Shidonna Raven, Chef Editor Podcast Editor, World Economic Forum
October 10, 2022
Source: World Economic Forum
Shidonna Raven Garden & Cook. All Rights Reserved. Copyright. Please contact us for republishing permission and citation formatting. Photo / Image Source: Unsplash, Maria L. Kim
How often has the scientific community used fear of food insecurity to produce food made in labs? How often have they approached farmers regarding promises of higher food yields only introduce farming materials and practices that are neither climate change friendly, nutritious, safe and create a system farmers say is not sustainable profit wise nor environmental. What are the health impacts of 'cheaper' lab produced crops and foods.
Food, energy and climate change are fundamentally linked, through fertilizer production, methane emissions and more.
Geopolitical and climate shocks, such as those in Ukraine and Pakistan, will become more common — public-private cooperation in the food system is necessary to build resilience.
The global food system is unique in that it presents a significant opportunity to actually fight climate change while improving resilience and accessibility of food, at local and international levels.
Food production has a huge impact on climate change. And climate change has a huge impact on our ability to produce the food we need.
As the war in Ukraine creates additional challenges to the global food and energy markets, a panel of experts looks at ways food production and consumption can adapt to address some of these huge issues,
This podcast is the audio from a session at the World Economic Forum’s Sustainable Development Impact Meetings 2022.
Transcript
This transcript has been generated using speech recognition software and may contain errors. Please check its accuracy against the audio.
Adrian Monck, World Economic Forum: Hello and welcome to this session of the World Economic Forum's Sustainable Development Impact Meetings. I'm Adrian Monck, and this session is Food and Energy: Tackling the Global Resource Crisis.
I'm delighted to be joined here in the studio by four fantastic panelists who can help us answer some of the big questions that poses.
We have Sam Kass, who is joining from Acre Venture Partners. He's been both a chef and a nutritional policy expert. We have the co-CEO and CFO of Royal DSM in the Netherlands, Geraldine Matchett. They're a bioscience company that specializes in health and nutrition. Joining from Columbia University, where he co-founded the Data Centre on Global Energy Policy and leads the Columbia Climate School, we have Jason Bordoff; and from the United Nations Food and Agriculture Organisation based in Rome, delighted to be joined by Chief Economist Maximo Torero. Thanks to our panel for coming together to shed some light on this very difficult topic.
I think for all of us, the conflict in Ukraine really brought to the centre the geopolitics of food and energy security. And in both of those cases, it was a conflict that told people that they needed to pay attention to where food was going and where their energy was coming from. But actually, for all of the leaders involved in discussing this, these have been issues that have been on the global agenda for a very, very long time. And a lot of our panelists have been engaged in thinking about them for far longer than the latest crisis. And so what we're going to be discussing in the next 45 minutes is what are the ways that public-private collaboration can really move the needle on these issues and how can we come up with innovative ways of tackling them. And what are the things we need to put in place to make sure that we're not having this discussion 10 years from now.
Geopolitics, climate change and food
“What is emerging in our food system is an opportunity to actually help solve the climate crisis, unlike, I would argue, any other sector on the planet. ” — Sam Kass, Partner, Acre Ventures Partners
I'm going to start, Sam, with you, if I may. You've been on the front line of thinking about nutritional policy from both directions. You've been in the kitchen and you've also been in the kitchen in terms of investment, you know, thinking about the kind of things that we ought to be thinking about. For you, how far has what we've seen about the way food is moving around the world, how has that kind of changed your thinking about nutrition policy and the things we should be doing?
Sam Kass, Chef and Partner, Acre Venture Partners: Oh, man, how much time do I have? That's a huge question.
I think what these last years really showed us is a window into the future. I mean, the future is here and now. These kind of massive disruptions that are having ripple effects around the world from a relatively constrained part of the world is the norm. And I think it is a real example, just a taste, really, of what we're going to be having to manage, going forward, in much more intense ways. And so, if anything, I hope it's a wake-up call to policymakers around just what's at stake when it comes to food security and the impact and intersection between food and climate.
It's changing, but if you go through the arc of climate discussions, food's been left out of the dialogue almost entirely. It's the number two driver of emissions globally. It's also the system that is most directly affected by climate itself. And I think, and we can talk about this more later, what is emerging in our food system is an opportunity to actually help solve the climate crisis, unlike, I would argue, any other sector on the planet.
There's a lot of other sectors that have to reduce their negative impact, but there's very few that actually could have a net positive result on sequestering carbon. So for me, I think, you know, when put my policy hat on, my investor hat on, there's an opportunity before us that we haven't seen before, because people are now opening their eyes up because they've seen what's going on. And wow, we got to act. Like, our very plates of food and dinner are at stake and the future of our ability to continue to put that food on our children and our children's children's plate is really at stake. So I think we have a sense of urgency now that we haven't seen before.
Adrian Monck: And Max, your organization hasn't just been dealing with this since the Ukraine crisis. You've been dealing with this for decades. Just how much has the Ukraine crisis given us an opportunity to focus on the bigger issue of where we're feeding the world and how we're relating that to the climate challenge that we face.
