Transformation and Alternatives on the Dining Table: Nature Positive and the Food Value Chain

Executive summary

With the agriculture and food sectors being major sources of global greenhouse gas (GHG) emissions and as improper management in these sectors negatively impacts biodiversity, addressing climate change and biodiversity challenges in the agriculture and food sectors is becoming necessary. In response to this situation, this report analyses trends in food value chain-related technologies that contribute to Nature Positive, using PwC’s proprietary Intelligent Business Analytics (IBA) tool, and provides recommendations on future prospects.

Regarding contributions to Nature Positive, transitioning to ‛vertical farming’ allows for the efficient use of fertiliser components, such as nitrogen and phosphorus, while preventing their runoff into soil and water bodies, thereby reducing environmental impact. In addition, ‛alternative food’ technologies may help mitigate environmental impacts by replacing livestock products, which are a major source of GHG emissions, and fish and shellfish, which have a significant impact on marine ecosystems due to overfishing, fishing gear and other factors. Furthermore, post-production stages in the food value chain and the increased use of advanced technologies will make commercial distribution and logistics more efficient, and reduce food loss, thereby helping reduce the environmental impact related to food waste. It is expected that further technological development and expanded application will reduce and reverse the impact on nature from the food value chain overall.

Transformation and Alternatives on the Dining Table

Overview of the Nature-Positive food value chain

Figure 1 shows how technologies related to the food value chain contribute to Nature Positive, categorised by outcome and plotted at each stage of the value chain.

GHG emissions from livestock and their supply chains are estimated to account for 11.1% to 19.6% of total emissions*2 *3. To address this situation, in addition to developing materials like livestock feed that suppress methane gas emissions, technologies and products that substitute livestock products, such as cellular agriculture (i.e. cultured meat) and plant-based alternative proteins, can contribute to reducing GHG emissions from livestock production (Figure 1, top left).

At the material and equipment supply stage, technological advances in fuel cells and energy storage technology will promote the electrification of agricultural machinery and the use of hydrogen, which can also be suggested as contributing to Nature Positive (Figure 1, bottom left).

Additionally, various GHG-reducing materials are being developed and utilised in the field of food production. These technologies enable more efficient land use (preventing the development of new agricultural land or producing more crops on smaller areas), and can be suggested as contributing to sustainable land use as well (Figure 1, bottom centre).

Furthermore, in the downstream stages of the food value chain, advancements and improvements in processing, storage, distribution and sales can contribute to reducing food loss and the environmental impact associated with food waste. These include ‛food 3D printers’ that enable the reuse of food materials otherwise that would be wasted (e.g. scraps) and losses generated during food processing, and ‛smart food chains’ that use advanced technologies to optimise supply-demand adjustment, storage and distribution, thereby reducing food losses (Figure 1, right).

Figure 1: Overview of technologies related to the Nature-Positive food value chain

Development trends and outlooks for key technologies

1. Vertical farming

The IBA analysis indicated that technologies related to the circulation and treatment of water for cultivating agricultural products, power generation to produce the energy for the facility and lighting to use it efficiently are important technologies.

Figure 3 plots these technological elements in the production process of vertical farming and shows that the important technologies mentioned above (in bold) are used to ‛improve energy production and usage efficiency’, such as power generation, lighting and heat recovery, and ‛reduce environmental impact from wastewater’, such as water circulation and wastewater and liquid waste treatment. This suggests that these two in particular are central to technology trends.

Figure 3: Technological elements and production processes related to vertical farming

Outlook

Assuming that ‛energy efficiency improvement’—one of the current technology trends—continues, it is possible that ‛zero-energy’ vertical farming, in which the farm or its attached renewable energy power generation facilities produce energy equal to or greater than the amount of energy used, could eventually become a reality. This would also address the business challenge of energy price vulnerability facing vertical farming, making it a potentially ideal vision for its future in that context. Furthermore, regarding the other trend of ‛reducing the environmental impact of wastewater’, achieving zero pollution risk to the environment may become a requirement when considering the increasing demand for environmental responsibility within the food system.

At present, vertical farming produces agricultural products with a high weight value per unit that can be grown under relatively low light, which does not contribute to reducing the environmental impact of raw materials that are highly dependent on nature. However, although the range of agricultural products may be limited, as mentioned earlier, transitioning from conventional cultivation methods to production in vertical farming can reduce the environmental impact associated with fertilisers, pesticides, plastic materials and transportation.

2. Smart food chain

The smart food chain refers to the process of enhancing and optimising the food supply chain, from production to consumption, by utilising advanced technologies, such as robotics, AI and IoT, as well as data. It also refers to the food supply chain that has been enhanced through such technologies. By connecting information from production to consumption, supply and demand can be adjusted in a timely manner, and inventory supply management can be optimised, leading to reductions in food loss and food waste as a result. Food waste transportation, incineration and landfilling are all sources of GHG emissions, so smart food chains can be considered a Nature-Positive technology that helps to reduce these environmental impacts.

