WEBVTT - The World's Food Supply Needs to Change 0:00:13.880 --> 0:00:17.160 Hello, and welcome to What Goes Up, a weekly markets podcast. 0:00:17.400 --> 0:00:20.320 My name is Mike Reagan. I'm a senior editor at Bloomberg. 0:00:19.920 --> 0:00:22.680 And I'm Moldona Hier, Across asset reporter with Bloomberg. 0:00:22.880 --> 0:00:25.279 And this week on the show, Well, we hope you 0:00:25.360 --> 0:00:28.080 had a good meal before you hit play on this podcast, 0:00:28.200 --> 0:00:31.880 because we're going to be talking about food a lot 0:00:32.000 --> 0:00:36.360 about food, but namely the opportunities and risks on the 0:00:36.400 --> 0:00:40.800 investing table amid a swiftly changing global food supply chain. 0:00:41.440 --> 0:00:44.360 Our guest is an executive at a major asset management 0:00:44.360 --> 0:00:47.519 firm who recently helped write an in depth report on 0:00:47.640 --> 0:00:51.680 this exact subject. But felt before we bring them in, 0:00:52.440 --> 0:00:54.160 I have to ask the big buzz I think on 0:00:54.200 --> 0:00:57.680 this topic lately cultivated. 0:00:57.040 --> 0:00:59.920 Meat, cultivated meat, grown meat. 0:01:00.200 --> 0:01:01.120 You're not a meat eater? 0:01:01.400 --> 0:01:04.720 Correct, No, I'm not, and just the idea really, but 0:01:04.880 --> 0:01:07.119 it excites you like well, I would feel like if 0:01:07.160 --> 0:01:09.560 I were you, it would excite me. Has anybody had 0:01:09.640 --> 0:01:10.399 lab grown meat? 0:01:10.720 --> 0:01:14.039 Someone somewhere has one person? And I think so maybe 0:01:14.040 --> 0:01:15.759 our guest knows the real answer. 0:01:15.880 --> 0:01:17.320 Maybe he has had it. 0:01:17.560 --> 0:01:18.600 We'll see. 0:01:18.880 --> 0:01:21.240 I want to bring him in time or hightt he's 0:01:21.280 --> 0:01:24.039 the chief operating officer for Pigeum. Thank you so much 0:01:24.080 --> 0:01:24.800 for joining us. 0:01:25.080 --> 0:01:26.119 It's a pleasure to be here. 0:01:26.200 --> 0:01:27.400 Have you had lab grown meat? 0:01:27.800 --> 0:01:31.440 I have not had lab grown meat, but very recently, 0:01:31.520 --> 0:01:35.560 the FTA just announced that two companies are allowed to 0:01:35.640 --> 0:01:40.520 start producing lab grown meat in the US and it's safe. 0:01:40.600 --> 0:01:42.679 Until then, the only place you could get lab grown 0:01:42.680 --> 0:01:45.840 meat was Singapore, where they introduced chicken nuggets a couple 0:01:45.880 --> 0:01:48.800 of years ago. So Mike, you may be able to 0:01:48.840 --> 0:01:50.680 have your wish sooner than you think. 0:01:50.760 --> 0:01:53.680 But timer from reading your report, I don't get the 0:01:53.720 --> 0:01:56.160 sense that you and your team are very bullish on 0:01:56.200 --> 0:01:59.280 the concept of cultivated cultivated meat. Talk to us a 0:01:59.280 --> 0:02:02.320 little bit about where you see that space going. 0:02:02.400 --> 0:02:04.280 He said, it's more sizzle than steak. 0:02:05.280 --> 0:02:05.960 That's pretty good. 0:02:06.040 --> 0:02:06.960 Yeah, that's really good. 0:02:07.280 --> 0:02:11.240 That is a podcast worthy pun. Yeah, their whole variety. 0:02:11.360 --> 0:02:13.240 I mean, there are lots of areas we excited about 0:02:13.280 --> 0:02:17.160 investing in, but they're definitely a bit like bitcoin and 0:02:17.720 --> 0:02:20.840 other cryptocurrencies in the crypto space, there are definitely some 0:02:21.040 --> 0:02:25.440 bubbles in the food chain as well, and cultivated meat 0:02:25.480 --> 0:02:28.960 is maybe not a bubble. I think our main issue 0:02:29.000 --> 0:02:32.280 as an investor is it's too early to invest. There 0:02:32.280 --> 0:02:35.200 are literally hundreds of companies around the world that are 0:02:35.200 --> 0:02:38.079 trying to do different kinds of cultivated meat, and it's 0:02:38.120 --> 0:02:40.880 pretty much impossible at this stage to know which one's 0:02:40.919 --> 0:02:43.800 going to win and which one's going to lose. So 0:02:43.840 --> 0:02:46.160 we would say even as a venture capitalist, it's too 0:02:46.160 --> 0:02:49.760 early to go in. There will be some winners over time. 0:02:50.120 --> 0:02:52.040 They're the ones who are going to solve the scale problem. 