Department of Defense Invests Heavily in Food Innovation. Why?
The U.S. Department of Defense is investing heavily in food innovation.
Via the Distributed Bioindustrial Manufacturing Program (DBIMP), it has allotted 12 of its 34 awards, representing $60 million in total, to food innovation. Diversified proteins, sustainable oils, fungi and fermented products and production are all interests of the DoD. Each awardee has the potential for a follow-on award of $100 million.
"The next industrial revolution will be a bio manufacturing revolution. DoD is keenly aware of that reality," said Heidi Shyu, Under Secretary of Defense for Research and Engineering. "DBIMP's investment in a diverse set of companies will help transition U.S. bioindustrial manufacturing from the laboratory to a network of large-scale production facilities, able to fortify defense supply chains...while positioning the U.S. bio economy for surging growth."
"The introduction of new investment and funding strategies aligned to the National Defense Industrial Strategy offers the DoD rapid access to commercial solutions for defense requirements," said Dr. Laura Taylor-Kale, Assistant Secretary of Defense for Industrial Base Policy within the Office of the Under Secretary of Defense for Acquisition and Sustainment." The DIBC OTA provides DoD with new paths for innovation through industry and ensures continued U.S. competitiveness."
Let's dig further.
While the West may always be food sufficient, the rest of the world may not be, and this causes political instability. China, Saudi Arabia, the United Arab Emirates, Singapore, Israel, Germany and Holland are all innovating for food security. If you doubt the weakness of the food system, remember back to Covid when even in the U.S. food was scarce and the supply system fell apart quickly.
Food insecurity around the world is an issue of national security in the U.S. and staying ahead of this curve is critical to the U.S. economy and its stability.
2. Our Food System Isn't Resilient.
As we experienced in Covid, our food system lacks resiliency. This is because we use our natural resources inefficiently, tied up in long supply chains.
We often think we cut down trees to grow food filled with protein and fiber for people, but we don't. We deforest the planet and destroy biodiversity, in part, to grow food for a resource-masticating middleman: animals. We don't feed them once; we feed them for their entire lifetimes. This is why animal factories are a leading cause of deforestation and biodiversity loss according to the UNEP: it must continually clear forests to grow food for 80 billion factory animals.
In short, it turns out that we are great at feeding animals, but we are bad at feeding people, particularly as the population grows and the natural resources don't.
Feeding animals instead of people is not just inefficient and a bad business equation (it takes 25 pounds of feed to get 1 pound of cow, for example, furthering the need for deforestation to grow more animal feed), but this supply chain is also lengthy and, thus, lacking in resiliency.
3. Our Food System is a Major Factor for Taking the Planet to the Brink.
Recently, a New York Times article noted that the environmental cost of beef is $22.05 for a $5.34 meat portion. That is 413%. For cheese it is $3.76 for a $3.74 portion (101%). Chicken is $1.83 to $2.20 (83%). Chickpeas and tofu's environmental to portion costs are $0.74 to $1.46 (51%) and $0.21 to $2.42 (9%) respectively.
Our global food system accounts for 30% of the world's greenhouse gas emissions. Included in that is food waste which constitutes 8% and animal agriculture which is 18% of the world's total greenhouse gas emissions. 32% of the world's methane emissions come primarily from the supply chain of cows and sheep, but also from pigs, according to the United Nations Environment Programme (UNEP). It would be hard to significantly impact climate change without addressing a number as large as 32%, especially since methane is one of the more potent emissions.
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While cow burps are often cited as a source of methane as the jokes commonly note, a substantial portion of these emissions is also due to the deforestation required to grow crops for animal feed. In short, feeding 80 billion animals is inefficient and environmentally costly.
4. Our Food System Puts Our Health and Healthcare System at Risk.
American healthcare costs for preventable lifestyle diseases related to diet are $1.1 trillion, per a Milken Institute Study from 2020. This is a $3.71 trillion cost to society due to lost GDP. Costs are likely higher for 2024.
Further, anti-microbial resistance is a threat to ensuring healthcare in hospitals and at home. When people are resistant to antibiotics from ingesting too much antibiotics from their meat and water, seeping into the ground from animals, then they can't heal from small surgeries, infections, etc.
Perhaps the most worrisome and expensive risk of our food supply system is that according to the United Nations, the top two reasons for the next pandemic are related to the intensification of animal factories. This stands to reason since animals live butt-to-snout in their own feces. Hence, the risk of spreading new diseases to people, like the recent jump of Avian Bird Flu to a human, is a major concern.
5. Why Should Investors Care? Government Investment Can Lead to Sector Success
Investing in novel innovations along the food supply chain for food system transformation has potential for major upside growth due to its ability to solve some of the society's most pressing issues.
A shifting food system isn't a question of 'if,' but rather of 'when.'
Further, per a White House briefing, "Past examples from the biotechnology industry, the pharmaceutical industry, the information technology sector, and clean energy technologies like wind and solar illustrate how public investments can unleash private sector innovation - lowering costs, improving quality and supporting domestic production of critical goods. Along the way, these public investments in strategic industries enabled the development and growth of companies like Tesla and Apple." (Added emphasis).
Getting in early on the on the food innovation sector supported by the U.S. Department of Defense could deliver both growth and diversification for your portfolio, and also have positive impact for the people, biodiversity and the planet.
We have captured this opportunity in the VegTech? Invest food innovation focused ETF. Reach out to us at any time if you would like to discuss our food system transformation financial product.
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