The development of world food affairs is shaped by the continuous rise in demand for animal products. Where has meat consumption increased most?
The increase in meat consumption is due to changes in dietary habits: the food revolution is happening mainly in developing countries which account for the majority of global population growth. Between 1961 and 2014, global meat production has quadrupled to fivefold and, according to the World Food Organization (FAO), is 43 kg per person in 2014.
According to data from the Food and Agriculture Organization of the United Nations (FAO), meat consumption is up an annual 5-6%, while the consumption of dairy and poultry products rises by 3.4-3.8% per year. Historically speaking, China and Brazil account for large parts of consumption growth: the global average per capita consumption of meat increased from 30.7kg in the 1980s to 36.4kg in the 1990s. This is largely due to the strong increase in pork production in China during that period; in Brazil, meat consumption increased by 55% from 1975 to 1990.
By 2017, global meat production had even quadrupled since 1965 to an annual 43kg per capita. The FAO also expects this trend to continue, because emerging countries will likely converge towards this “Western diet” that is heavy in meat consumption. This means that global meat production may reach 455mn tonnes globally by 2050.
Meat production is tied to animal feed
The rising demand for meat is correlated with demand for animal feed (mainly grain and oilseeds), whose cultivation also comes with negative environmental and climate effects:
- The large-scale cultivation of animal feed ousts primary forests, which are an important CO2 reservoir
- The use of chemical fertiliser is both energy- and CO2-intensive and burdens the environment, because the application on fields also affects other ecosystems such as waterways. The higher content of nutrients in the water makes these systems uninhabitable for sensitive forms of life
- Pesticides that are also used by conventional agriculture have negative effects on the environment and are suspected of carcinogenicity
Bayer AG & Monsanto Co: punitive damages
After the takeover of Monsanto by Bayer, the herbicide Roundup was faced with numerous lawsuits in the USA. This herbicide is part of the portfolio of Monsanto and has been suspected of carcinogenicity.
Bayer AG has been accused of underestimating the legal and reputational risks that came with the takeover of Monsanto and that could have a detrimental effect on the enterprise value. The international proxy advisory form ISS (International Shareholder Services) therefore suggested to express discontent with this misjudgement by refusing to discharge the Management Board from liability at this year’s AGM.
In a reaction, Bayer AG pointed out that according to the results of numerous studies a link between Roundup and carcinogenic diseases could be ruled out.
However, in the United States three verdicts have been passed to the contrary; in the most recent verdict, the plaintiff couple has been awarded more than USD 2bn, the highest amount of punitive damages to date. Punitive damages means that the fine exceeds the damage so as to have a deterrent effect. Bayer AG is confronted with about 13,000 lawsuits in the USA in connection with its glyphosate-based products.
A ban of glyphosate use has been discussed as well: in Los Angeles, it has already been introduced; the herbicide cannot be used until official healthcare bodies and environmental protection officers can ensure that the substance is harmless. A majority may be found in favour of a ban in Austria as well.
Bayer Management Board refused discharge from liability by shareholders
At the AGM held on 26 April 2019, a 56% majority voted in favour of refusing the Management Board discharge from liability, while a 66% majority voted to grant the Supervisory Board said discharge. This result has symbolic character. Much like in the case of climate-related motions in the past (Exxon Mobil, 2017), investors are making increasing use of their vote in order to address topics of sustainability that could negatively affect the enterprise value.
Erste AM exercised its voting rights last year in more than 400 AGMs, following its own sustainability guidelines. Throughout the peak season by the end of June 2019, Erste AM had already supported about 100 shareholder’s motions in the ESG areas (environmental, social, governance).
Prognoses are no reliable indicator for future performance.