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Writer-s-Bloc

Hundreds of companies developing lab-grown food

Food from cells

We knew it was just a question of time, and we know the time is now. The Food and Drug Administration (FDA) just authorized the sale of cultivated chicken in the U.S., giving safety approval for human consumption to Upside Foods, a San Francisco-based start-up. The company produces meat grown from animal cells, without killing a single animal.

While the FDA is on board, and although the agency found Upside Foods’ chicken safe to eat, the product is not approved to be sold commercially – yet. The U.S. Department of Agriculture and its Food Safety and Inspection Service also need to approve the product. But the most significant hurdle was indeed the FDA, which means the day we see lab-grown chicken on the market is within reach.

The production process is not that complex, though the science behind it certainly is. It starts by taking a sample of primary cells from a live chicken or fertilized egg. Once done, cells are fed in a lab (just as you would feed animals in a barn) with amino acids, fatty acids, sugars, trace elements, salts, and vitamins.

The main distinction between feeding a live animal versus feeding cells is the size of the feed components. That’s it. While chicken is fed corn, cells are fed microscopic carbohydrates and proteins. Products are then put in a cultivator to reproduce more cells.

After three weeks, voilà. The product is ready to be packed, shipped, and sold. No animals were slaughtered, and the product can be designed to suit different tastes and nutritional needs. Wings, legs, or breasts can be cultivated depending on market demand.

And make no mistake, this is not fake meat. Those who condemn cultivated meat as phony simply don’t understand the science. Unlike traditional methods, cells are reproduced in a clean, sanitary lab environment and come with significant advantages.

The cost to produce a kilo of chicken in a lab remains unclear. But the economics of cultured meat production are more predictable, the production cycle is shorter and, obviously, less prone to food safety issues. Decreasing the likelihood of food-borne illness from intestinal pathogens is a clear advantage. Animal diseases like the avian flu, which currently costs a fortune to the poultry industry and consumers, can also be avoided. Risks are much easier to contain.

Hundreds of companies are developing lab-grown food in the U.S. and over a dozen in Canada. The environment and the ethical treatment of animals are becoming top-of-mind issues for a growing number of consumers, especially among younger folks who question farming practices and the industrialization of agriculture in general. Most of these initiatives are funded by investors who barely have any experience in agriculture at all, and their way of thinking is not compromised by historical biases. They just see food differently, and meat giants are forced to investigate this edge against the future of animal proteins.

The Upside Foods story is a good example. Upside Foods just acquired Cultured Decadence, a cultivated seafood company, for $400 million. A company can only raise that amount of money if the technology has some serious scientific traction.

Upside Foods started back in 2015, which is ancient history in this field. The first series of funding came from Bill Gates, Cargill, Tyson Foods, and Richard Branson, and whole Foods joined forces in 2020. While Tyson and Cargill are among the largest meat packers in the world, many influential investors have believed in the technology for a few years now.

The science is still unclear as to whether cultivated meat is healthier, but the possibilities are endless. Healthier meat can literally be designed based on consumers’ wants and needs.

Still, if you think eating cultured meat is disgusting, chances are you’re over 45 years old. In a recent survey by our lab, 27 per cent of Canadians said they would try lab-grown food. But that percentage almost triples for millennials and younger generations simply because they see these proteins as more sustainable and humane.

It is estimated that a third of all human-induced greenhouse gas emissions come from food production, leading some to advocate for different ways to produce animal proteins. Furthermore, the UN has warned the world of the risk of maintaining highly concentrated animal feeding to prevent future pandemics. These risks are real.

Cultivated chicken being sold commercially in the United States is only a matter of time. In Canada, though, with our beloved quota system, chicken farmers will have something to say about whether cultivated chicken will ever be sold commercially.

Let the lobbying games begin. But if cultivated meat is commercialized in Canada, unlike genetically modified salmon, let’s hope it’s labelled so consumers know what they are buying.

Sylvain Charlebois is senior director of the agri-food analytics lab and a professor in food distribution and policy at Dalhousie University.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.





Do we have the capacity to feed world's growing population?

