The feasibility of Cultivated meat from the farm

26-09-2024: Cultivated meat farming: A transitioning model for the future of agriculture

A Global Leader in Agriculture

The Netherlands stands as a global leader in livestock farming and protein-rich food exports, ranking second in agricultural exports worldwide. In 2019, the Netherlands produced over 3.7 million tonnes of meat, with 60% exported, generating €5.2 billion. Its strategic logistical and geographical position in Europe bolsters its position as one of the largest exporters of agricultural and food technology, including the potential for cultured meat.

In Need for Change

Traditionally, Dutch farmers have enjoyed robust earning capacity due to the Netherlands' status as an agricultural exporter. Livestock farming including the dairy, pig, and poultry sectors, have driven this success. However, recent challenges such as fluctuating market prices, high production costs, financial risks through infectious diseases, and stringent environmental and animal welfare regulations have impacted profitability and business resilience.

The current earning capacity is under pressure and there are little to no growth opportunities. A study conducted by Connecting Agri & Food with RESPECTfarms shows that, on average, no operational profit was made in the beef sector between 2020 and 2023. Even though 426 million euros in annual subsidies (CAP) are invested in it.

On top ofeconomical struggles, the Dutch livestock sector is under pressure due to environmental problems, such as nitrogen, and concerns about animal welfare and health. Intensive agricultural practices lead to tensions in the field of spatial planning and land use. Political and societal pressures result in
policies to promote sustainable agricultural practices, improve animal welfare, and reduce environmental pollution. Finding a balance between economic interests, environmental considerations and animal welfare is a constant challenge for policymakers and the livestock sector.

Research executed with Connecting Agri and Food and Rabobank, based on Agrimatie, shows that the beef producing livestock farming has a profitability of 95% (Revenue / 100 EUR Costs) on average between 2020 and 2023). This is despite 426 mln per year of subsidies (GLB) are invested and 8 % of their income comes from other activities than livestock. Many companies in the chain of meat need to make money, livestock farmers certainly do not get the profits they deserve.

Next to the economic pressure there is also societal pressure, the costs for society of producing and consuming meat are significant. Wageningen University calculates in a True Cost Accounting study that each kg of minced beef from dairy cows comes with 4,91 EUR of societal cost. The study also shows that the same amount of cultivated minced beef produced on a farm would come with a significant reduction to 2,17 EUR societal costs.

We had a great idea

We knew new business models for livestock farming were urgently needed. The current earning capacity is under pressure with little to no growth opportunities. In response, the concept of cultured meat merged as a potential transformative solution, but nobody thought about reusing current infrastructure or working together with farmers.

Willem van Eelen, often revered as the "Godfather of Cultivated Meat," laid the foundational work for cultivated meat and to produce it on farm-scale level. Driven by a vision to combat hunger and reduce the environmental impact of traditional meat production, van Eelen pioneered the idea of cultivating meat
outside of an animal in the 1950s. Already back then his vision was that livestock farmers would cultivate meat as an additional business model.

We founded RESPECTfarms out of the idea that we can do better: the idea that cultivated meat offers a new revenue model for traditional livestock farming. RESPECTfarms considered many assumptions people make around agriculture. Farming is often considered dirty or farmers would not be educated enough to operate fermenters: “Do farmers even want this? Is it even feasible? Will it ever create a viable business model?”

Over the past years, we have seen increasing openness towards the idea of involving farmers and creating a seat at the table for them. We have seen more social research on this topic by universities, more political debates at governments, and especially more interest from farming organizations to get informed and support research on this. This increasing interest in our concept made us enthusiastic about the future but also stressed how much we needed to research whether it is possible.

Feasibility, Viability, and Desirability researched

From January 2023, we brought together thought leaders from different sectors to go after this. In the past 1.5 years, RESPECTfarms has been working on a feasibility study to find this out. Together with its consortium partners and sponsors, Mosa Meat, Priva, Crole Natuurrund, Rügenwalder Mühle, GAIA, Rabobank, fenaco, the European Commission, Kansen voor West, Dierenbescherming, Barth Misset Foundation, Wageningen University and the Dutch Ministry of Agriculture. The concept idea was researched on its feasibility, viability, and desirability. The report is owned by RESPECTfarms and was shared with our consortium members. We want to highlight some of our key takeaways with you!

