Livestock’s ‘race to the bottom’ has exposed it to coronavirus shocks

Robeco’s Peter van der Werf said research from Coller FAIRR has exposed 'the fundamental weaknesses of the production system' which was created by a 'race to the bottom'.

Coller FAIRR’s latest research into animal protein producers has placed a high risk grading on 73 percent of the world’s 60 largest public companies in its ‘pandemic ranking’, which it says puts them at “high risk of fostering future zoonotic pandemics.”

The research looked at meat, dairy and fish producer’s performance across seven categories which it said are “vital to preventing future zoonotic pandemics.” Indian poultry giant Venky’s and US dairy business Cal-Maine Foods ranked last in 59th and 60th place, with an overall pandemic score of 6 and 5 out of 100, respectively.

Peter van der Werf, engagement specialist at Dutch asset manager Robeco, which is a member of the FAIRR investor network, told Agri Investor the research confirms “the fundamental concerns” the firm has had about the industry since it embarked on its own research in 2016. Robeco has investments in publicly listed meat packing businesses, he confirmed.

“A lot of the issues are linked to that race to the bottom in terms of price competitiveness that has gone through livestock production,” said van der Werf, who specializes in impact investing, labor rights and supply chain management in the food and agricultural sector.

“In 2016 we started driving into the meat and fish supply chain and found a lot of weaknesses when it comes to issues like animal welfare and labor standards, which is now top of mind. We are now reengaging with a lot of these companies, especially in the US, where you have seen such large numbers of infections and outbreaks in comparison to the communities around the plants.

“That clearly shows the fundamental weaknesses of the production system,” he said.

Businesses were graded against their performance on the following criteria: deforestation and biodiversity loss, waste and pollution, antibiotics use, animal welfare, working conditions, food safety and sustainable proteins.

In his forward to the report, FAIRR founder and Coller Capital chief investment officer Jeremy Coller noted that over 15,000 workers in the livestock supply chain in the US alone have contracted covid-19.

“Factory farming is both vulnerable to pandemics and guilty of creating them. It’s a self-sabotaging cycle that destroys value and risks lives,” he said in a statement.

Coller added that the rise of factory farms in the past 70 years has “brought with it an increasingly frequent string of zoonotic outbreaks from BSE, SARS, H1N1 … and now covid-19.”

The North American Meat institute, a US trade association that claims to represents companies that process 95 percent of red meat and 70 percent of turkey products in the country, issued the following statement in response to a request for comment from Agri Investor.

“It is shameful to play off consumer fears in a global public health crisis to advance an agenda. There is no connection between animal agriculture and covid-19. The North American meat and poultry industry is the safest and most efficient system in the world and demand from American consumers is at an all-time high,” the NAMI statement said.

Robeco’s van der Werf said in light of the supply chain shocks revealed by covid-19 and livestock’s historic link to disease outbreaks, producers will have to move to sustainable meat production in future, which is “fundamentally a very different system, with lower amount of animals per square meter, different types of housing systems and a different view on live animal transportation.”

He predicted that businesses will be forced to curtail some of these factors at their own cost as the world emerges from the pandemic. Robeco is currently focused on scrutinizing labor and sick pay issues at its meat packing investments, said ven der Werf, which are based in the US, South America and Asia, and is analyzing supply chain and biosecurity risks.