Eight billion people

On Nov. 15, the world’s population reached a symbolic number—eight billion people. The planet took 11 short years to add one billion more humans to its population. By 2058, it’s estimated the planetary population will reach 10 billion.

That’s a lot of people.

Whenever humanity is reminded that our population is increasing, we always wonder if we have the capacity to feed ourselves adequately, and for how long.

Amazingly, 90 per cent of the world’s population lives in the Northern Hemisphere, and almost 40 per cent of the surface area of the Northern Hemisphere is land, compared with only about 20 per cent of the surface area of the Southern Hemisphere.

More than half of the world’s population lives in Asia. A single visit to this part of the world will help you realize the space in Canada is an overlooked asset. Our abundance of space defines our quality of life, our policies and the way we eat. Most don’t realize this, but it’s true.

But are we producing enough to feed eight, nine or even 10 billion people on earth? The answer is yes.

The food sectors are adapting and developing new technologies at an astonishing pace. Many underestimate the ability of agri-food stakeholders, from farm to consumer, to adjust. While our planet produces enough food to feed the more than eight billion people who inhabit it, systemic inequalities and economic disparities have led to unbalanced distribution and irregular access to agri-food commodities.

Corruption, pandemics, poverty, lack of infrastructure, and, of course, geopolitical conflicts, as we have seen this year with Ukraine and Russia, often undermine our global food security.

We produce enough to feed the planet, but climate change remains the greatest threat to our agrarian systems. For centuries, humans have adapted to risk. We are compelled to find solutions to problems that suddenly emerge: floods, drought, fires, hurricanes, and the list goes on. But with climate change, the risks never go away. Risks will essentially move and threaten other parts of the food supply chain.

Band-aid solutions are just no longer feasible. Greater resilience in the industry requires extreme adaptability, which is what our recent federal task force on supply chains was advocating.

Canada is making a difference. In fact, the Barton Report, presented five years ago, offered us a road map in this regard. The report talked about unlocking the potential of key sectors and identified agribusiness as one of them. And fortunately, Canada has delivered the goods, yet we rarely talk about it.

The report mentioned expanding populations around the world, growing demand for protein in Asia, and a need for reliable markets, such as Canada. As the fifth largest agricultural exporter in the world, Canada can become a trusted global leader in healthy, nutritious, and sustainable food in the 21st century. The report indicates Canada has the potential to become the second-largest exporter in the world. Second, no less.

The strengths of our agri-food sector include a reliable food supply, the availability of resources, the position of arable land, and strong research poles. In addition, global opportunities relate to exploding demand from emerging markets as well as growing global supply constraints on land, water, energy, and carbon emissions.

Our agri-food exports have continued to grow despite challenges in the sector, reaching over $82 billion in 2021 and surpassing the previous goal of increasing agri-food exports to at least $75 billion by 2025. With better resilient logistics networks and supply chains, we can do even better.

The catch is that when people discuss food security and leading countries internationally, Canada rarely gets mentioned. The Netherlands, Denmark, and the United States are often mentioned, but our reputation is simply not there. Our image as a global agrarian provider lacks a bit of pizzazz.

We have to brag about it and celebrate the incredible contributions of our agri-food sector internationally as often as possible.

Sylvain Charlebois is senior director of the agri-food analytics lab and a professor in food distribution and policy at Dalhousie University.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.



Research shows grocery stores not guilty of 'greedflation'

Rising price of food

As food prices rise, many are quick to blame grocers for profiteering and taking advantage of consumers.

The notion of “greedflation” has emerged as one of the most talked about issues in the last month. Food inflation in Canada is at a 41-year high, at 10.3 per cent, and chances are that consumers won’t get a break anytime soon.

It is difficult to determine whether grocers have been inflating prices to benefit their bottom line. If greed exists in our grocery sector, how do we measure it? Well, our lab tried.

In a recent report, we used publicly available data to look at the gross profit (revenue minus cost of revenue) for each of the three big Canadian grocers: Empire/Sobeys, Metro, and Loblaws. We then calculated their respective “best” and “average” performances for the past five years. Next, we compared each company’s two most recent quarters of 2022 against their best and average years’ performances and quantified the excess (deficit).