Máximo Torero, Chief Economist, Food and Agriculture Organization: So we need to understand that the Ukraine crisis exacerbated the situation that was already there. And the situation was ruined first by conflict — that was the first driver of food insecurity. The second one was slowdowns and downturns. And COVID-19 really impacted through that mechanism and that's why in the last two years, we have 150 million more people chronically undernourished. And the third one is climate change. And of course, they interact. And when they interact, it gets even worse.
But climate change has two dimensions, which we need to look at carefully. One is extremes. When you have high temperatures or flooding like Pakistan, the fourth exporter of rice in the world today. But the second one is variability. And that's what makes it very difficult for farmers to make decisions. And that's where technological opportunities could help them to do things properly.
So the situation is not new, but then you have the choke of Ukraine, the war that nobody expected. And basically, Russian Federation and Ukraine represent 30% of the cereals in the world. Luckily, a big chunk of that was already exported, and that's why there was a supply response that we could compensate but exacerbated prices. And in March we had the highest price of the FAO Food Price Index recorded in history. Now prices are starting to slow down, but they're still very high.
And what we found as a result of that — two things. One is that there is a serious problem of food access this year, people cannot afford. So 62 of the most vulnerable countries have increased their food import bill [by] $25.4 billion. That means 1.72 billion people are at risk.
The second important thing is the link between energy and food, which we have forgotten. Because we talk about the changing energy mix for climate issues, but that will increase the price of energy, natural gas, and that will increase the price of fertilizers. That is what really is building a risk right now, the next supply. And that's what really could create a problem of food availability in addition to food access in the next year.
So, yes, we are seeing all the interlinkages. We are seeing that agriculture is a sector under risk and uncertainty. Risk, as you know, you can insure. Uncertainty, you don't have the idea. It's very difficult. COVID was uncertain, the war was uncertain. And that's where we need to learn how to operate and what tools we need to have in place to cope with that.
Adrian Monck: Thanks. We're used to sort of thinking about governments and international organizations dealing with these issues, but actually a lot of the way we're dealing with them is through investments that big business is making. And Geraldine, I mean, your company, Royal DSM, you've been looking at this from the long term for quite some time. Can you just explain a little bit about the thinking that you do when it comes to investing in some of the investments that you're making that are helping to address some of the issues that Maximo and Sam have spoken about?
Geraldine Matchett, Co-Chief Executive Officer and Chief Financial Officer, Royal DSM: Yeah, exactly. And I think you said it absolutely right. The world has woken up to the fact that we cannot take for granted that there is food security and even more importantly, that there's nutritious food that's available.
So as a bioscience company, which has the longest history in micronutrients, so what goes into our food and in the feed of animals, we've been thinking for decades around the long-term future of these things.
To give maybe a couple of examples to make it concrete for people listening to us: A lot of people think about hunger, but actually malnutrition is actually even more devastating. So when people don't have the right micronutrients, they're stunting and you have the whole generation that is lost effectively. So we've been working on what we call 'hidden hunger' for many, many years, but that turns into not only scientific innovation but real concrete investment. So about eight years ago, we decided that we were going to help invest in producing in Africa, for Africa, the Super Cereal Plus, which is effectively the relief food of the World Food Programme, which right now is desperately needed.
Why was it important to do that in Africa? Because then you combine it with development. So not only is it helping close the micronutrient gap of extremely vulnerable people, but we're sourcing from over 100,000 smallholder farmers. When you do that, you give them certainty of income, so they can invest in better crops that can fight aflatoxin, which is quite a common disease in crops, etcetera. So, looking at really developing structurally, how do you improve the ability to produce food, nutritious food, closer to the markets?
Now, if you think right now to what you were saying, the supply chain disruptions are massive. The plant in Kigali right now is operating full speed because we're sourcing locally and we're able to produce for the countries in the areas which are very vulnerable.
So that's one example. The other one is actually: science has to think ahead because it takes time. So if you think of climate change, methane is one of the most damaging greenhouse gases. And you said very correctly, food and agriculture was often not part of the conversations around climate. Yet a third of methane in the world comes from livestock. So about 15 years ago, we started thinking about how can we reduce the methane burped by cows, which at the time was seen as a rather eccentric thing to put some serious money behind. And I'm talking serious money because the investments over 15 years of R&D have now translated into building a big production facility because we have developed a feed ingredient that you can feed to the cows. It's a quarter of a teaspoon and it reduces the emissions by 30%.
Now, if you think of the methane pledges that have come out of COP26 to the 30% reduction, and when you know that methane over, I think it's a ten-year period is 100 times more potent than CO2, this is the handbrake that we can pull in the world on slowing down the climate crisis and trying to gain time to do all the other things.
So these are some of the things. You don't do this in isolation. I mean, this has to be done in an ecosystem that is supportive and thinks nicely ahead of time.
Now, the crisis we're seeing right now is clearly showing that all of these things that we do to ensure the resilience of the food system needs to accelerate even further.
Adrian Monck: And you made the link there between cows, burping, energy.
Geraldine Matchett: Indeed.
The food, energy and climate nexus
Adrian Monck: Not a link, I know, that probably most people think about when they think about tackling climate change, but the energy side of the piece, that is something where, you know, food has always, I think, been thought of in terms of malnutrition and hunger, rarely in terms of its impact on energy. We've seen this huge shock both to the food supply system, which has woken people up to just how complicated the world is that arrives on their plate. But we've also seen a shock to the energy supply system, which has woken people up to just where the gas comes from that powers their cookers, that powers the boilers, and heats their homes. And you know, Jason, can you give us a bit more context on that energy crisis and that side of the piece?