0:02:52.080 --> 0:02:54.480 It is just so expensive to get that chicken nugget 0:02:54.560 --> 0:02:57.839 or that beef steak cultivated at this point that it's 0:02:57.919 --> 0:03:00.120 just not feasible for it to become a mainstream in 0:03:00.200 --> 0:03:01.360 food item around the world. 0:03:01.400 --> 0:03:04.480 It actually costs some multiple of the real thing at 0:03:04.480 --> 0:03:05.919 this point right way more. 0:03:06.000 --> 0:03:08.240 And the only place where we see progress at this 0:03:08.280 --> 0:03:10.920 point is actually not in that actual finish good where 0:03:10.960 --> 0:03:13.440 you will want those charm marks on your steak and 0:03:13.480 --> 0:03:15.800 you'll want all that flavor, and you won't get that 0:03:15.880 --> 0:03:18.400 in cultivated meat yet. But they are taking things like 0:03:18.919 --> 0:03:22.680 egg whites which go into cakes and pastries or way, 0:03:22.800 --> 0:03:25.440 which is part of how they make yogurt in Israel 0:03:25.520 --> 0:03:28.679 and other places, and that's where cultivated versions of those 0:03:28.720 --> 0:03:31.480 products could be could get cheaper, quicker. So that's why 0:03:31.520 --> 0:03:34.000 we're keeping an eye on first. That's where the first 0:03:34.040 --> 0:03:37.360 investment opportunities will arise. But it's too early. It's not 0:03:37.400 --> 0:03:39.480 a bad opportunity. You just don't want to be ten 0:03:39.560 --> 0:03:40.760 years too early to something. 0:03:41.240 --> 0:03:43.120 I'm already hungry with ol donna. 0:03:42.760 --> 0:03:46.320 I've had the eggless mayonnaise or whatever. It's pretty good, 0:03:46.520 --> 0:03:49.680 is it. Yeah? I know that's slightly different, but you know, 0:03:50.120 --> 0:03:53.520 I can see trends evolving from all of the you know, 0:03:53.600 --> 0:03:54.280 different branches. 0:03:54.480 --> 0:03:57.400 There's a lot of changes in how consumers are behaving 0:03:57.440 --> 0:03:59.360 around the world, and that's actually one of the big 0:03:59.400 --> 0:04:03.720 drivers customent opportunities, including things that are more humane and 0:04:03.800 --> 0:04:06.520 things that are more healthy. So eggless mail would definitely 0:04:06.560 --> 0:04:07.480 fit that category. 0:04:07.520 --> 0:04:07.760 Well. 0:04:08.200 --> 0:04:10.920 Before we talk about all of this and the investment implications, 0:04:10.960 --> 0:04:12.880 I actually want to ask you what made you look 0:04:13.000 --> 0:04:16.360 into food as a topic, especially an investment topic. 0:04:17.000 --> 0:04:19.400 I mean, beyond the fact that I'm a big foodie. 0:04:19.440 --> 0:04:23.240 The reasons we as PGM went into this were a couple. 0:04:23.720 --> 0:04:28.200 We think, first of all, that food is not just 0:04:28.240 --> 0:04:31.679 ten percent of GDP, but forty percent of the labor force. 0:04:31.920 --> 0:04:34.080 So a lot of people work in this industry, and 0:04:34.120 --> 0:04:38.120 we're defining food as from farm to fork and everything 0:04:38.160 --> 0:04:41.800 in between, processing, packaging, preparing the seeds all the way 0:04:41.839 --> 0:04:44.479 to kind of end retail. So it's a big part 0:04:44.520 --> 0:04:46.159 of the labor force, and there's been a lot of 0:04:46.160 --> 0:04:49.560 focus on labor and inflation and so on. So that 0:04:49.680 --> 0:04:53.200 was one driver. But the second one to really write 0:04:53.240 --> 0:04:56.560 this report and to think about its investment implications was 0:04:57.320 --> 0:05:00.600 that we think food is where the energy and this 0:05:00.640 --> 0:05:03.760 whole talk about energy transition was about ten years ago. 0:05:03.960 --> 0:05:06.760 We're like ten years behind in the thinking and it's 0:05:06.760 --> 0:05:09.200 going to catch up because the current food system is 0:05:09.240 --> 0:05:12.080 simply not fit for purpose. It is not going to 0:05:12.120 --> 0:05:14.000 work for our planet. It's not going to work for 0:05:14.040 --> 0:05:16.800 our consumption needs for a variety of reasons that we 0:05:16.800 --> 0:05:19.680 can get into, and that debate on how do we 0:05:19.760 --> 0:05:22.359 transition this, even if it takes twenty thirty years to 0:05:22.480 --> 0:05:25.160 the new food system of the future, has happened their 0:05:25.200 --> 0:05:28.599 carbon transition funds, there's renewable energy, there are opportunities, there's 0:05:28.640 --> 0:05:31.200 Inflation Reduction Act and lots of money going there. It 0:05:31.279 --> 0:05:34.359 hasn't happened to food yet, but we think it's about to. 0:05:34.520 --> 0:05:36.320 And that's why we thought it was an interesting time 0:05:36.360 --> 0:05:37.000 to write about it. 0:05:37.080 --> 0:05:40.159 Yeah, absolutely fascinating topic, and I wonder if that making 0:05:40.240 --> 0:05:43.360 that transition. It's one thing to get people to stop 0:05:43.640 --> 0:05:46.880 driving gasoline cars if you can give them an electric 0:05:46.920 --> 0:05:50.599 car that's just as fast, just as reliable. But food, 0:05:50.640 --> 0:05:52.760 I feel like will be a little bit trickier. And 0:05:53.160 --> 0:05:55.919 one pustion of this report that really caught my interest 0:05:56.320 --> 0:05:59.960 was you talk about when a society becomes more app 0:06:00.400 --> 0:06:04.640 when per capet income goes up, people's diets change, and 0:06:04.880 --> 0:06:06.520 I've found that fascinating. Can you talk to us a 0:06:06.560 --> 0:06:09.479 little bit about what changes in a diet as a 0:06:09.560 --> 0:06:12.800 society sort of gains more income. Yeah. 0:06:12.920 --> 0:06:15.360 Historically, the main reason we needed more food for the 0:06:15.400 --> 0:06:17.400 span it was that there were just more people on it. 0:06:17.480 --> 0:06:22.120 Population grows, everybody needs galleries, more food has to be created. 0:06:22.400 --> 0:06:25.200 But an important shift is happening in one you hit mic, 0:06:25.240 --> 0:06:29.200 which is now we have as perhaps an increasing influence 0:06:29.279 --> 0:06:33.000 is the fact that particularly Asia is developing a new 0:06:33.080 --> 0:06:36.080 emerging middle class and they have the same wants and 0:06:36.160 --> 0:06:40.240 needs and desires as people in develop markets do. And 0:06:40.320 --> 0:06:44.080 that means a not just more calories, but more protein 0:06:44.279 --> 0:06:47.159 and more calories that are increasingly converging with what we 0:06:47.200 --> 0:06:50.640 call the Western diet. So there's more more meat in it, 0:06:50.680 --> 0:06:53.919 there's more chicken in it, there's more more pork in 0:06:54.000 --> 0:06:57.520 that diet. And those are galleries that need to be exported. 0:06:58.120 --> 0:07:00.560 You can't just all get them in via Knam or 0:07:00.600 --> 0:07:04.240 in Thailand or in China. There's much more export supply chains, 0:07:04.279 --> 0:07:07.240 ironically where everybody's trying to simplify them. After COVID are 0:07:07.240 --> 0:07:10.200 going to get more complicated because people want the same 0:07:10.240 --> 0:07:12.360 food in more and more countries of the world rather 0:07:12.400 --> 0:07:15.640 than just the local food, and be that food itself 0:07:16.000 --> 0:07:19.040 has a bigger climate footprint because of all the methane 0:07:19.080 --> 0:07:22.000 and greenhouse gas emissions that come from the farming system, 0:07:22.320 --> 0:07:24.600 and now more people want livestock, which is the key 0:07:24.640 --> 0:07:28.680 creator of greenhouse gases, and see it means much more 0:07:28.680 --> 0:07:32.400 pressures on the governments in these countries to provide the resources, 0:07:32.440 --> 0:07:34.920 to provide the infrastructure so that people can get these 0:07:35.000 --> 0:07:38.640 new forms of Western diets that are frankly maybe a 0:07:38.640 --> 0:07:41.840 little less healthy for them as well definitely more costly, 0:07:42.200 --> 0:07:45.240 require much more importing of things from around the world 0:07:45.320 --> 0:07:46.000 than you did before. 