Currently, 800 million people suffer from hunger. After 15 years of decline, the figure has been on the rise recently. Most likely, humanity will not reach the Sustainability Goals by the United Nations to achieve zero hunger by 2030. But not only are we struggling to feed the world today. By 2050 roughly 10 billion people will live on the planet, resulting in a 60% higher demand for food.
To make things even more challenging several trends put more pressure on the system.
Climate change: In Germany alone, it is estimated that 50% of the yield loss in the last couple of years as a result of water shortage and drought – increasing global temperatures will affect almost every area, resulting in constant yield losses.
Soil degradation: Due to intense farming, the availability of arable land will decline continuously. A vicious cycle that leads to the exploitation of new areas.
Adoption of Western lifestyles: The countries with the biggest populations, like India and China, definitely continue to develop and adopt more and more meat-heavy Western diets.
Hence, it will be a challenge not only to overcome existing inequalities but to secure our food supply, without sacrificing our planet.
At better ventures we believe that entrepreneurs are the ones who can solve those problems. We had a look at promising areas, which could contribute to a better solution and encourage founders to use existing startups as role models and push in similar directions.
Improved food allocation
Actually, the world has enough food to feed the population. The real problem is the allocation and having access to food. In addition, especially Western countries suffer from huge wastage, causing an unnecessary demand in acreage – experts estimated that a whopping 30% of our food goes to waste.
Reducing wastage would be a real game-changer. One startup, doing exactly this is California bases Afresh, who are using AI to optimize deliveries to supermarkets and grocery stores. On-demand supply chain and prediction could severely change the way, how supermarkets fill their shelves in the future. We are already looking forward to seeing other areas, like restaurants and hotels, who could also benefit from similar approaches. One step in that direction is already done by Too Good to Go, allowing customers to pick leftovers from restaurants at a reduced price.
Fundamental change in the way we eat
Reducing waste alone won’t be the solution to provide food to everyone and to reduce the environmental impact of the food industry. Especially, since our western diets are meat-heavy. According to the New York Times, a kilogram of meat-protein is 30 times more taxing for the environment than 1 kilogram of plant-based protein, accelerating climate change and putting further pressure on food supply.
In total, 80% of the global agricultural area is used to grow animal-based food, mainly as pasturage and to grow forage. However, animal food (especially meat and milk) only accounts for 13% of the global food supply but accounts for 68% of the CO2 emission of an average western diet (OnePlanetNetwork).
With more and more people becoming aware of the problem, they chose consciously to adopt a plant-based diet but this habit change will most likely not suffice. Alternative solutions are required.
Focus on plant-based meat and milk: While the first wave of plant-based startups just tried to substitute meat with vegetarian alternatives, the new generation has understood that adoption of alternatives depends on having similar taste, texture, and structure. Several products on the market today, such as Beyond Sausage and the Impossible Burger, have demonstrated that the “imitation game” is key to success. According to the Good Food Institute, this is reflected in an 31% in grocery sales, compared to 5% growth of classic meat products – still plant-based alternatives account only for a small fraction of the market, offering a lot of growth potential, which is reflected in the sheer amount of funding in the market. In 2019 alone, startups in the plant-based sector secured funding of $900 million.
The same holds true for the milk-market. Oatly is of course the number one company which is the farthest on their journey, but looking at the market size, they are a small fish in the tank, leaving room for other players. Speaking of fish: We are curious to see what happens in the seafood segment!
Develop Cellular protein: Recently, a founder whom we talked to said: “Let’s cut out the middleman!”. In this case, cellular protein has the potential to make animals obsolete to actually produce meat or milk. Companies like Memphis Meats, Mosa, and German-based Innocent Meat are at the frontier in developing different types of clean meat. The management consultancy A.T. Kearney recently estimated that by 2040 almost 35% of our meat consumption could stem from lab-grown meat alternatives – which would be great, since research estimate that cellular meat needs up to 92% less water, 95% less acreage and produces 74% less carbon emissions. Also, the exciting part about cellular food is that it could potentially disrupt the whole industry: New underlying ingredients are required and supply chains will be changed entirely. Interestingly, funding sizes are still relatively small, compared to plant-based alternatives, showing that the market is still at an early age.
All in all, we are convinced that there won’t be one single dominant alternative in the near future. Long-term, cellular based protein alternatives could attract a greater market share, but we expect to see a highly fragmented market.
Improved usage of existing resources
Another area which could be improved is how we use our acreage. Instead of looking for new fields, it is imperative that we make the most of what is already available. Also, approximately 15 - 30% of the annual yield is lost due to plant diseases.
Make plants more resistant: One solution could be genetically modified plants, being more resistant. The rapid advancements in the CRISPR/Cas technology could address this problem. Since genetic modification is highly regulated, it is unlikely that we see “super plants” in the near future, at least in European grocery stores. However, the technology could be used to at least delete faulty DNA sequences in plants, instead of inserting transgenes. There is a lot of experimenting going on, with promising results in all areas.
Use technology to avoid yield loss: Another solution could the use of technology. The App Plantix recognizes diseases and suggests potential treatments. This could be a game-changer to provide help in less developed countries. Also, mid-range drones like those build by Beagle Systems could be used to specifically target certain areas to reduce the usage of pesticides.
Use alternative farming. Locally grown food could be an answer to reduce friction in the supply chain. Berlin-based startup Infarm, which started out in the living room, just closed funding of €170 million and is now cooperating with supermarkets like Metro, while Agrilution brings vertical farming to your home.
As you can see, the possibilities are almost endless on how to improve the current conditions. Food is and will be one of the most important aspects of our human lives, resulting in a willingness to spent money, if problems arise. This is especially encouraging for all founders who want to get started.
If you are a founder, who wants to change the world for the better and you have an idea on how to improve our food ecosystem feel free to reach out to us. We are willing to invest and support passionate founders in these fields.