Various systems using technologies have been established at each stage of the supply and value chain, with examples shown in Figure 4. Each of the systems employs advanced technology, and the technological elements that constitute this technology cluster were particularly prevalent using ‛cloud computing (128 patents)’ and ‛big data (57 patents)’.

Figure 4: Representative technologies in the smart food chain

Outlook

Regarding the linkage and sharing platforms for agriculture and food-related data, which are important for building smart food chains, in the US, the private sector took the lead in promoting data linkage and sharing from early on, and the number of member companies is increasing. In the platform launched by a US agri-tech company, collaboration with major grain companies has rapidly expanded its user base. Additionally, the platform promotes regenerative agriculture through its environmental scoring function, contributing to GHG reduction, and showcasing fast-paced and large-scale use cases^*4.

There are many advantages to having the private sector take the lead in building and utilising data platforms, and it is expected that the US private sector will continue to lead the smart food chain sector.

These technological advancements will further strengthen the linkages in the food value chain, optimising supply and demand, production and consumption, and streamlining logistics and commercial distribution. This helps reduce food overproduction and food loss, which in turn reduces the GHG emissions associated with their disposal. Therefore, technologies related to smart food chains will become increasingly important in attaining a Nature-Positive society.

3. Alternative food development (‛cellular agriculture’ and ‛other alternative proteins’)

Cellular agriculture

Cellular agriculture refers to the technology of producing primarily meat by culturing edible animal cells. The process involves four steps: cell extraction, large-scale cultivation, tissue formation and processing to produce alternative proteins. It has the potential to help reduce environmental impact by cutting methane gas emissions during fattening, natural environmental pollution from manure, etc., compared to raising livestock, while also producing substitutes in less space. In addition to livestock meat, cellular agriculture technology is also being used to develop alternative foods, such as eels and some whitefish, which are becoming increasingly scarce due to dwindling resources, and foie gras, for which production methods have become an issue from an animal welfare perspective.

Currently, cultured meat products from cellular agriculture are available in only the three countries of Singapore, the US and Israel, and the Netherlands and Switzerland are on the way to commercialising them. While the market is still small, this is a rapidly advancing field of technological development, with various countries promoting the export of their technologies.

Looking at the policy trends in various countries and regions, the US has made significant progress in technological development as well as in policy-backed support, with the sale of cultured meat being legalised in 2023. However, Florida and some states are attempting to ban the sale of cultured meat through state laws, driven by opposition from the livestock industry and other factors, thus, there are different opinions among states. Similarly, in Europe, Switzerland and the Netherlands are progressing towards legal frameworks for the commercial sale of cultured meat. On the other hand, Italy has become the first country in the world to pass a domestic law banning the production and sale of cultured meat, and countries such as France and Austria also oppose its production and sale, indicating a lack of alignment among European nations.

Looking at the relevant technological elements, the majority (96%) of the components in the technology cluster are related to cell culture, especially those related to bioreactors (72%). In addition, the ratio of important patents (Figure 5) indicates the strong influence of the US in the development of technologies related to mass culturing. This indicates that the current trend in the technology cluster of cellular agriculture is ‛improving productivity of culturing’ led by the US, and that the next step in the production flow—technology related to reproducing texture, such as differentiation and organisation—will advance going forward.

Figure 5: Production flow of cultured meat and percentage of important patents held by country

Other alternative proteins

Other alternative proteins include plant-derived foods (plant-based meat) that reproduce the texture of meat by using plant foods, such as beans and grains, as raw materials, as well as the utilisation of insects and microorganisms. The environmental impact of producing plant materials or insects would be lower than that of livestock production, and this technology can be said to contribute to Nature Positive by replacing livestock products and reducing GHG emissions and environmental impact.

Many patents in this technology cluster relate to products using alternative proteins, which can be classified into three categories—derived from vegetable raw materials, bacteria or beans—depending on the raw material. Looking at the percentage and number of important patents, Europe and the US are strong (Figure 6).

Figure 6: Percentage of important patents held by each country and region,
and the types of alternative protein products

A wide variety of alternative foods are produced, but in terms of important patents utilised, most (16 of 24 important patents that are identifiable forms of products) are related to plant-based meats, which serve as alternatives to animal meat. This includes the production of food additives containing meat flavour components using precision fermentation, which is used to replicate the taste and flavour of meat in vegetable-based alternative protein products. Additionally, one of the important patents pertains to ‛hybrid foods combining cultured meat and plant-based protein products’. This suggests that there is a growing trend in the pursuit of ‛meat-like’ qualities in alternative protein foods, indicating a key direction in this field.