0:07:46.000 --> 0:07:47.680 So it's a pretty radical change. 0:07:48.360 --> 0:07:50.640 And finally it does mean the food system doesn't just 0:07:50.720 --> 0:07:53.920 need to cope with more population, it needs to provide 0:07:54.000 --> 0:07:56.640 many more calories even to each person on the planet. 0:07:58.080 --> 0:08:00.600 So you have all of these different fine one of 0:08:00.600 --> 0:08:03.000 them is that climate change is causing a twelve percent 0:08:03.040 --> 0:08:05.640 of climb and crop yields. So this is just I 0:08:05.680 --> 0:08:08.240 make this point to show that there's really a lot 0:08:08.280 --> 0:08:10.960 of geopolitical implications for this as well. 0:08:11.040 --> 0:08:15.560 Right, Yeah, So the climate interlinkage is actually quite interesting 0:08:15.640 --> 0:08:18.560 and complex because it goes both ways. First of all, 0:08:18.800 --> 0:08:22.280 the fact that climate is changing is changing our food 0:08:22.600 --> 0:08:25.440 supply chains. You know, you have less fish in the 0:08:25.480 --> 0:08:28.720 ocean when oceans are warming up. You have new kinds 0:08:28.800 --> 0:08:33.680 of fungi. Even if we haven't seen the HBO TV. 0:08:33.520 --> 0:08:35.679 Series watching it right now, it's so scary. 0:08:35.840 --> 0:08:38.839 Then new kinds of fungi, the new kinds of insects, 0:08:38.880 --> 0:08:43.640 and that require new pesticides. Because of warming climate change 0:08:44.160 --> 0:08:47.320 and with heat, it's harder for labor to work in 0:08:47.360 --> 0:08:49.880 conditions in many kind of parts of the world where 0:08:49.920 --> 0:08:53.560 you do have manual labor, eighty percent of Indian farms, 0:08:53.559 --> 0:08:57.199 for example, and crop yields have declined. So, first of all, 0:08:57.240 --> 0:08:59.560 you've got this effect from a change in climate. A 0:08:59.600 --> 0:09:04.000 more stream climate, reduces crop yields, creates more variability, adds 0:09:04.040 --> 0:09:07.080 new threats and risks. And then second you've got the 0:09:07.120 --> 0:09:09.439 fact that the food system as we have it today 0:09:09.679 --> 0:09:12.920 it self changes the climate. Something like thirty percent of 0:09:12.960 --> 0:09:16.600 greenhouse gas emissions which cause global heating come from the 0:09:16.640 --> 0:09:20.920 food system. Seventy percent of freshwater consumption. Is not all 0:09:20.960 --> 0:09:23.560 of us drinking waters to you know, have our two 0:09:23.559 --> 0:09:26.200 to six liters a day, but it is because the 0:09:26.240 --> 0:09:29.120 food system needs it to grow crops and so on 0:09:29.200 --> 0:09:32.079 and so forth. So you've got a very complicated inter 0:09:32.160 --> 0:09:36.160 relationship and frankly, it's one that's unsustainable and need some 0:09:36.240 --> 0:09:39.080 new ways to thinking about food to create a food 0:09:39.080 --> 0:09:40.920 system that can meet our needs for the future. 0:09:41.480 --> 0:09:43.400 So talk to us about some of the new ways 0:09:43.440 --> 0:09:46.760 what's on the horizon that will alleviate some of these 0:09:46.760 --> 0:09:47.880 issues that you're talking about. 0:09:48.240 --> 0:09:52.480 So one that comes to mind is how agricultures change 0:09:52.559 --> 0:09:56.800 what we call ag tech, And there's precision agriculture, which 0:09:56.840 --> 0:10:00.040 is about how can you really take sensors and and 0:10:00.360 --> 0:10:04.600 data from satellites and information on what's happening in the 0:10:04.720 --> 0:10:09.080 roots of crops and make that available to farmers around 0:10:09.160 --> 0:10:12.160 the world so that they can grow crops more quickly, 0:10:12.320 --> 0:10:15.680 more productively at a higher level. Frankly, there hasn't really 0:10:15.720 --> 0:10:18.840 been a revolution outside of the US and Latin America. 0:10:18.880 --> 0:10:23.320 So in the big grain baskets of Ukraine and Asia 0:10:23.360 --> 0:10:26.760 and Africa since the Green Revolution of the nineteen sixties, 0:10:27.080 --> 0:10:29.160 that was when a lot of new seeds were introduced. 