Is meat too cheap for plant-based to succeed?

One of the key barriers to the success of alternative proteins such as plant-based meat is achieving price parity. While in specific and limited instances, these products have matched or even been lower than the price point of their animal-based counterparts, overall traditional animal meat is still significantly cheaper.

The price of meat in the supermarket does not always reflect the true cost of production, however.

Could the reflection of the real cost of meat in consumer prices change the balance between meat and plant-based?

The cost of meatAccording to Arild Skedsmo, senior analyst at KLP, the production of meat, which has been linked to climate change, has “little or no cost to the producer and is often even subsidised by governments.”

Subsidies for meat production include payments to farmers by the EU as part of the Common Agricultural Policy (CAP). In the EU’s recent Vision for Agriculture and Food, it committed to continuing these payments, albeit in a ‘simpler and more targeted’ way.

The result of this is, of course, mass consumption of cheap meat.

The true cost of meatThe solution, Skedsmo says, is meat sold at a price that better reflects its production costs.

“The sensible way to manage this is to force the real cost of production back into the value chain, eventually to be picked up by the consumers,” he suggests.

“In practice this means government regulations that limits producers’ ability to expand and exploit. This relates both to people and the environment.”

To do this, agricultural subsidies should be realigned with global nature and climate objectives.

“We have to stop subsidising inefficient reprocessing of plant based food through cattle for beef,” he says.

“An effective combination of regulations and subsidies should result in a more sensible pricing of the end product.”

Consumers should be able to choose a sustainable diet at a lower cost, he suggests, over a subsidised diet that is linked to unsustainable practices. “Fundamentally, there should be no trade-off between efficient agriculture and consumer costs.”

The fluctuation of meat costsThe cost of meat production, as well as market prices, are far from constant.

“In general, processors work to recover production costs and turn a profit in their selling prices,” explains Sandro Schulz, EMEA protein team lead at Expana.

“However, there are times when there can be a disconnect between production costs and market prices. Animal production cycles can be years and not necessarily aligned with consumer demand patterns.

“If there is a disconnect between production costs and market prices, there can be unprofitable price levels across the supply chain as sellers’ ability to affect price is linked to buyers’ willingness to pay.”

In conclusion, then, the profitability of meat can vary widely across the EU.