Jason Bordoff, Founding Director, Center on Global Energy Policy, Columbia University: Yeah, absolutely. And I think you're right. I mean, energy, obviously, the primary driver of emissions. Agriculture is huge as well. And then that leads to climate change. And we know the impacts there in terms of impacts on food security because of drought or flooding in Pakistan or anything else.
We're being reminded now in what is, I think, the worst energy crisis in at least half a century, maybe longer. The first global energy crisis. And by that, I mean almost every part of the world affected. We're relatively insulated in the United States, but that's the exception, not the norm. And almost every fuel.
A strong focus on what it looks like in Europe, but what's happening in Europe is having ripple effects by pushing up energy prices in the developing world, in emerging markets, Pakistan, Bangladesh, which are having trouble affording natural gas, affording coal, everything is going kind of through the roof in terms of prices. And because those prices are so high, natural gas, as you said, used for cooking, used for heating and for fertilizer — that's how we grow food. And I think somewhere around 70% of the fertilizer production in Europe is shut down right now, because we don't have enough energy, it's too expensive. And when you're facing scarce molecules, scarce energy sources, you know, what do politicians do? First thing you've got to do is let people keep it in their homes, you've got to keep the electricity going. So there's a plan in Europe now to gradually ration energy as needed. And the first thing you shut down is your industry. And fertilizer is a big part of industry — ammonia — and that's going to have a big impact in some of the poorer parts of the world in terms of food production.
Geraldine Matchett: May I just jump in just to quantify this? Let's also maybe put a number to that. If you produce without fertilizers, you lose 50% of the yields. That is the delta between agriculture with fertilizer and agriculture without. So that is really the scale that we're looking at. It is not just that there is a shortfall now, it is that actually, if you look forward just a year or two years, it's not going to be an access issue, it's going to be an availability issue.
Máximo Torero: I'm sorry, but it would be next year.
Geraldine Matchett: Next year? Yeah.
Máximo Torero: But also Africa uses 3% of the global fertilizer, so it's very low. The intensity of use, the potential of growth is enormous. That's why the Dangote plant was built, which can supply fertilizers to all Africa. The problem is that 95.5% of the fertilizer in the Dangote plant goes to South America. So why doesn't it stay in Africa for which it was it was built, with money of IFC, so it was in a certain way de-risked.
Adrian Monck: So this is a factory, for people listening...
Máximo Torero: In Nigeria. It is a factory of fertilizers in Nigeria, but most of it goes to South America because it's more profitable for them there. They are a company, they're doing the correct thing. The problem is what is happening that this thing is not moving inside Africa, no?
But you're completely right. What is happening right now with natural gas is closing ten of the plants of fertilizers in Europe. And Europe was an exporter of nitrogen. Nitrogen is the element that wipes the fastest when you produce and therefore that will create- Europe will become a net importer when it was an exporter, so that will put even a bigger choke on the supply.
Jason Bordoff: And that will squeeze some of the lower income parts of the world.
Máximo Torero: It will affect the poorest.
Jason Bordoff: Who already are facing an economic crisis, because they can't afford energy, among other things.
Adrian Monck: So just to ask you, Geraldine, how does a company like Royal DSM keep its plants running in the face of this kind of shock? Is this something that you have planned for or is it something you're talking to governments about, or is it something you just have to look at the newspapers and think, how the heck are we going to keep things running when this is coming towards us?
Geraldine Matchett: So extremely difficult. Planned for? Absolutely not, because this was a black swan, to call it that way. And it's difficult to truly plan for those black swans. Now, we have an industrial footprint around the world. So to some extent some of our facilities, whether it be in China or in the US, etcetera. Okay, in Europe, I mean, we are a Dutch listed company, so we have a big footprint in the Netherlands.
The gas situation in Europe is critical and you have to position yourself in the context of society as well. Logically, homes need to be heated. So what we've managed to do in some cases —which we don't like because it doesn't help the climate — but some of our facilities we can tilt back to oil. So wherever we can produce steam and energy out of oil, we've done that. But if the infrastructure is not there, you can't build it fast enough. So in fact, it's some of our more legacy sites which have that duality. Others are completely dependent on gas supply.
So it does put companies like us and many others, particularly in Europe, in a very difficult situation. And you look at capital markets and financial markets to hedge, for example. There's no market for hedging. I mean, you could do that over a period of time, but it's maxed out because there's so much uncertainty in the system. So a lot of interaction with governments, trying to understand what the plans are going to be. But it is very much a crisis management situation.
Adrian Monck: And, Sam, from an investment point of view, I'm sure it's even tougher, or are there things that you're seeing coming through where you think, actually there's some quite interesting signs of what this has precipitated? Or this has got people talking much more seriously about things that maybe a year ago they wouldn't have considered?
