Is there a future in food for New Zealand?

New Zealand’s traditional leadership in agriculture is due to our land, climate, hard work and invention from generations of farmers, and our universities and business that have supported them with increasingly valuable technology.

But our position is under threat, not today but in the medium term certainly. The threat is that high-quality food will be grown essentially anywhere for lower cost of inputs, and that global demand for meat will fall. Perhaps something will come along to make it easy to replace milk as well.

High-density gardening
There is a trend towards growing plants in more controlled environments in agriculture (CEA). The neat trick with high-density gardening is that the control of temperature, energy and climate not only reduces the amount of inputs (water, energy and so on) but also allows for control of insects and pathogens. And when you control the access of pathogens then you don’t need so many fungicides and pesticides, if at all. The result is not only faster growing plants but also food that is almost organic in its lack of pesticides and other additives. It can be delicious.

At the moment, it is relatively rare to see crops grown using tightly controlled environments for the whole lifecycle. But observe in the supermarket that some crops, such as tomatoes and blueberries are now available – and incredibly tasty – year round. I suspect the same is happening with many high-value flowers. These crops are grown in glasshouses but there is, apparently, still a good gap between current practices and true CEA.

The goal, still fairly seldom seen, is vertical farming, with leaders like Plantagon and AeroFarms. With this very high intensity farming, there is no reason why the farms need to use a lot of land footprint – a farm can be on floors of a tall building, with controlled LED lighting.

But there is a problem, as it costs money to power those LED lamps while on traditional farms the plants receive free energy from the sun.

The answer is tied up in the lowering costs of renewable energy, such solar panels, and batteries. These costs are already at to the point where it makes little sense to build traditional power plants, with Warren Buffet bragging in his latest letter that

“Berkshire Hathaway Energy (“BHE”) … … has invested $16 billion in renewables and now owns 7% of the country’s wind generation and 6% of its solar generation. Indeed, the 4,423 megawatts of wind generation owned and operated by our regulated utilities is six times the generation of the runner-up utility.

He also showed slides showing the precipitous fall in prices for storage batteries and solar panels. These curves will keep going, so while today it’s hard to economically justify building a thermal power plant, at some stage soon it will not be economical to even fuel a thermal power plant. Once we reach and pass that point it’s clear that generating and storing the power to drive those LEDs will be relatively cheap and a relatively low capital or opex cost for a vertical farm.

Better Meat
But we also eat meat and, as more of the world enters the middle class, the demand for grass and grain-eating inefficient methane-belching animals will continue to grow. We can gain more efficiencies and control effluent and CO2 by keeping animals inside, and that’s done in many countries. If that’s the future for meat and milk, then New Zealand has no structural advantage over any other country, and the resulting products will be priced accordingly at very low or negative margin.

There are alternatives – The Economist has a video article, The Meat Makers, on two companies with different approaches to replacing meat. One is attempting to grow meat in-vitro and the other is trying to use plants to create a beef substitute. The video shows poor progress for both companies but it does show that a lot of investment is going into moving directly from plants into meat. In New Zealand, SunFed Meats is attempting the same and seems to be making great progress turning peas into chicken.

Now if we combine the two trends together, it seems logical that someone will figure out how to grow a plant that is able to be easily processed into a substance that we find very close to meat. Will it be tasty? I suspect that for many years a very good steak will continue to attract demand but would not be surprised to see meat eating consigned to the same shameful dustbin as cigarettes within the next 50 years.

Malthus is wrong again
When I was younger, many years ago, I remember reading Green literature about the end of days. The World was going to run out of resources and food, and quoted Thomas Malthus, who wrote in 1798:

That the increase of population is necessarily limited by the means of subsistence,
That population does invariably increase when the means of subsistence increase, and,
That the superior power of population is repressed, and the actual population kept equal to the means of subsistence, by misery and vice.

Malthus was right but he also thought that population would increase exponentially and food production linearly. However, productivity of food (and other) production improved exponentially over the ensuing years and the techniques above will continue that trend. It’s a future where we can produce more with less, as a globe, and one where there is no need for our plants, at least, to not be tasty and fresh.

Existential crisis
All these trends are great for the world but will they also trigger an existential crisis for New Zealand? If anybody anywhere in the world can use small amounts of energy, water and nutrients to create the same quality food as we can here then why would anyone buy from New Zealand? If good-enough meat made from plants is able to substitute for a large amount of meat eaten globally, then won’t the demand and price for our cattle and sheep fall? And surely someone will figure out how to more efficiently produce milk from plants?

The future of New Zealand is unknown, and these trends could be decades away. But we should be leading and not reacting late to these trends. We do have a good agri-tech sector, with many companies helping traditional farming get more efficient, and others like Sunfed Foods and Autogrow, who make controllers for glasshouses, aiming ahead of the curve. We should support them.

We should also focus on the quality end of food production, aiming to be the purveyor of the best food in the world rather than shifting tonnes of powder and meat. We’ve moved a long way in this direction over the years but our polluted rivers are evidence that we can  no longer collectively hold our heads high.

Or perhaps there is another path – fast adoption of these intensive techniques to increase production and lower land and other resource use per output, followed by the return of some of the less productive land under grazing to native forest and birds. That’s a New Zealand we could all live in.

Lance Wiggs is the founder of Punakaiki Fund, which invests in high growth New Zealand-based companies. He is a member of two Return on Science investment committees, and has helped over 40 companies as an independent practioner through NZTE’s Better by Capital program. He writes at Lancewiggs.com

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