The Bull Case for Cellular Agriculture
As the world’s population continues to grow, experts predict that by 2030, the global population will reach 10 billion. This surge in population means that the demand for food will increase significantly. To meet this demand, we need to find innovative ways to produce food that are sustainable and efficient. One such method is cellular agriculture, which uses biotechnology to grow animal products without the need for traditional animal agriculture. In this post, I explore the bull case for cellular agriculture and its potential as a long-term investment opportunity with generous returns expected over a multi-year horizon.
The first reason why cellular agriculture is a strong long-term investment opportunity is because it can help address the challenge of feeding a growing population. Traditional animal agriculture is inefficient, requiring vast amounts of land, water, and resources to produce meat, dairy, and eggs. In contrast, cellular agriculture can produce animal products with significantly less environmental impact. For example, a study by the University of Oxford found that producing cultured meat could use up to 95% less land and produce up to 92% fewer greenhouse gas emissions than traditional animal agriculture. This efficiency can help reduce the pressure on the global food system and make it more sustainable.
The second reason why cellular agriculture stands poised to disrupt the food and agricultural sectors is because traditional animal husbandry and the slaughter-house economy for meat production is becoming increasingly unsustainable. The ecological and environmental impacts of animal agriculture are well-documented, including deforestation, water pollution, and the release of greenhouse gases. As the public becomes more aware of these issues, there is a growing demand for sustainable and ethical food production. Cellular agriculture can provide a solution that addresses these concerns while still producing high-quality animal products.
The third reason why cellular agriculture is a strong long-term investment opportunity is because of the robust capital inflows into the food tech space. Investors are recognizing the potential of cellular agriculture and are pouring money into the industry. In 2020, venture capital firms invested $3.1 billion in the food tech industry, with a significant portion of that going towards cellular agriculture. This influx of capital is driving innovation and helping to bring cultured meat products to market.
Another factor driving investment in cellular agriculture is the changing regulatory climate. As the industry gains more attention, regulators are beginning to take notice. In December 2020, the Singapore Food Agency became the first regulatory agency in the world to approve cultured meat for commercial sale. Other countries, including the United States and the European Union, are expected to follow suit in the coming years. This regulatory approval will provide a significant boost to the industry and could make cellular agriculture a mainstream food production method.
I’ve been working on building up a cellular agriculture portfolio meant for LT returns and passive income meanwhile. My top pick for this booming industry is Steakholder Foods (NASDAQ: STKH), which is the first pure-play cultured meat listing to hit American markets. At the moment, most players in the space remain private (Upside Foods, Umami Meats, Mosa Meat) or are managing PE-style investment portfolios in these private actors like Agronomics (LSE: ANIC) and Cult Food Science (CSE: CULT). In contrast, Steakholder foods is aggressively pursuing both global expansion, go-to-market, and a fast track for R&D focusing on developing scaling infrastructure for cultured meat production. At the moment its a seriously undervalued pick with analysts projecting triple-digit upside over an intermediate timeframe.
In conclusion, cellular agriculture is a strong long-term investment opportunity. As the world’s population grows and traditional animal agriculture becomes increasingly unsustainable, cellular agriculture can provide a sustainable and efficient solution for producing animal products. The robust capital inflows into the industry and changing regulatory climate make it an attractive investment opportunity for those looking to invest in the food tech space. While there are still challenges to overcome, including the need for scalability and reducing the cost of production, the potential benefits of cellular agriculture make it and leading actors such as Steakholder Foods a promising space to watch.