0:10:29.200 --> 0:10:30.800 As long as you had a lot of irrigation, you 0:10:30.840 --> 0:10:32.800 could really raise your crop output. 0:10:33.040 --> 0:10:34.559 But in those parts of the world you. 0:10:34.520 --> 0:10:37.880 Still have very manual, small farm holdings, and there really 0:10:37.920 --> 0:10:41.640 hasn't been another revolution. The mechanization hasn't happened, and this 0:10:41.720 --> 0:10:44.960 next generation technology hasn't come there. So you now have 0:10:45.040 --> 0:10:48.280 this sort of world where US and Latin American farms 0:10:48.280 --> 0:10:52.640 are taking all this new precision agriculture. You have seed throwing, 0:10:52.720 --> 0:10:55.800 you have plantation, you have knowledge about when you need 0:10:55.840 --> 0:10:59.200 to water, plants available at the fingertips of farmers in 0:10:59.240 --> 0:11:02.880 these markets. And then you've got this like massive gulf 0:11:02.960 --> 0:11:07.080 and another universe where things are still very basic. It's 0:11:07.200 --> 0:11:10.640 manu labor. They may be like bullock drawn guards that 0:11:10.679 --> 0:11:14.040 are kind of harvesting fields, and there is where there's 0:11:14.080 --> 0:11:17.080 a massive opportunity to take all this data, take all 0:11:17.120 --> 0:11:20.040 this information, get in on mobile phones because people don't 0:11:20.080 --> 0:11:25.000 have fancy computers in emerging markets, and really revolutionize agriculture 0:11:25.040 --> 0:11:27.199 and create much more food and galleries for the world. 0:11:28.120 --> 0:11:30.760 Okay, so you said investing in the food system provides 0:11:30.800 --> 0:11:34.320 opportunities for investors to further ESG goals and have a 0:11:34.320 --> 0:11:38.000 measurable impact. So maybe can you talk about the ESG 0:11:38.160 --> 0:11:38.880 aspect of this. 0:11:40.160 --> 0:11:40.439 Sure. 0:11:40.559 --> 0:11:44.240 So again, it's a great analogy to energy ten years ago, 0:11:44.720 --> 0:11:47.240 where the first sort of reaction to energy was we're 0:11:47.240 --> 0:11:49.080 going to stay away from the oil and gas sect 0:11:49.120 --> 0:11:52.520 and we're just going to focus on solar and renewables 0:11:52.559 --> 0:11:56.520 and hydro electrics. And then it became clear that solar 0:11:56.600 --> 0:11:59.720 and wind and hydrop on its own wasn't going to 0:11:59.720 --> 0:12:02.760 meet our need for the next twenty thirty forty years, 0:12:02.960 --> 0:12:05.800 and so the carbon transition required investors not to just 0:12:05.880 --> 0:12:10.479 separate and disengage from all the oil and gas producers, 0:12:10.880 --> 0:12:14.440 but find what I like to call kind of the 0:12:14.440 --> 0:12:17.280 the not the greenest of the green only, but stay 0:12:17.280 --> 0:12:19.440 away from the brownest of the brown and kind of 0:12:19.440 --> 0:12:24.320 find the in between. Khaki renewable and fuel providers, including 0:12:24.400 --> 0:12:27.280 Shell and BP and the big companies, to encourage them 0:12:27.280 --> 0:12:32.240 to make the transition. And the opportunity for the ESG 0:12:32.679 --> 0:12:36.840 investor is not to move away from beef, not to 0:12:36.920 --> 0:12:41.040 move away from livestock cultivation, but recognize that the livelihoods 0:12:41.080 --> 0:12:44.040 of billions of people around the world and the calorie 0:12:44.040 --> 0:12:46.800 needs of a rising Asia that does need its middle 0:12:46.800 --> 0:12:49.840 class to be fed, requires that for a while, we 0:12:49.960 --> 0:12:54.240 will need all these forms of production to be maximized. 0:12:54.520 --> 0:12:57.160 But find better ways of doing that, find greener ways 0:12:57.160 --> 0:13:01.200 of doing that. So engage rather than disage, but really 0:13:01.280 --> 0:13:04.400 find Okay, if they're nitrogen visk fertilizers, which are not 0:13:04.440 --> 0:13:07.680 particularly good for the environment, what's the next best option. 