Empire/Sobeys’ performance in 2022 was over-performing relative to their best years in Q2 by $7 million, while their Q3 numbers had them underperforming by $44 million. For the most recent two quarters of 2022, Empire/Sobeys had a net deficit of $37 million relative to their best years’ performances.

Metro’s 2022 performance, on the other hand, relative to its best years, over-performed in Q1 by $3 million and under-performed by $14 million in Q2. For the most recent two quarters of 2022, Metro Inc. had a net deficit of $11 million relative to their best years’ performances. Nothing overly scandalous.

Loblaws, though, is an exception. In Q1 of 2022, Loblaws outperformed their best years’ performances, equivalent to $68 million; in Q2 2022, they outperformed their best years’ performances by $112 million. So Loblaws’ gross profit thus far in 2022 outperforms its best performances of the past five years by $180 million, or about $1 million a day to date.

Does this mean Loblaws is greedy? Not quite. Loblaws’ reported revenues combine food, health, beauty, apparel, and other general merchandise into one category. Grocers are incredibly diversified and sell cosmetics, drugs, and clothing. Margins are different for these verticals, and of course, the ethics and social responsibilities of selling bananas or eggs are quite different than when selling lipstick.

Loblaws’ 2022 Q2 News Release attributes its increase in sales to an increase in same-store sales for food retail (0.9 per cent) and drug retail (5.6 per cent). Readers of Loblaws’ financial statements cannot definitively say whether an increase in non-food sales has driven the bulk of the “excess” gross profit, which is why accusations of profiteering are pointless.

But this doesn’t mean changes are unnecessary. Perhaps, companies like Loblaws should be required to report their food operations separately from their non-food operations. Unlike selling t-shirts or perfume, selling food, a necessity of life, is inherently ethical, and the stakes are very different.

We find it interesting that Loblaws can justify food and non-food (healthcare, beauty, apparel, and other general merchandise) as a combined operating segment which satisfies both IFRS 8.12(a) the nature of the product and services and IFRS 8.12(b) the nature of the production process. (IFRS is an accepted accounting standard.) It is unclear how food retail and drug retail are similar in nature, sales, or production. Canadians deserve to be informed of the details, especially when food inflation is in the double digits. This is worth investigating.

Still, the blame game continues, and Canadians want a scapegoat, which points to another change required, which has to do with the Competition Bureau. The Bureau has constantly failed the Canadian public by not providing forceful support to Canadian lawmakers by simply endorsing acquisitions and overseeing investigations with little or no vigour. The bread price scandal is a good example. After seven years, the investigation is still ongoing. We’ve also seen investigations into meat and salmon, neither of which have provided definitive results.

Grocers are easily blamed, simply because we know them. The more obscure part of our food supply chain has been spared by “greedflation” accusations for months, even if several multinationals like Unilever, Kraft-Heinz and Kellogg’s have recently posted significant profits.

The constant food inflation politicization has led to more irrationality and confusion within the population. Farming also contributes to higher prices at retail, but few are willing to point to farmgate economics as a contributing factor. The bureau should look at the entire food system, from both ends.

The anger directed toward grocers is truly unique to Canada. Our nation may be experiencing a consumer trust crisis that is spilling over into our relationship with grocers due to the Competition Bureau’s baggage, that is, the awkward unfinished business it has with many files. Canadian consumers feel grossly unprotected.

In the U.S., things are different. Their inherent hatred for monopolies and oligopolies has pushed lawmakers and bureaucrats to act swiftly and forcefully. Kroger is currently trying to acquire Albertsons for almost $25 billion, which would make Kroger the second-largest grocer in America. The deal is hitting major regulatory roadblocks. Kroger could be asked to let go of almost 400 stores, creating a rival to the new grocer. The initiative led by lawmakers has been relentless, and yes, politicized.

This would never happen in Canada. When Loblaws acquired Provigo in 1998, when Metro acquired A&P in 2005 or when Sobeys bought Safeway out west, barely anyone raised an eyebrow during the proceedings.