Methodology

RESPECTfarms researched the feasibility of cultivated meat farms for the past 18 months. The research was based on extensive literature reviews, experiments, and interviews with experts in cultivated meat, bioprocess design, the regulatory landscape, farming and more. The design of cultivated meat farms was based on design criteria, specifically for farm-scale production (e.g. ease of operations, simplicity, or low CAPEX). We talked to 12 companies for cell line development, 27 for cell feed development, 13 for bioprocess development, 19 for product development, 72 farmers and farming organizations, and became part of numerous different research projects to gather information. It led us to the design of the demonstration farm, with specific technologies that are suitable for farm-scale production.

Do farmers want this?

RESPECTfarms, together with Wageningen University, has been conducting interviews with farmers over the past years, 57 official interviews were conducted with Dutch farmers alone.

The typical Dutch farmer we encountered is a fourth-generation farmer in their mid-50s. Farming for these farmers is not just a job but a cherished way of life. They are well-educated and highly-skilled in agriculture, with a strong focus on animal welfare and environmental stewardship. They view their role in society as
crucial for food security and seek government support to address challenges such as fluctuating market prices, reduced profitability, and increased costs from recent energy crises.

Dutch farmers are generally open to technological advancements to boost productivity but are cautious about becoming too dependent on financial institutions. Diversifying farm activities has become essential for managing financial risks in an unpredictable economic climate. They aspire to achieve a better work-life balance, more personal freedom, and fewer hours on the farm. However, they face uncertainties about passing down their farms to future generations amidst changing agricultural landscapes shaped by climate
change and regulatory shifts.

10.5% of Dutch farmers want to produce cultivated meat

From this research, we concluded that 10.5% of the Dutch interviewees respond positively to the idea of transitioning to cultivated meat farming. Considering 19,949 Dutch livestock farmers (only dairy, veal, pork,
broilers) solely in the Netherlands, there are 2,094 Dutch livestock farmers open to transition now already. Why would they change?

• Economic Viability: "If the earning model is good, I would switch directly." Current livestock farming,
  particularly beef farming, is no longer profitable. From 2020-2023, the beef sector in the Netherlands made no operational profit despite receiving €426 million in annual subsidies.
• Sustainability: "Sustainability reasons." Livestock farming is a significant contributor to greenhouse gas
  emissions, accounting for 14.5% of all human-driven emissions. Farmers are under pressure to find sustainable alternatives, and the Cultivated Meat model could offer a more viable solution.
• Efficiency and Reduced Labor: "I can create more meat with fewer animals." Livestock farming requires long hours, physical labour, and constant attention, leading to stress and burnout. New solutions that reduce these burdens and make farming more appealing are highly sought after.
  

Other countries are excited

We are currently evaluating the desirability to transition to cultivated meat also in Germany, France, Italy, Spain, and Poland over the next 24 months as a research partner of the FEASTS consortium. Some of the farmers we talked to until now said:

Next to the research that we are currently doing in the European Union, farmers reach out to us regularly and want to become part of our demonstration farm or the “first” RESPECTfarmer. From the Netherlands to Germany and the UK over to Brazil, there are many farmers out there that we are in touch with and that want to create new business opportunities with this concept in the future.

Farm-scale cultivated meat is feasible

In the cultivated meat industry, it is widely recognized that producing cultivated meat, at this point, is not feasible at industrial scale. A survey conducted by Harsini and Swartz from GFI (2023) showed that most of the cultivated companies intend to reach a 50.000 L bioreactor scale in the future, while the largest scale achieved so far is limited to 1.000 L. Scale-up of a cell culture process up to such volumes (50.000 L) has never been performed and implies big technical risks. In large scale cell culture processes, gradients of dissolved oxygen, carbon dioxide, pH and shear can result in much lower cell densities at the end of the process and makes the process less efficient.

The RESPECTfarms concept minimizes these risks: We want to produce at a scale (<1.000 L) that has already been reached before. For our farms, we can imagine it like a smaller cheese factory where we use cow-sized bioreactors to grow meat. In this way, we can reach competitive cell densities and make the production as efficient as possible.

To comply with our design criteria and to create a feasible process, such as easy operations, reduced risks of contamination, or reduced investment needs, we are using single-use technology. In the future, other bioreactor technologies might create a better environment for our cells and work better for farmers. We will evaluate the state-of the art technology continuously as is our role as a system integrator.