Sam Kass: I mean, I spend we spend our time focused on earlier stage mission-driven
companies that are trying to solve the climate and health crisis. And so from an investment standpoint, ironically, it actually creates a lot of opportunity because people are now aware of the magnitude of the challenges that we're trying to solve and grapple with, and that we do need more innovation and more capital flowing into this sector. I mean, right now, as much as it's flowing, it's still a drop in the bucket compared to the size of our food system globally and the magnitude of the challenges that we face.
I mean, we have to remember that we have a food system that has been built and constructed around the most stable climate that scientists can see in the history of the planet. The last couple of years have been completely, you know, a utopic climate for growing food. We're now entering an age of incredible volatility, and we just do not have a system that's set up to manage and deal with the risk that is going to come from this volatility. Ukraine, yes, was a black swan event by our current standards. That is the norm. There will be an increasing amount of conflict. Pakistan, what we saw there, that will be happening every year and year over year over year. In a few years we would no longer call that a black swan event.
Adrian Monck: This is the flooding that we've seen.
Sam Kass: And also America is on fire. There are places that haven't had rain in 20, 30 years. Like this is now becoming what we have to design our system for and which to this point we have done not at all. And so from a technology innovation standpoint, there's so much effort being put into, okay, how are we going to do this? How are we going to lessen the footprint of our ag system like, you know, reducing methane from cows and other parts of the system.
But also in spending a lot of time in this space, I think food, honestly, is our only chance, quite frankly, to sequester enough carbon, to give us enough time for other technologies to come to bear to mitigate the worst of climate.
A lot of the carbon that is in our air used to be in our soil. We have, you know, a billion people working in food and ag globally who we could finally start paying them to farm with better practices and start sequestering that carbon back into the soil.
If we don't successfully do that and I think we have a really good shot at it, I don't think we're going to come close to meeting the moment. So there's a lot of challenges to do that well. There's a lot of problems still in the space, but I think technology innovation is going to help give us a shot at solving some of these challenges.
Geraldine Matchett: Yeah, I fully agree. I mean, right now a third of arable land suffers from drought. That is not a black swan — that has been getting higher and higher and higher. The climate disruption is clearly not a black swan. It's a trend. And therefore the resilience part is what we all need to work on.
And what gives me hope is that across the value chain, what we're seeing is increased collaboration between parties that never used to collaborate, but they used to compete. And now the scale of the crisis on scaling regenerative agriculture, on making sure that we have healthy top soils that can actually withstand these downpours and these droughts, etcetera, everyone is now leaning in. And so that's the positive out of what's happening, is that because there's the on top of factor of the Ukraine crisis and the fertilizer crisis, to be honest, that has really changed attitudes.
Máximo Torero: Can I say something, because yes, everybody is leaning in, but for where? Because the major problem right now is that more than $60 billion are located in agricultural subsidies and incentives in developed countries, which are not for what we are talking about — they are for the opposite. They are to create more emissions. They are to produce grains and cereals which are not healthy, they don't have the micronutrients you need. And that is mostly developed countries, you know. Developing countries, it's not so much. So if that doesn't change, then I don't see what is going to really change.
And so I think it's really important accountability in our actions. And we said, okay, we need to change the energy mix. Sure, we need to change the energy mix, for what? To reduce emissions, which is a public good, is an international public good. [Where did] the level of emissions that we have accumulated right now come from, historically? Who is going to be affected by a change of the energy mix in countries?
Adrian Monck: But if you are, say, a Dutch farmer and you're told to take certain actions in order to to use less fertilizer, for example, or to, you know, make less emissions, and you find it hitting your bottom line and you take to the streets to protest because you see your livelihood being threatened. How does the message get through to farmers like that or how to governments begin to compensate people for the cost of those changes?
Because what we're seeing is that a lot of this transition comes with a price tag. And as you said, currently that price is set up to pay people to do certain things that are not delivering what we want to deliver. How do you make sure from a government point of view that people actually don't feel robbed or disempowered? They actually, you know, feel that they're on the right pathway towards achieving those goals?
Máximo Torero: Aligning the incentives. So I don't need to provide the Dutch farmer more resources to keep subsidizing the production of cereals. I can give incentives to the Dutch farmer to produce high-value commodities and to innovative in technologies which will provide healthy diets to the world. The problem is I'm doing the opposite.
So the problem — you go to farmers in X countries, in developed countries where the subsidies are such level that they can make a museum of tractors because they have so much money that they can keep buying tractors [...] And you ask, why do you [do] that? "Oh — because of the subsidies." So it's completely inconsistent to the reality we are living.
Food and a fragmenting global economy
“If people have trouble paying their energy bills, heating their homes, have issues with energy security, affordability, they take to the streets — and that's not only bad economically and geopolitically, it makes it harder to have an energy transition. ” — Jason Bordoff, Co-Founding Dean of the Columbia Climate School, Columbia University
Adrian Monck: Jason, just want to bring you in for a second on this, because we've talked about the food system, but it's not really a system, is it? You know, it's a market that's existed for decades on the back of what Sam said is a very stable climate that's suddenly shifted. It's existed on the back of a kind of geopolitics that we've seen as very fragile. So what are the kinds of things that we need in the public-private space that can help mitigate some of these interlinkages? Are there things, are there discussions, are there conversations where we can start to join up and do something?
