Rabobank, the leading global agri-based bank has identified production of animal-based proteins for investment by venture capitalists in its first quarterly report of 2021.
Venture capitalists are investors with funds looking for investment projects and agriculture might not be considered a particularly fashionable investment, particularly in the livestock sector.
The fact that this sector is attracting such investors suggests there is recognition that there will be future value in meat and dairy production.
Interestingly, the report identifies the growing awareness of environmental issues and social outcomes as drivers of innovation in the sector.
Historically, livestock industries globally have been frustrated by poor returns, something that Irish farmers will identify with, particularly in the meat sector.
Rabobank identifies this being a particular issue with larger extensive operations but it is changing. Innovation is creating opportunities, with more data capture and the internet enabling analysis of research.
Society interest drives change and investment
The drive for sustainability is identified as a creator of wider community interest in production and in turn an opportunity for investors.
Rabobank has identified food and agriculture as targets for venture capital from a decade ago but until recently it was crop production that was the main focus for investment.
Interest in animal proteins, beef in particular, is a more recent development, with societal concerns about the environment leading large companies to invest in research that will drive improved outcomes.
Suggested innovations will be familiar to Irish farmers
Rabobank has identified a range of innovations that will be familiar to Irish farmers as the basis for progress.
Top of the list is maximising the potential of genetics, genomics and breeding, which will reduce environmental footprint, improve productivity and even improve eating quality.
Better nutrition and feed additives are identified as a solution to managing enteric methane and also increasing productivity.
Wearable devices on livestock are also noted as a means of monitoring and capturing data on individual animals for health and performance, while better land management will create both environmental and productivity benefits.
Distribution of cost and reward in the supply chain
The report notes that there have always been plenty of ideas on boosting productivity but getting commercial value for these ideas has been more difficult.
Getting alignment between the different parts of the supply chain is recognised and the issue of one part of the chain carrying the costs while other parts benefit is something that will resonate with Irish farmers.
Rabobank suggests that the focus on sustainability and the setting of goals by beef supply chain captains may change the alignment between costs and benefits. This in turn would make the sector more attractive to entrepreneurs and investors.
What is particularly striking about this Rabobank report is that the bank sees animal proteins, beef in particular, as an attraction for investors.
Of course, there is money in circulation following the creation of recovery funds in many developed countries and the importance of food supply has been highlighted by the global pandemic of the past year.
It is also a reality that ruminant livestock production has a disproportionately negative image in the global climate change battle which in turn might have been expected to create a negative image for the sector in terms of attracting investment.
However, the Rabobank analysis suggests that initiatives in agriculture that address the problems will make the sector attractive to investors with money to spend.
The message is clear – food, including animal proteins, is valued and if the sector embraces initiatives that improve the environmental and carbon performance, it will attract investors.
This, of course, is at a global level. What is urgent for Irish farmers is that a pathway is quickly found that makes this a viable commercial business.