FAIRR’s report reveals how the COVID-19 crisis has impacted the animal protein industry and analyses the industry’s susceptibility to future shocks and contribution to future pandemic risk. The report recommends plant-based proteins as a cleaner and more efficient substitute to animal protein, with manufacturers and consumers becoming open to this alternative. The report also highlights how 70% of the world’s largest public protein producers are classified as “High Risk” of fostering future zoonotic pandemics.

Exposure to global shocks

COVID-19 exposed how vulnerable the animal protein industry was to supply chain shocks as it forced slaughterhouses and processing facilities to close or reduce capacity, the dumping of unpasteurised milk, and the culling of animals when there was a low consumer demand for meat. Prior to this, producers were already battling several endemic and re-emerging animal diseases, including African Swine Fever (ASF), Swine flu and Avian flu which animals are highly vulnerable to. This was exacerbated by the insufficient mechanisms available for infected animal disposal and how susceptible workers are to being in contact with infected animals and becoming vectors for a potential outbreak.

Driving future pandemics

Not only are live animals susceptible to disease, but they can produce and propagate it as the greatest source of infection. Modern intensive farming methods allow deadly pathogens to mutate and spread as they involve chronic stress, high stocking density, indoor confinement, lowered immunity, and live transportation. With 3 in 4 of all emerging human infectious diseases being zoonotic, livestock workers are a key vector for disease outbreaks being transmitted to the human population. This is further exacerbated by deforestation which forces wildlife to resettle near animal farms with nearly one in three outbreaks and emerging diseases being linked to deforestation.

Looking ahead

Manufacturers are substituting animal-based with plant-based proteins to manage supply chain risk with US plant-based egg producer JUST reporting record sales in China since the COVID-19 outbreak. Despite high prices, more consumers have also chosen plant-based meat substitutes due to COVID-19 disrupting the meat supply chain with rising demand for sustainable pork products in China. Further regulations have been imposed in Europe to prevent zoonotic outbreaks with the banning of live transport, limiting usage of antibiotics, tougher regulations on intensive farming, and higher hygiene standards. The report anticipates that a concerted focus on improving biosecurity will become necessary for this to be effective.

Pandemic ranking

The Pandemic Ranking was created by adjusting the 2019 Coller FAIRR Protein Producer Index to considers 7 ESG risk and opportunity factors among 60 of the world’s largest public protein producers. The greatest risk factor observed was waste and pollution (94% of companies), followed by deforestation and biodiversity (88%) and then antibiotics (77%). Forty-four (of 60) companies with combined revenues of over $207 billion, are deemed “High Risk” (worst performers) by the Pandemic Ranking. Overall, this score informs to investors that the vast majority of companies have yet to meaningfully address pandemic risk.

1. As of June 2020, over 20,000 workers in the US cattle industry have contracted COVID-19, with supply chain failures estimated to cost over $13 billion in the US. Alongside oil, livestock is now listed as one of the two most precarious commodities for investors in 2021.
2. As of May 2020 in the US alone, 70 meat industry workers have died and over 20,000 meat workers across 216 plants have become ill with COVID-19. At that time, COVID-19 outbreaks occurred globally across meat processing plants in US, Ireland, Spain, Australia, Germany, Brazil, and Canada. This has caused supply chain disruptions with slaughterhouses and processing facilities being forced to close or reduce capacity due to outbreaks, social distancing requirements and labour shortages.
3. Three in four emerging infectious diseases in humans are passed on from animals (termed as zoonotic diseases). Infectious disease such as swine flu, avian flu and Nipah virus are increasingly being produced by livestock. 50% of all known zoonotic viruses are found in domesticated animals (concentrated in just 12 species) due to their abundance.
4. Manure, a key infection route for pathogens, is produced in abundance. Intensive livestock production generates 314 million metric tons of waste per year in the US alone. Since, manure is also often used as fertiliser, this increases the likelihood of pathogens being spread by wild animals, such as birds as well as compounding the incidences of contamination of local water bodies.
5. Global antibiotic consumption is forecasted to grow 67% by 2030, fuelled by the growth in intensive livestock farming. In 2015, 70–80% of global antibiotic use was within the livestock industry. Therefore, in the absence of any intervention, by 2050 AMR could kill an estimated 10 million people annually at a cost to the global economy of $60–$100 trillion.
6. If left unchecked, the rise of antimicrobial resistance (AMR) is predicted to kill 10 million people annually by 2050. It has become vital to undertake countermeasures to prevent antibiotic-resistant bacteria (such as the coronavirus) from causing the next public health crisis. Investors are forewarned that animal protein producers and processors will be forced to instigate costly measures (from biosecurity to antibiotic stewardship) to prevent further outbreaks of zoonotic pandemics.
7. The rapid culling and safe disposal of infected animals is critical to the successful containment of an outbreak. A single drop of blood from an acutely infected pig can contain over 50 million African Swine Fever (ASF) virus particles. Therefore, just one particle contaminating water can potentially be enough to transfer the ASF disease.
8. African Swine Fever (ASF) is one of the most prevalent diseases facing pork producers. In 2019, ASF resulted in one quarter of the world’s domestic pigs dying from disease or being culled. The economic costs of ASF globally are running well into the hundreds of billions of dollars, with a recent study estimating the cost of an ASF outbreak in the US at $50 billion.
9. Consumers have become increasingly open to plant-based alternatives as sales are sky-rocketing across many markets around the world (including the US and China). Plant-based substitutes have been able to compete directly on price for the first time as COVID-19 disrupts the animal protein supply chain. It is expected that manufacturers and retailers will increase their use of plant-based proteins to reduce supply chain risks.