Jason Bordoff: Yeah, there are obviously a lot of answers to that question. One important point I think is we are seeing how climate is impacting food. Obviously energy impacts climate. We're also being reminded now that climate impacts energy. Europe is in the middle of an energy crisis. It's also in a gas crisis. It's also in the middle of an electricity crisis. Which is not all about Putin. Let's put the blame where it's due, it's most mostly on Putin and Russia. But warmer waters are making it impossible to cool nuclear power plants. Drought is making it impossible to move coal barges up the river. High temperatures are reducing the output from wind turbines, hydro, because of drought. So climate is severely impacting energy now and then that is impacting the food system.
I think part of the broader macro environment that's happening now is one of more disruptive change because of climate impacts, but also more disruptive change because of geopolitics coming out of the pandemic, coming out of this conflict, completely rethinking what the World Economic Forum is all about. The world is rethinking what a globalized economy looks like. The trend is toward fragmentation, which is why the conversations we're having at WEF are so important, because we've got to make sure that we don't fragment. LMore resentment, a sense of hypocrisy in some developing countries against some of the behaviours we just saw in wealthier countries.
So that's a backdrop that is going to in some sense make it more challenging to have what we need, which is a more not less orderly energy transition. To your point, if we have more price volatility, if we make mistakes along the way, if we have geopolitical events, if we get the technologies a bit wrong, there's a massive transition to go to net-zero in 28 years. I mean, we've never done anything like this. And if you want to take a goal like that seriously, it is going to be jagged, it's going to be messy, it's going to be disruptive. We need more, not fewer policy tools to smooth the pathway, because if people have trouble paying their energy bills, heating their homes, have issues with energy security, affordability, they take to the streets, and that's not only bad economically and geopolitically, it makes it harder to have an energy transition and stay the course with the kind of climate policy we need.
Sam Kass: I totally agree. I mean, I think, you know, to try to meet that goal in the next, you know, less than 30 years, we're going to not only have to realign incentives around our subsidies. And I will say that, yes, they're a perverse set of money being spent in a counterintuitive way. And anybody who is either from the policy lens, who's resisting aggressive policy, you know, policies around climate, or not advocating for using those subsidies more efficiently, I would just say that's a sort of a dereliction of duty at this point. I mean, the problems are so extreme that we just can't waste any more time.
That being said, I think people focusing on food often like to point at subsidies, as like if only those were fixed, everything would be fine. And they're still a tiny drop in the bucket in terms of the global food and ag economy. And while we need them to unlock a lot of the change and start paying farmers to make those initial changes and cover that cost of farming in a different way, I think setting up the marketplace tools so that people are getting paid from the market as well for commodities that are grown in a much more sustainable manner and that farmers are starting to get paid directly for the carbon that they're put in the soil is the way we're going to actually unlock everything.
The subsidies have to be aligned to that, no question. But without businesses saying I'm going to reduce, I'm going to start paying farmers much more for these kinds of commodities, or I'll buy offsets that are high quality from these growers, it's all going to just be incremental and come nowhere close to meeting the moment that we have to in the time that we do so.
I just want to caution ourselves to say it's just government bad policy. It's the reason we're not solving this.
Having been in the White House for six years helping to lead on food policy, you can see the power of, you know, national governments to do the right thing. And certainly, I would take a lot of issue with some of the ongoing policies that we have here on this specific issue. But when it comes to food and ag, in most countries, government's not telling the farmer, you will grow this in this way. I couldn't write a law that says you must eat the steak and thank God it was cooked in this way, because given who came after us, thank God that, you know, presidents can't tell you what to eat.
So I just think it's a balance. And I do think we have to understand the role of government in those subsidies to start pointing in a very clear direction about how we have to move and how fast. And we have to put the tools in for the market as well to unlock that.
Adrian Monck: Maximo, are there governments who you would pull out and say these guys are doing the right thing, they've got it right? They're the example that we like to show people.
Máximo Torero: I agree with you and I missed a zero in my number, it was 600 million, not 60. But the point is that's one of the elements, of course it is not the package.
But there are several things that are not correct. Like I think the best example of how the system is failing is what happened with the vaccines. That's the best example. You immediately saw how the game is played, no? Who got the vaccination? The developed countries. The poorer countries — forget about it. You will get it at some point. That doesn't make any sense in a world that is so interconnected. The same applies to climate, because if I am able to use your technology and I am able to produce livestock, which emits less methane, I should do it, but I should be able to trade those emissions with somebody else. And the system doesn't allow me to trade emissions and that doesn't create the positive results.
Geraldine Matchett: And that's one of the biggest issues. Agriculture has always been kept out of any climate mechanisms, which is wrong, because I think you said it absolutely right - it's the sector that brings the biggest opportunity for various reasons.
Firstly, how do we grow food? On soil. How do we get to the soil? We take away the trees in order to grow. So there's a direct correlation of feeding more and more people with loss of forest cover and vegetation cover.
Then there's the methane. Then there's the methane from livestock, but also from rice paddies. And then you've got the nitrogen and then you've got the watersheds, etcetera.
When you actually look at all of that and you take the opposite lens and you say, okay, so if all of these things are not quite right, that means if we actually deal with them, we have a huge upside. And the technologies exist today. So and they're not so extremely, you know, they don't require massive capital. But what they do require is a lot of coordination. And I wonder sometimes that in this world, what's the hardest? Is it to pull together a lot of capital to do big capital investments, or is it to coordinate a lot of people to do the right things? And in the case of food and agriculture, that seems to be sometimes the biggest issue.
