2: heavy impacts on the quality and the yield of crops. 416 00:22:05,040 --> 00:22:07,280 Speaker 4: So, Alex, what are the good news stories here? 417 00:22:07,480 --> 00:22:08,160 Speaker 3: Well, the good. 418 00:22:08,000 --> 00:22:11,560 Speaker 2: News, I suppose is that farms are becoming more sustainable 419 00:22:11,600 --> 00:22:16,000 Speaker 2: inherently as the economics drives farming decisions. We see that 420 00:22:16,160 --> 00:22:19,600 Speaker 2: farmers are using less fertilizer and less pesticide, which is 421 00:22:19,760 --> 00:22:23,000 Speaker 2: inherently environmentally damaging to grow the same amount of crops. 422 00:22:23,080 --> 00:22:25,680 Speaker 2: So whilst we're increasing the amount of food that we're producing, 423 00:22:25,760 --> 00:22:28,840 Speaker 2: we are on an intensity level using less of these 424 00:22:28,920 --> 00:22:30,120 Speaker 2: synthetic inputs. 425 00:22:30,400 --> 00:22:33,560 Speaker 4: So the agriculture transition is making progress, it's just not 426 00:22:33,640 --> 00:22:37,320 Speaker 4: in the sort of sexier ways that people were hoping. Absolutely, 427 00:22:37,520 --> 00:22:40,119 Speaker 4: it's not in what most people thought were going to 428 00:22:40,160 --> 00:22:43,760 Speaker 4: be the north star of the agriculture transition five or 429 00:22:43,960 --> 00:22:44,560 Speaker 4: so years ago. 430 00:22:44,840 --> 00:22:47,000 Speaker 1: So we found a little ray of sunshine in here 431 00:22:47,119 --> 00:22:49,440 Speaker 1: that there is still progress being made, and I think 432 00:22:49,480 --> 00:22:53,120 Speaker 1: that's a positive note for us to wrap On. Thank 433 00:22:53,160 --> 00:22:56,720 Speaker 1: you Cobad co hosting today, and thank you Alex for 434 00:22:57,040 --> 00:22:59,879 Speaker 1: coming and sharing all of your wisdom on this topic. 435 00:23:00,160 --> 00:23:02,679 Speaker 4: Thanks for having me, Thanks very much for coming to 436 00:23:02,720 --> 00:23:03,520 Speaker 4: talk to us, Alex. 437 00:23:12,400 --> 00:23:15,520 Speaker 1: Today's episode of Switched On was produced by Cam Gray 438 00:23:15,720 --> 00:23:19,439 Speaker 1: with production assistance from Kamala Shelling. Bloomberg NIF is a 439 00:23:19,480 --> 00:23:22,600 Speaker 1: service provided by Bloomberg Finance LP and its affiliates. 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