More financial data to clarify food sales and a more authoritative watchdog in the bureau, industry and grocers may be the only way to get consumers’ trust back.

Sylvain Charlebois is senior director of the agri-food analytics lab and a professor in food distribution and policy at Dalhousie University. Samantha Taylor is a professor in accounting at the Rowe School of Business at Dalhousie University.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.



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Are grocery chains in Canada colluding over food prices?

The rising cost of food

The food inflation rate in Canada has exceeded our country’s general inflation rate for 10 straight months now.

The rate in September was 10.3 per cent, according to Statistics Canada’s most recent Consumer Price Index released this week. Since Canadian grocers are again facing a barrage of criticism from concerned Canadians, some have started to respond.

Loblaw's recent announcement to launch the largest price freeze campaign in the world received mixed reactions from Canadians. While some welcomed the campaign, many still remembered the price-fixing bread scheme which unfolded a few years ago and understandably reacted to Loblaw's announcement with great skepticism. Consumer trust was severely damaged at the time, which makes the criticism grocers are now facing undoubtedly deserved.

Still, Loblaw's campaign will continue for more than 10 weeks, including the highly lucrative holiday season. It’s unclear whether consumers will save, or how much they will be saving, but at last, the campaign will bring some predictability for grocery shoppers and provide some immunity against sticker shock. We have all suffered sticker shock many times over the previous several months.

Reactions by other grocers may have made things worse. The competition, which includes both fellow Canadian grocery giants Sobeys and Metro, was clearly caught off guard by Loblaw's announcement. While Sobeys opted to showcase some of its current promotions, Metro decided to go on the attack, and made it a “hold my beer” moment.

“It is an industry practice to have a price freeze from Nov. 1 to Feb. 5 for all private label and national brand grocery products, and this will be the case in all Metro outlets,” stated Metro in an announcement of it own.

Wait, what? Metro clearly wanted to undermine Loblaw's campaign by stating that freezing prices this time of year was nothing out of the ordinary and normalize what appears to have been a long-standing, industry-wide price freeze practice. By doing so, without even giving it a second thought, Metro was inferring to the media that it was colluding with other grocers. Loblaw quickly denied everything. In the end, Metro issued another statement a day later clarifying its position on price freezes.

Many in the industry are familiar with seasonal cost management practices. Grocers will be inclined to accept cost increases during specific periods of the year. The so-called “blackout” periods will get grocers to reject cost increases. These are known practices.

But what Metro was suggesting is much more troubling. The company’s statement implied that seasonal collusion has impacted the price of privately labelled food products for years. This is what collusion typically looks like and is reminiscent of the bread price scandal, which lasted 14 years in Canada, with nobody fined or jailed.

Metro likely issued its statement in haste to respond to media requests. Still, it appeared that Metro did not even understand how incriminating the statement was to itself and the entire industry.

Almost four out of five Canadians believe greed is inflating food prices at the grocery store, and Metro’s statement certainly did not help. Supported by a unanimous parliamentary vote, Ottawa will launch its investigation into food prices and inflation in the coming weeks. The Standing Committee on Agriculture will need to get to the bottom of Metro’s statement and what it implies for the industry and consumers.

Beyond that, the committee also needs to appreciate that greed can be harboured anywhere within the food chain, from farmgate to table, and not just in retail. Retail prices for some verticals like dairy, meat, and bakery have shown erratic patterns in recent years. We shouldn’t be surprised that the meat packing industry is currently subject to two class-action lawsuits, in both Quebec and British Columbia. The Competition Bureau needs to provide more proactive oversight of what is happening across the food spectrum.

Targeting grocers exclusively would be like blaming the waiter at a restaurant when your dish is undercooked or just generally subpar. Let’s hope the committee will look at legitimate root causes, not just populist targets to score political points. But given what has happened this week with Metro, grocers are simply not helping their cause.

Sylvain Charlebois is senior director of the agri-food analytics lab and a professor in food distribution and policy at Dalhousie University.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.



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