For the feed for the cells to grow, we evaluated different agricultural crops and side streams on its economic potential and its technical feasibility. Models have shown that amino acids are and will continue to be a cost driver in the production of cultivated meat, contributing to between 16%-45% of the cost of the cell feed (Specht,2019; Humbird,2021). Our research showed that crops and side streams such as yeast and grass have the potential to be a feasible and cost-competitive cell feed source for farmers to use to produce cultivated meat. However, there is work to be done for us and our partners to develop a productive process for the cells to grow based on raw materials like these.

Regulatory-wise, a permit to one of our farmers has been granted to produce cultivated meat on his farm. Although this permit demonstrates the possibility to produce cultivated meat on farms and by a farmer, we aim at working even more closely together with municipalities and regional governments to see more of these permits happen in the future.

Farm-scale cultivated meat will be viable in 2030

Creating a profitable business model with cultivating meat is key when you want to convince a farmer to transition or adapt to a new earning model. To evaluate the business and revenue model and its potential for cultivated meat, we worked together with the Dutch agricultural bank Rabobank.

The projections of the revenue model of a cultivated meat farmer, based on current known data (and taking the whole future business into account), suggest: Substantial investments (over 1 million euros) in farm adaptations and business operations could return within 3 (best case scenario) to 7 years (conservative scenario). In the long run we want to produce a 100% cultivated meat product on a similar volume as an average beef farmer (100 metric ton per year). On the road to get there we first aim to produce a so-called hybrid product (cultivated cells combined with plant based ingredients).

Entering the market with a hybrid product first makes sense from a cost-point of view and is realistic to be on the market by 2030. Assuming a price of 2.93 €/kg for the plant-based ingredients, based on consultations with experts from the plant-based industry, a final production cost of 4,88 €/kg is estimated for a hybrid product. Required CAPEX for downstream processing is under 50k€ for artisanal butchery scale equipment. The cost of farmer’s premium burgers we estimate at this point around 9 €/kg. To further work on the future business model of cultivated meat farming, Rabobank continued the support for RESPECTfarms through their Rabo Impact Fund.

You might wonder how that compares with industrial production in the future. We looked at different publications on the projections of industrial scale production (here Vergeer et al., 2021). From that you can conclude that farm-scale production will be more expensive to produce per kg. On the other hand, it will be less risky in terms of capital investment and loss of product in case of contamination.

Source: Vergeer et al., 2021, TEA of cultivated meat Future projections of different scenarios -
corrigendum; RESPECTfarms 2024

We believe that we can lower production costs further by fully automating the process or delivering to a
premium channel with our farmers food. In any case, we foresee that the future of cultivated meat production will be as diverse and colourful as the meat industry is nowadays, with products that target different consumer profiles and tastes!

The societal costs of inaction are significant

Any consumption comes with additional costs for the society. But how high are these societal costs for meat from livestock? And how much can we lower these societal costs by consuming cultivated meat from farms in the future?

RESPECTfarms, together with the PPP True Price Consortium "From Insight to Action", evaluated the true costs of cultivated meat from our future farms vs. conventional meat in 2030. The study was executed by
Wageningen Economic Research and CE Delft. The findings are promising. The study indicates that, by consuming cultivated meat from RESPECTfarms in the future, people can lower overall external costs 2 to 3,5 times, without the need to sacrifice. See the full report here.

Source: External costs of locally produced cultivated meat compared with three conventional Dutch meat products, Jonna Snoek, Pelle Sinke, Elsje Oosterkamp, Nikki Odenhoven 2024
Demonstration: RESPECTfarms

What is next?

We believe in a diverse food production system where the potentials of conventional and plant-based meats, together with products from cellular agriculture are used in a way to create a more diverse, resilient and sustainable food production system.

As RESPECTfarms, together with its consortium partners and sponsors, we have seen that cultivated meat production on farms will be able to play an important role in this future. Cultivated meat farming promotes more efficient use of materials, leading to a more profitable revenue model for farmers. Our concept and our line of thinking is by now widely shared and researched by other research groups such as the Royal Agricultural University that recently published a report on the topic of involving farmers in the cultivated meat value chain.

Over the past 18 months, we gathered the proof points necessary to confidently build up a first demonstration farm. We are currently in the planning of doing so and are actively looking for partners and investors to make this happen. If you want to become part of this journey, let us know!

Thank you for the continuous support: Mosa Meat, Priva, Crole Natuurrund, Rügenwalder Mühle, GAIA, Rabobank, fenaco, the European Commission, Kansen voor West, Dierenbescherming, Barth Misset Foundation, Wageningen University, the Dutch Ministry of Agriculture and the many supporters in our network.

On to the next phase. Let's build that first farm!