“We tend to talk about food and agriculture as if it's the same everywhere. Absolutely not. The battles are different depending on regions and countries. ” — Geraldine Matchett, Co-CEO and CFO, Royal DSM
But I'd like to add a slight topic, which is we tend to talk about food and ag as if it's the same everywhere. Absolutely not. So the battles are different depending on regions and countries. And I very much agree with you that while mature economies, whether it's the US, Europe, etc, really needs to switch to regenerative agriculture and we need to find the right subsidies and incentives and whatever to facilitate the journey for farmers. Because let's be clear, the farmers can't afford to do it on their own. That doesn't take away that in other regions - and I'll take Africa as the obvious continent - that's not the battle. The battle is: increase productivity, locally produce nutritious food that is affordable and resilient, that they don't depend on international trade to eat. And therefore, we need to think very differently of the regions and hopefully the two put together you start moving the whole planetary food system up.
Máximo Torero: Now 3.1 billion people don't have access to healthy diets today. And most of them are in Africa. Now the point is, I wouldn't think that trade is wrong. On the contrary, I think trade is good. You use your resources in the most efficient way. You can do short supply chains or long supply chains, it doesn't matter. The important thing is that you assign the incentives properly, that's the trick. Agriculture is the sector with the biggest level of distortions in the world. Therefore, we have to give them a different treatment to any other sector. We need to make it more transparent. And it's like that on purpose, it is not like that by mistake. It is, of course, designed to be like that. So that's the point.
And that is basically what we talk about, the true cost of food. We need to understand the true cost of food, I use cost and I use value because it's important to understand. But it's not accounting costs, it should include the value of all those externalities that we generate. But that will help a lot to create this transparency and incentives so that things start to align.
Adrian Monck: Right. We've talked about- you brought in the vaccine distribution. And, you know, if you're a national government leader responsible to a nation, are you going to be that concerned if an outside party doesn't get the same access you get, be it to food, be it to energy, be it to vaccines, your responsibility as you sitting in the chair is to the people in your state and you're wanting to look after them, making that bigger argument that we're talking about here, which is about coordination and cooperation and collaboration...
Máximo Torero: That's a silo view, because I am sure if the counterfactual was that the vaccines were distributed globally faster, we would have solved this problem earlier than where we have been right now. So the idea of just protecting my own people in a world like the one we have for full interconnection, that anybody can flow from one country to the other and bring the virus and create a pandemic again. And this will happen a lot because climate change will accelerate this process. This is not new. I think that that vision, that way of thinking has to change. If it doesn't change, we will never resolve the problems.
Jason Bordoff: It's exactly part of the response and I think part of Putin's strategy with the energy crisis, which is to divide Europe and break European unity and we'll see what happens. And I've been impressed by how much European unity has held. But when people don't have enough molecules to keep the heat on in the winter. To your point, are they going to make sure they're heating homes of their people or exporting gas to a neighbouring country? And I think we have to be careful of that.
Now the good news is that, Geraldine, what you said for food is true for energy too, where the solutions for energy security - in the near term, we're going to switch to some oil and coal and we're going to build LNG import terminals. But in the long term, the things that give you more energy security, mostly, not entirely but mostly, point in a decarbonized direction as well. And I think that's a really important thing to keep our eye on and keep focused on, which is that if we were less dependent on globally traded hydrocarbons, inevitably exposed to geopolitical risk, if it's not Putin, it'll be something else next time you get a lot of energy security benefits from that, not to mention what we need to do for emissions.
Geraldine Matchett: And I have to say, having COP27 and COP28 coming up is really helpful because, in the context of now, there's a full awareness that climate, food and energy actually all hang together. I'm really hopeful and confident, actually, that now we're going to have the right conversations because it's been very much a siloed sort of energy discussion, as if energy is a standalone thing, which it's actually not.
And we have seen, given the civil unrest that has happened in many countries, when food fails, everything fails. It's as simple as that. People cannot wait three months or cannot put an extra jumper on or go without a mobile phone. Food is a daily requirement, preferably nutritious, healthy, delicious food, chef. But that is true of all culture and of all places. And that if there's one thing that unites populations around the world: it is not only the need for food, it is the passion for food, it's at the core of every civilization. And I think if we bring to COP27 and 28 the passion that this kind of attitude takes, hopefully we can break through some of these geopolitical barriers that have been in the way, to be fair, and I'm with you and distorting too much the system.
Harnessing food, identity and culture
“It's an issue of behaviour and trying to understand that diversity is good and diversity of what you eat is what you really need. ” — Máximo Torero, Chief Economist, UN Food and Agriculture Organisation
Adrian Monck: There was another thing I wanted to just bring in to get your views on, which is: we talk about the passion, but people have a passion for what they eat and it's an incredible part of people's identity. You only have to look at, you know, a street here in Manhattan to see all of that expressed in every single variety of restaurant. But, you know, when they hear the kind of discussions like we're having now, they tend to think that we're just talking about calories and vitamins and micronutrients and that you can serve it all up in a big pile of slop and say, there you go, that's your meal. It meets 2,000 calories. Vitamin C...
