There are two schools of tech innovation dealing with the sustainability challenges of the livestock industry. One school is totalistic, replacing animals entirely. The other is ameliorative, addressing the sustainability challenges of the industry without eliminating the animals. Israel is producing solutions representing both schools. But the latter gets far less attention from investors despite its market relevance and prospective financial returns.
In recent years, totalistic solutions have generated a global craze of investor interest. Everyone knows Beyond Meat, whose plant-based burgers continue spreading throughout the restaurant industry. According to Pitchbook, newer totalistic solutions attracted $700 million in venture capital in 2019 worldwide, including from new alternative-protein-focused VCs and even from the world’s largest livestock companies. From 2015 to 2019 the number of such startups in Israel more than tripled and annual investment rose from zero to $33 million. No other area of AgriFood-tech innovation has grown so quickly in number of companies or investment capital.
Ameliorate rather than replace
This boom in totalistic solutions is fueled by concern over the environmental and ethical compromises of the livestock industry: animal farming is responsible for 15% of human-induced greenhouse-gas emissions, according to the Food and Agriculture Organization of the United Nations (“Tackling Climate Change Through Livestock,” 2013); it requires 35% of the world’s cropland and 20% of water withdrawals to grow crops for feed (“Water Use of Livestock Production Systems and Supply Chains,” FAO, 2018); three liters of water are needed for obtaining one liter of milk from a cow (FAO, 2018); ethical issues include the physical conditions in which animals are raised, and the practices and magnitude (even the very notion) of slaughter, including the culling of several billion poultry chicks annually.
Seen as resource-intensive, cruel, and a cause of global warming, the livestock industry may be unsustainable (some research even anticipates its collapse by 2035). Protein-alternative solutions that would replace the industry with plant-based and cell-cultured products are therefore very popular right now in tech media and among investors.
Protein alternatives are popular, but the livestock industry is too important to be replaced
But the livestock industry is too important economically and nutritionally to be replaced any time soon. Throughout the world, the industry is a ubiquitous feature of any growing or industrialized economy. It is so interconnected with other sectors (especially in middle- to higher-income countries) that when it expands, numerous others tend to also, producing overall economic growth. As for human nutrition, animal byproducts contribute 33% of global protein intake. No wonder the industry has exceeded a value of $22.5 trillion.
This industry’s universal, multifaceted value worldwide makes ameliorative technologies significant. Several important ones are coming out of Israel:
- The Mizrahi Lab at Ben-Gurion University of the Negev recently announced its successful manipulation of the cow microbiome, which could reduce GHG production and thus their environmental impact.
- SGTech is turning GHG-emitting manure into bioenergy, reducing its environmental toll. COEXIST estimates that its digital farm-management solution reduces the carbon and methane footprint of dairy-cow operations by up to 63% and that of their waste by 40%.
- Likewise, Dairyionics’ and miRobot’s milking automation raises dairy-cow productivity, enabling farmers to reduce their population and, with it, GHGs and water demand.
- To reduce the livestock industry’s demand on land and other resources, FreezeM and INOSECT grow and process insect-based animal feed.
- To deal with the conventional culling practices and huge waste of resources in the poultry industry, Soos, Ovo, eggXYt, and LIVEgg screen eggs to identify the sex without damaging them. The eggs can then be rerouted to relevant sub-industries rather than euthanizing unwanted chicks and wasting energy for incubation in the process.
All of this tech innovation makes the treatment and use of farm animals more sustainable without eliminating the industry.
Yet since 2017, Israel’s ameliorative solutions have raised less than a tenth of the capital raised by its totalistic ones. This disparity may reflect how alarmism and excitement over technologies touted as revolutionary – as “the future” – drive investor interest. But for now, totalistic solutions reach mainly vegans, vegetarians, and flexitarians, and they predicate a global shift toward a futuristic animalless industrial agriculture.
Meanwhile, the ameliorative target has an existing, growing global market. In fact, ameliorative innovation has already demonstrated returns. The largest AgriTech acquisition to date – Merck’s $2.4 billion purchase of Antelliq in early 2019 – involved Israeli ameliorative technology from SCR. Investors should consider betting on more innovation from this school.