0:13:08.400 --> 0:13:11.040 If somebody is using up too much water for their 0:13:11.040 --> 0:13:13.840 farmland because they don't have modern technology, how do we 0:13:13.880 --> 0:13:17.640 get modern technology there? And that requires ESG to engage 0:13:17.640 --> 0:13:20.440 in all these sectors, not stay away. Another great example 0:13:20.520 --> 0:13:25.079 is packaging, Like you still need packaging. People in developing 0:13:25.120 --> 0:13:28.840 countries in emerging frontier markets want their food to be 0:13:28.880 --> 0:13:31.320 as safe as we have in the US, and to 0:13:31.400 --> 0:13:34.400 do that you need various kinds of safe modern packaging. 0:13:34.640 --> 0:13:37.679 How do you invest in that in greener packaging, less packaging, 0:13:37.960 --> 0:13:40.280 not withdraw from the sector. So we think there's a 0:13:40.360 --> 0:13:43.000 huge role for the ESG sector, and I would say 0:13:43.080 --> 0:13:45.760 even bigger data gap than exists in the energy world. 0:13:45.800 --> 0:13:48.560 There's very little data on what's good what's bad. We 0:13:48.679 --> 0:13:51.880 all confused as consumers. Investors are equally confused because the 0:13:51.920 --> 0:13:54.920 data doesn't exist, and we really need to ask all 0:13:54.960 --> 0:13:58.000 the food companies to start providing the same data that 0:13:58.040 --> 0:14:00.800 the energy sector is now providing that people can make 0:14:00.800 --> 0:14:04.320 informed decisions and investors can make informed decisions on ESG good. 0:14:05.040 --> 0:14:07.520 I want to get back to that notion of geopolitics 0:14:07.640 --> 0:14:11.480 as well, and obviously, from time to time, food security 0:14:11.520 --> 0:14:13.959 can be a major geopolitical issue, you know, I'm thinking 0:14:14.000 --> 0:14:17.480 of the Arab Spring a decade ago, even just more 0:14:17.520 --> 0:14:22.160 recently with the war in Ukraine. Ukraine obviously a major 0:14:22.160 --> 0:14:24.920 grain producer and there were all sorts of questions about 0:14:25.040 --> 0:14:29.479 supplies from Ukraine. Do you see this sort of geopolitical 0:14:29.960 --> 0:14:33.800 deglobalization that's happening in a lot of industries. Is that 0:14:33.840 --> 0:14:37.080 going to hit the food the global food industry as well, 0:14:37.200 --> 0:14:40.120 or is this sort of hunger for meat and protein 0:14:40.280 --> 0:14:43.360 enough to allow the world to kind of stick closer 0:14:43.400 --> 0:14:46.760 together when it comes to food, if not semiconductors and 0:14:46.800 --> 0:14:49.040 other industries. You know, how do you see it going 0:14:49.520 --> 0:14:52.720 as far as geopolitics and food is Is it going 0:14:52.760 --> 0:14:55.440 to be a local market more so, or is there 0:14:55.760 --> 0:15:00.920 potential for sort of multinational dominance from some multi na corporations. 0:15:01.880 --> 0:15:03.960 So maybe a good chance to step back, and I'd 0:15:04.000 --> 0:15:07.560 say we found four reasons why investors should care about 0:15:07.560 --> 0:15:10.800 this food system, even if they're not foodies. And the 0:15:10.840 --> 0:15:12.960 first one is if they care about ESG. 0:15:12.760 --> 0:15:14.000 And many, many, many do. 0:15:14.680 --> 0:15:17.640 There's a real connection between climate change and the food 0:15:17.680 --> 0:15:20.080 system and their ways to help make it a better 0:15:20.120 --> 0:15:25.240 food system. The second factor was simply the incredible investment 0:15:25.280 --> 0:15:28.360 opportunities in the food sector, and we can talk about 0:15:28.360 --> 0:15:32.120 a few of them that investors, regardless of their motivations, 0:15:32.120 --> 0:15:34.480 may want to capture the risk return opportunities that are 0:15:34.480 --> 0:15:37.840 available to them. There The third, which we haven't talked 0:15:37.840 --> 0:15:41.000 about yet, is just how inextricably linked food prices and 0:15:41.040 --> 0:15:44.240 inflation have become and therefore food supply and food demand, 0:15:44.240 --> 0:15:46.680 what it means for food prices and therefore what it 0:15:46.720 --> 0:15:48.960 