Geraldine Matchett: 'It's climate friendly.'
Adrian Monck: It's climate friendly. How do we address both the issues that you're all talking about and make sure that this conversation doesn't happen? So you're saying to people, no, you can't eat that. You've got to eat this. You can't eat that.
Máximo Torero: Beautiful Mediterranean diets. They are healthy.
Adrian Monck: I should have realized we had an Italian in the room, I'm sorry.
Sam Kass: You know who is going to take that one.
Máximo Torero: Well, no, but honestly speaking, I think it's an issue of behaviour and trying to understand that diversity is good and diversity of what you eat is what you really need. It doesn't mean that you need to have a pill with all the micronutrients that you need to survive. That's not what you are looking for because it's culture also behind. So the diversity is what we are looking for and to be careful on what you eat. But the most important thing is to understand that there is other people also that is affected and they don't necessarily have access to that diversity that you have access to right now.
Geraldine Matchett: I would say to preserve the diversity of diets, which actually is the pleasure of food, you have to be looking at every possible opportunity to reduce the footprint and look at how we produce that food. So it's what we eat, but it's also how we produce it. And then when you combine it together, if we have enough of this work, then you will be able to have, on the one hand, the net positive direction of food production and preserve the pleasure and the culture of diverse diets.
And that is something if you actually look at the Green Revolution, we managed to feed three times more people on this planet, which from a scientific and a technical point of view is a real achievement. But the diversity of what we eat has narrowed massively, in fact, and you probably have all the figures, the percentage of what we eat is now in the hands of sort of five crops. And, you know, it's extremely narrow and that is actually destroying our soils and our climate. So diversifying what we eat is actually part of the solution. And I'm sure the chef would agree on part of the pleasure as well.
Sam Kass: Yeah, you know, I think diversity is the foundational theme, from a strategic standpoint. Look, I think we have to bake the impact into the products that people are eating. We have to make it really easy for people to have a positive impact. If we're going to ask everybody to become experts on all the things that are happening globally while they're trying to raise their kids or work a couple of jobs and deal with their ageing parents. It's not going to happen. The products themselves have to carry the change and it's good to educate and communicate. But we can't ask people to go on a mission to transform their whole diets because they don't have access to those kinds of products to do it easily.
So that's up to us. That's up to policymakers, investors, businesses and industry to make it much easier on people. And then I think we have to do the hard work over time to shift the cultural values to include better nutrition and climate sustainability in what we expect from our food system, from a consumer standpoint.
Companies can only go so far unless people are saying, "Yeah, I really am expecting in that product that you're considering the impact on the environment" or what you're putting in that package or you know, what that chef's cooking. And that's the hard, slow work that we all have to pay attention to because it is exactly who we are. And so you can't tell somebody: if you eat this, you're bad. Because it's just like, I'm not a bad human and I do like to eat what I've always eaten, what my grandparents and great grandparents have eaten. So that's why you have to sort of shift those values over time to include a different way of thinking. And then we express it. Then chefs can start cooking up new ways of expressing that same identity.
Máximo Torero: Also, one thing that is really important is information, especially with kids. What we are observing in the schools and the bad information that is being provided to kids for what is a healthy diet, for example. Vegetarian diets are not healthy and everybody knows that scientifically they are not healthy diets. It's true.
Sam Kass: We just made some news right here.
Máximo Torero: They are not healthy diets, they are not defined as healthy diets. They do not comply with all the micronutrients, you need to add supplements to it to make it a healthy diet. I don't have any problem with you deciding to be vegetarian or not, but if you are misinformed about it, you can create a behaviour in children that will end because if they don't have the complements, the vitamin [supplements] that they need, they will end in serious problems. And many kids are ending in serious problems right now. So I think information would be very important on this topic.
Sam Kass: Your social media, your inbox is going to be full today.
Máximo Torero: That's good.
Adrian Monck: It's been a really interesting discussion. I think maybe what we've seen is that there's a diversity not just of opinions, but of issues. And the kind of links between them are both what economists call wicked, which means they can't figure them out, and also the kind of issues that need conversations like the ones we're starting to have today, which is to say conversations that help people understand some of the changes that they need to make on their side in order to meet other people where they are, so that we can try to move things in a direction that achieves the kind of change that move the needle on these two very, very thorny issues.
I hate to leave that discussion without offering people a little bit of optimism. And whilst I'm excited that not being a vegetarian is good news for my own personal health, I really want to ask each of our panelists what aspect of what they do gives them optimism about tackling these crises. And I just heard a deep sigh there, Jason, so maybe if I turn to you first. Is there something that you come across in what you are doing that gives you optimism about tackling the energy crisis?
Jason Bordoff: Yeah, well, it was your introduction to me which said I run an Energy Institute of Columbia, but also the Columbia Climate School, the first climate school in the country. And there are a lot of institutes, a lot of centres. A university like Columbia owns a couple of schools, a law school, the business school and medical school. We've decided to create the first climate school because it's the largest commitment an institution like that can make to this issue. We just graduated our first class of 90 Masters students with a degree in climate and society. And I will say to stand on that campus overlooking 30,000 people, bestowing degrees on those extraordinary young people who are committed and passionate and brilliant and care deeply about this issue, it's hard not to work with young people these days and not really feel inspired by hopefully their ability to make do a little bit better than we did.
