Displacement Risk in Agricultural Commodity Markets: The Impact of Plant-Based Meat

Abstract

Plant-based meat is an innovative and sustainable type of food that has been received with enthusiasm by consumers and investors. It is also a threat for the demand of traditional meat, and for those crops used primarily as animal feed. In 2019, 59 % of global corn and 83 % of global soybean production were used as inputs for meat production. In this paper we consider plausible global plant-based meat adoption scenarios for 2030 and couple them with production, efficiency and price elasticity measures from the literature. We generate simulated corn and soybean negative demand shifts and their associated price change distributions, relative to a baseline scenario without plant-based meat. Expected (std. dev) declines for corn and soybean prices under low plant-based meat adoption scenarios are -13% (4%) and -21% (6%) respectively. For high adoption scenarios, corn and soybean price declines are -23% (5%) and -35% (8%). These projections are economically very significant. Permanent shocks of this magnitude are comparable, but of opposite sign, to that caused in 2005-2010 by the ethanol mandate on the price of corn and reported in the literature. Corn and soybean producers, at the farm and regional level, are at risk of suffering from technological displacement.