means for inflation and all the headlines and all the 0:15:49.000 --> 0:15:52.360 monetary policy decisions as you try and bring back inflation 0:15:52.520 --> 0:15:55.320 in Europe, in the US and many countries around the world, 0:15:55.880 --> 0:15:58.320 and you've got to figure out the food equation piece 0:15:58.360 --> 0:16:00.760 of that. And the fourth is the one you mentioned, Mike, 0:16:00.800 --> 0:16:04.200 which is if you want to understand geopolitics, both within 0:16:04.240 --> 0:16:07.400 a country and between countries, you've got to understand food 0:16:07.440 --> 0:16:10.720 because it's such a sort of primal important necessity that 0:16:10.840 --> 0:16:15.880 everybody wants, and across borders, it's driven things. I think 0:16:15.920 --> 0:16:18.720 it's come to like for two reasons. One, COVID and 0:16:18.840 --> 0:16:22.080 everybody recognized that their food supply chains were too scattered 0:16:22.120 --> 0:16:25.560 and too far away. And since COVID, I think food 0:16:25.600 --> 0:16:30.239 security has become national security. And you've seen, for example, 0:16:30.520 --> 0:16:36.160 in Congress lots of discussions around, for example, should Chinese 0:16:36.520 --> 0:16:41.440 companies own US agricultural land, And that same debate is 0:16:41.480 --> 0:16:44.920 being echoed around Latin America and Africa and Asia and 0:16:44.960 --> 0:16:48.160 other parts where they're Chinese owners of the land system. 0:16:48.920 --> 0:16:51.840 And then you're seeing it also playing out domestically. You 0:16:51.880 --> 0:16:53.880 see it in Peru, you see it in India, you 0:16:53.920 --> 0:16:57.360 see it in France, where farmers are a very important lobby, 0:16:57.920 --> 0:17:01.320 and when you hit farms cities, which are massive in 0:17:01.360 --> 0:17:04.480 some of these countries, you really get a massive political reaction. 0:17:04.920 --> 0:17:09.080 So it's a big domestic stabilizing or destabilizing food potatoes 0:17:09.080 --> 0:17:11.280 go up twenty percent in India, you could have a 0:17:11.320 --> 0:17:14.120 new government at your hands, so it really makes a difference. 0:17:14.520 --> 0:17:17.760 And then geopolitically, I think between COVID and Ukraine, there's 0:17:17.760 --> 0:17:20.320 been a recognition that we need to figure out where 0:17:20.320 --> 0:17:22.560 these supply chains are because we've got to get food 0:17:22.560 --> 0:17:27.320 security for our own populations. 0:17:30.920 --> 0:17:34.240 What is it about the food space as an investment topic? 0:17:34.400 --> 0:17:38.159 Is it that there are these opportunities there or is 0:17:38.200 --> 0:17:40.760 it that it's a space that not very many investors 0:17:40.800 --> 0:17:43.639 have been thinking about. Hence you can maybe find some 0:17:44.400 --> 0:17:47.720 hidden companies or investment opportunities. 0:17:47.880 --> 0:17:49.640 It's probably a little bit of both. 0:17:49.640 --> 0:17:52.840 Fieldane and I think they're definitely opportunities and I think 0:17:53.000 --> 0:17:56.960 compared to certain other sectors that probably underrecognized and underappreciated, 0:17:57.000 --> 0:17:59.159 which is one of the reasons Pijeum wrote this report. 0:17:59.600 --> 0:18:02.960 And the unique ability because we have a big realistic 0:18:03.000 --> 0:18:06.240 team private credit, we do fundamental equity, we do bonds, 0:18:06.520 --> 0:18:08.399 so we kind of approach the topic from four to 0:18:08.400 --> 0:18:12.800 five different anglesing where's the opportunity. So, for example, one 0:18:12.800 --> 0:18:16.159 opportunity is cold storage. Everybody thinks of real estate and 0:18:16.200 --> 0:18:18.200 the first thing that comes to mind is offices, and 0:18:18.520 --> 0:18:20.720 nobody is going to offices any longer in the US 0:18:20.760 --> 0:18:23.399 and Europe, and there's a crisis in the office sector, 0:18:23.480 --> 0:18:26.159 and I think the are pressure is there. But cold 0:18:26.200 --> 0:18:30.159 storage and the logistics and distribution that you need around 0:18:30.160 --> 0:18:33.840 cold storage is a very significant opportunity with very high 0:18:33.920 --> 0:18:37.760 growth rates in the real estate sector, that entire ecosystem 0:18:37.840 --> 0:18:41.280 of real assets and then the storage for them is 0:18:41.280 --> 0:18:44.040 a big opportunity. And it's really linked to the fact 0:18:44.119 --> 0:18:48.040 that forty percent of food around the world is just wasted. 