Adrian Monck: Maximo, you've given us some very honest and sometimes gloomy advice. A little bit of optimism for those hoping to not turn entirely vegetarian. But what's your...
Máximo Torero: So, look, I think that despite of the shocks we had, the COVID-19 and so on, the agricultural system worked. You got food during COVID-19 and we will go out of the war in Ukraine. So I think what the sector is telling us is that it is resilient, it needs to be a lot more because of the shocks that are going to happen. But it has been resilient.
And the second thing is that these are huge opportunities to make big changes. I think the window we have is very small because the financial crisis that is coming will be very bad. And if we don't take opportunity of this little window, I think we lose a very important chance to do the transformation that we need.
Adrian Monck: And Sam, from your perspective, looking at new, interesting businesses and and other things coming through, what's your...
Sam Kass: Yeah, I mean, I look I live from the vantage point of hope and optimism and, you know, urgency, given how bad things are getting.
But every day I'm working with entrepreneurs that I think are setting out to solve the fundamental problems we've been discussing all day. I have a long list, just a couple: Meati is bringing probably the most delicious but healthiest food I've ever seen, both from a nutrient macro and micro nutrient standpoint to the market right now. Do Good Foods is collecting food waste from retailers and turning into animal feed. You have carbon-reduced chicken, so that you can just eat a piece of chicken and have a pretty big impact. Sprinng Foods is trying to bring regenerative bread to everybody. You know that I've been helping for a long time. So just like a long list of brilliant entrepreneurs that are trying to tackle.
Adrian Monck: So without having to make the change, the products are getting better.
Sam Kass: The products are going to get better. And I think that though the big systemic opportunity is how we actually value our ecosystem and the services that these ecosystem are providing us. And I think we are called to change how the economy fundamentally reacts to these natural ecosystems. Right now, we only pay people to take things out because the forest down for the wood or you take the plant out, you harvest it.
We haven't figured out how to start valuing what the world provides humanity for life on Earth. And I think carbon offers us an opportunity to start paying farmers to relate to the earth in a fundamentally different way. And I think that is the near-term opportunity which will lead us to a different way of valuing what these ecosystems mean to humanity, what a forest actually provides for humanity.
And an incredible company called Loambio's sequestering three tonnes per hectare of carbon per acre per year and in much more permit forms. And you've got companies like Intrinsic Exchange Group that are creating actual market mechanisms to invest in these natural ecosystems. And I think you start to see this lineage of different companies putting together and organizing our economy in a fundamentally different way. And that's the kind of transformational shift that I do think is actually beginning, that's going to be bumpy and messy and have a bunch of problems along the way, but that we're actually starting to move to a new direction that could, on a global basis, really solve a lot of these challenges because we're starting to pay people to do the right thing. And until we do that, this isn't going to work. There's no policy that is going to change this, the market is too powerful. We're going to have to align our policy and market to actually reach these goals. We have the chance. I don't know if we're going to do it, but the pieces are starting to be developed, so that that gets me out of bed every day, ready to go.
Adrian Monck: Thanks. And Geraldine, from your perspective, you've talked about some of the things that Royal DSM has done over the last 10 years and it's starting to do. But are there other things that you have in the pipeline that give you optimism about what we're doing? But you've also talked about coordination, which is, I think, a really important piece of the puzzle that people sometimes don't understand — the public-private cooperation piece - that not everyone's talking to each other on a big WhatsApp group. There isn't that kind of there isn't that kind of interaction. Are there a couple of things that have opened up for you in that space?
Geraldine Matchett: I think what gives me a lot of hope is the scaling of the Food Innovation Hubs. So they really are now extremely active. To your point, connecting the new science to the scaling. The other one is the fact that we are now as a world bringing together climate and food and actually now flipping it the other way and really saying, okay, we need to protect the ability to produce food. And that points to farmers.
So for a long, long, long time, to be honest, farmers were somewhat neglected in this equation, and I'm sorry to say it in a rather brutal way, but certainly from a big part of the chain, it was assumed that the right stuff would be produced, and then we focused on all kinds of things and brands and whatever. Now that's not the case. It's back to the fundamentals of where this food comes from. And that basically enables companies like us to lean in and to connect with all and to really say, how do you scale affordable, nutritious, tasty, because let's be clear, people only eat things that they like to eat, foods? And for that you need the farmer at the table. And we've been doing that, and we're middle of the chain. So before we would never have thought about it. And now it's everyone together. And that's when you see that the positive energy is there. And one thing that I would really love to see is a fresh generation, an excitement in the young generation coming at you. You triggered me with your comment on graduates in energy — two of my nieces are doing exactly that. I would love to see that strong generation come up on food, food and agriculture and food production, because it's been an underrated activity for too long. So that's what gives me hope, is that I think everything's now there to create that.
Adrian Monck: Thank you. Thank you for joining us in this discussion. Please follow along with the rest of our meeting material. To Sam, to Geraldine, to Jason and Maximo, my thanks. Thanks for being with us at the Sustainable Development Impact Meetings. Goodbye from Manhattan.
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