world population booming and increased incomes, human demand for animal protein – and therefore feed for livestock – is rising.
Vikram Mansharamani, a lecturer at Yale University and the author of , says the world is approaching the key tipping point of approximately $5000 of GDP per capita. At that level, more people want to diversify their diets with protein and consumption accelerates, a trend institutional investors can act on, he notes. Boombustology: Spotting Financial Bubbles Before They Burst
Mansharamani recommends actively building a thematic portfolio across sectors and geographies that will be impacted by higher demand for protein. The United Nations estimates 11 billion people will live on the planet by 2100, primarily in southeast Asia and south Asia, as well as Africa. And as these people diversify their diets to include more protein, investors should not just consider what people will eat, he argues in an interview with PROJECT M.
Mansharamani points to
Michael Pollan, author of the Netflix series and the much-lauded Cooked The Omnivore’s Dilemma (2006). Looking at the total value chain, Pollan asks, “What does the protein consumption story entail? You are what you eat eats.” Mansharamani takes that analogy one step further. “You are what you eat eats eats. Because the corn has to ‘eat,’ too. The corn needs sunlight, water, fertilizer. And you can build your investment case around this.”
This means, for the protein play, investors may want to focus on companies that work in water, fertilizer, seed technology, food processing, agricultural equipment, irrigation or precision GPS services for farming. There are also opportunities in crop acidity and moisture monitoring with sensors, drone technology, insect management technology, chemicals as well as in bee health and refrigerated infrastructure, to name a few.
HOW INSECTS MATTER TO INVESTORS
Taking the idea one step further, Mansharamani sees investment opportunities in anything that enhances crop yield. “The bottleneck in this story is yield. How much can you take out of an acre of land? Anything that enhances the yield will be very valuable.”
In terms of patents and the R&D pipeline, investors should pay attention to the things
Syngenta and Monsanto are doing that may help improve crop yields. “I wouldn’t be surprised if these companies bring to market products that enhance yields in ways that we aren’t expecting. What if we had a drought-resistant grain that could be grown where water is less available? That would be interesting given the water outlook. And what about changing the ecology that a plant is growing in to improve yields – instead of modifying the plant organism itself?”
Insects like crickets and mealworms are increasingly becoming a part of the human diet. As more people adopt
entomophagy (the practice of eating insects), and more and more insects are ground up to be included in livestock feed, insect production and harvesting may be a niche for investors. Americans, too, eat them
Sounds far-fetched? Already, more than two billion people consume insects as a direct source of food. Americans, too, eat them – though they may not know it. According to
current FDA standards, food may have up to 30 insect fragments in 100 grams of peanut butter, up to 30 drosophila fly eggs in 100 grams of tomato sauce, up to 10 whole insects in 8 ounces of golden raisins, or up to 20 maggots in 100 grams of drained mushrooms. In fact, by some estimates, Americans are already consuming almost 500 grams of insects per year.
Regardless whether this prompts demand for insect-based dishes in the US, insect farming is good for the environment. Few people realize that the most productive producers of protein in the animal world are insects.
One of Mansharamani’s blog commentaries was entitled “
Protein Production Powerhouse … in Your Backyard!” In it, he noted: “Many of the six-legged friends in your backyard are more efficient in converting carbohydrates to protein than chicken, pigs or cattle.”
Consider the fact, he continued, “that ten pounds of feed can generate five pounds of chicken, approximately three pounds of pork, or about one pound of beef. Ten pounds of feed given to crickets, however, will yield almost
nine pounds of cricket-meat. Insects also produce less waste, generate fewer greenhouse gases, need significantly less freshwater and leave a smaller environmental footprint than virtually all other source of protein.”