0:18:48.640 --> 0:18:51.680 In the US, in Europe, it's wasted at the end 0:18:51.680 --> 0:18:53.760 the end consumers all of us are probably not as 0:18:53.760 --> 0:18:57.080 efficient with food as we should be, and in emerging 0:18:57.119 --> 0:19:00.359 in frontier markets, it's all happening in production. Getting it 0:19:00.359 --> 0:19:02.840 from the farm to the retail storefront is where you 0:19:02.880 --> 0:19:05.720 lose all the food, and cold storage can absolutely be 0:19:05.760 --> 0:19:07.840 critical in changing that. So we see that as very 0:19:07.920 --> 0:19:11.320 much as a global opportunity. On the other end of 0:19:11.359 --> 0:19:15.560 the spectrum, for debt holders, for bonds. There's some really 0:19:15.640 --> 0:19:19.960 safe spaces. The consumption of energy, drinks and alcohol in 0:19:20.480 --> 0:19:24.399 Kansas going up. You've seen all those apple sauce and 0:19:24.480 --> 0:19:27.760 baby food things, and those pouchers that are openable and sealable, 0:19:28.200 --> 0:19:32.359 so plastic manufacturers of these fairly specialized food equipments that 0:19:32.440 --> 0:19:35.439 you really can't get other people to make very quickly 0:19:35.680 --> 0:19:39.080 are a very safe place to be. Another good example 0:19:39.240 --> 0:19:41.239 of a safe place to be where there's lots of 0:19:41.240 --> 0:19:45.680 long term opportunity is all the franchise holders in developing countries, 0:19:45.760 --> 0:19:50.320 the pepsicola butlers, the people who are making well recognized 0:19:50.320 --> 0:19:54.280 foods and big emerging markets. Everybody's gearing towards them that 0:19:54.400 --> 0:19:57.920 don't want to take a risk with smaller, less known brands. 0:19:58.320 --> 0:20:00.720 And then we started this discussion with meat, and it's 0:20:00.720 --> 0:20:03.840 probably worth mentioning it again again. As a dethold, you're 0:20:03.840 --> 0:20:06.120 not going to get like equity like returns. Don't look 0:20:06.119 --> 0:20:09.240 for cryptocurrency type returns, which by the way, don't exist 0:20:09.240 --> 0:20:10.080 in cryptocurrency. 0:20:10.119 --> 0:20:11.320 Don't look for them. Heyah. 0:20:11.520 --> 0:20:16.040 But in meat production and the more humane, the more 0:20:16.280 --> 0:20:20.040 esg friendly end of meat production, there's definitely another opportunity 0:20:20.080 --> 0:20:23.160 because we've seen with plant based meats. If somebodep talked 0:20:23.200 --> 0:20:26.960 about impossible burger, we've seen with cultivated meats at the 0:20:27.000 --> 0:20:30.200 beginning of this discussion, they're either not going to succeed 0:20:30.280 --> 0:20:34.199 based on demand and appetite, or they're going to be 0:20:34.200 --> 0:20:37.040 a long way away, and therefore these core opportunities in 0:20:37.320 --> 0:20:38.399 those sectors exist. 0:20:39.320 --> 0:20:42.040 Yeah, there was so much hype about plant based meat 0:20:42.119 --> 0:20:44.080 for a while. They're impossible burgers. 0:20:44.320 --> 0:20:46.200 I like them, do you? Yeah? 0:20:46.400 --> 0:20:48.119 I think you're in the minority, though, I don't think 0:20:48.119 --> 0:20:50.679 they're really really touching on it. Seems like for a 0:20:50.680 --> 0:20:52.960 while everyone was willing to try it. You know, the 0:20:53.720 --> 0:20:56.800 whopper had an impossible whopper. What are you supposed to 0:20:57.400 --> 0:21:00.399 happen there time? Or is it? Are they not quite 0:21:00.840 --> 0:21:04.679 there yet where regular meat eaters will swap in an 0:21:04.680 --> 0:21:08.480 impossible burger? What is sort of the headwind to plant 0:21:08.560 --> 0:21:11.720