Challenges

Cellular agriculture is a relatively recently invested-in technological domain, with the economic cost of the product currently higher than that of conventional meat. On the other hand, as a result of progress in bioreactor-related technological development, productivity improvements and cost reductions, a scenario has been found in which cultured meat can be brought to market at a price comparable to conventional meat, albeit on a research basis*6.

In addition, cultured meats and other food products produced by cellular agriculture technology are still only available in a limited number of countries, but general consumer interest is not particularly high. In a survey asking how appealing people found cultured meat after receiving an explanation, only 31% of respondents answered ‛appealing’ or ‛somewhat appealing’. This breakdown also revealed that in no gender, age group or ethnic group did the percentage exceed 50%*7.

Additionally, in relation to branding and the protection of intellectual property, it is also entirely possible that value could be generated from the ‛cells’ of animals, such as brand-name beef. In 2020, Japan partially amended the ‛Law Concerning the Prevention of Unfair Competition Regarding Livestock Genetic Resources and the Livestock Improvement and Propagation Law’ to protect the genetic resources of Wagyu beef, which are highly recognized worldwide. However, this law only protects or regulates animal semen and fertilised eggs; it does not apply to the removal of cells outside Japan, nor does it apply to the export of cells from the country*7. Therefore, it may be necessary to consider intellectual property protection for animal cells in the future.

Cost and taste remain challenges for other alternative protein products as well, and these factors are affecting sales and market growth. In the US, for example, both the value and volume of sales of plant-based alternative protein products have declined for two years. This is partly due to changes in consumer behaviour caused by inflation and higher product prices, but it is also due to the failure to meet the needs of consumers. A survey of US consumers showed that plant-based meat alternatives have largely failed to meet consumer expectations, particularly regarding taste, texture and price*8, suggesting there is still room for improvement.

Outlook

Technology trends are ‛improving productivity and reducing costs’ and ‛pursuing quality’, and are issues common to both technology clusters. Therefore, it is expected that technological developments will continue to improve cost and taste, and eventually, a ‛commodity’ may be created in which all the factors that consumers look for in alternative protein foods, including taste, texture, aroma and cost, are equal to or better than those of conventional meat and fish. On the other hand, non- technological issues have emerged, particularly with regard to cellular agriculture, and there is concern that these issues may be a bottleneck in this field. This is because some countries and regions are facing regulations against cellular agriculture and opposition from the livestock industry. Since consumers do not have sufficient awareness and understanding of cellular agriculture, efforts by governments, companies and society at large will be necessary to promote cellular agriculture and its products, including the establishment of laws and the improvement of consumer awareness.

Although alternative food development, particularly cellular agriculture, is a relatively new technology and there will be market expansion in the future, it has the potential to make contributions towards Nature Positive by replacing livestock, which are considered to have a particularly high environmental impact in the agricultural industry, and seafood.

Sources

*1 WEF, 2020. Nature Risk Rising: Why the Crisis Engulfing Nature Matters for Business and the Economy.
https://www3.weforum.org/docs/WEF_New_Nature_Economy_Report_2020.pdf

*2 The Breakthrough Institute, 2023. Livestock Don’t Contribute 14.5% of Global Greenhouse Gas Emissions.
https://thebreakthrough.org/issues/food-agriculture-environment/livestock-dont-contribute-14-5-of-global-greenhouse-gas-emissions

*3 FAO, 2017. Livestock solutions for climate change.
https://www.fao.org/family-farming/detail/en/c/1634679/

*4 ADM, 2022. ADM, Farmers Business Network to Expand Sustainable AgTech Platform.
https://www.adm.com/en-us/news/news-releases/2022/7/adm-farmers-business-network-to-expand-sustainable-agtech-platform/

*5 Sugimitsu, Tatemoto, et al., 2023. A Study on the Influence of Important Patents on Financial Data of Firms.
http://fdn-ip.or.jp/files/ipjournal/vol24/IPJ24_26_38.pdf

*6 Good Food Institute, 2024. 2023 State of Industry Report Cultivated Meat and Seafood.
https://gfi.org/wp-content/uploads/2024/04/State-of-the-Industry-report_Cultivated_2023.pdf

*7 Tsujimoto, N., 2021. Rulemaking and Intellectual Property on Foodtech.
https://iplaw-net.com/doc/2021/chizaiprism_202107_1.pdf

*8 Good Food Institute, 2024. 2023 State of Industry Report Plant-based: Meat, seafood, eggs, and dairy.
https://gfi.org/wp-content/uploads/2024/04/2023_State-of-the-Industry-Report-Plant-based-meat-seafood-eggs-and-dairy.pdf