Sustainable Livestock Management

Animal agriculture significantly contributes to greenhouse gas emissions (GHG), and over the past 50 years, habitat loss has primarily been due to the conversion of natural ecosystems for crop production and pasture. In 2022, the global cattle population reached 940 million, taking almost 70% of the 4.74 billion hectares of agricultural land worldwide for grazing and feed crops.

The demand for animal-based foods, such as meat and dairy, is expected to grow by nearly 70% between 2010 and 2050, with the majority of new demand coming from developing countries. Using current livestock practices to meet this demand is infeasible, as it will accelerate habitat conversion, the decline of essential ecosystems and their services, including soil fertility, water availability, pollination, climatic stability and biological pest management.

Sustainable livestock management practices make livestock production more efficient, meeting the growing demand for animal protein while curtailing its environmental damage. Increasing pasture productivity and introducing practices such as rotational grazing enables sustainable intensification of livestock and reduces the pressure for grassland and forest conversion and the threat of overgrazing. Sustainable animal feeds can preserve biodiversity through the reduction of soy and fishmeal demand. Feed additives that reduce enteric fermentation decrease methane emissions mitigating climate change. Offering guidance and technical help on good animal husbandry and welfare, along with promoting animal identification, traceability, value-chain development, and livestock farmer field schools, enhances sustainability, profitability, and productivity in the livestock sector.

The last decade has seen a significant increase in venture investment in agricultural technology (AgTech). AgFunder’s Global AgriFood Tech Investment Report 2023 found that increasingly outlandish tech valuations drove 2021’s record-breaking $51.7 billion in agrifoodtech funding. Then, in the wake of war, inflation, and continued supply chain disruptions, the market came crashing down in 2022, and funding to agrifoodtech startups was only $29.6 billion in 2022, down 44% year-over-year. (However, the drop in deal activity was not as pronounced with 2,797 deals closing, down 19% from 2021.) .

Investments into livestock (Animal Agtech) - mostly aimed at productivity enhancement – represent just a small segment of this universe; sustainable livestock management is a new investment frontier. SVG Ventures, one of the most active venture capital firms investing in the agrifood tech sector presented a map of 95 startups innovating within livestock 2019 (Fig 1). They range from pre-seed to fast growth and have attracted over $500 million in investments.

Figure 1: Landscape Map of Animal AgTech Source: Thrive by SVG Ventures

While the demand for animal-based products is expected to grow, especially in developing markets, there are several factors are acting to constrain growth:

• The relationship between deforestation pressures and livestock production has raised concerns regarding access to export markets
• Livestock’s current contribution to climate change, especially the beef and dairy industry, is incompatible with a 1.5°C pathway
• More and more consumers have concerns about animal welfare and eating animals
• The alternative protein market is offering an increasingly good replacement

This is leading to a shakeup of a usually slow-moving sector and forcing the livestock industry to adopt more sustainable measures, which in turn has led to the rise of several alternative approaches.

Currently there are three poised to shape the market:

• Low-emission feed or feed additives like red seaweed and Bover increase feed digestibility thereby reducing enteric fermentation and methane emissions. Companies providing these products include DSM and Mootral.
• Sustainable animal feedstocks that are a replacement for soy and fishmeal, both of which are linked to negative environmental impacts. Companies providing these products include DryGro and AgriProtein.
• Sustainable intensification of livestock that increases stocking density while limiting damaging animal welfare and environmental impacts. Usually related to grazing management systems and breed genetics. Companies include Pasture Map, Vence, Halter.

Low emissions feed or feed additives have received the most attention and private capital is beginning to flow into this sector. In 2020, FutureFeed, an Australian company developing a feed additive made from Asparagopsis seaweed, raised $9.34 million in funding from CSIRO, Woolworths, GrainCorp, Harvest Road, and Sparklabs Cultiv8. The company claims that it is effective in reducing methane emissions by as much as 80%. This has caught the attention of the Australian government which plans to use “technology not taxes” to reach its net zero commitments. Volta Greentech, a Swedish seaweed startup raised $2 million in a seed round that took place in 2021, led by two independent investors. Volta Greentech licenses its technology from CSIRO.

One of the innovators in the methane-reducing feed additive sector is Mootral, a UK-Swiss company whose garlic and citrus extract feed supplement has been shown to reduce methane emissions by up to 38% while increasing milk productivity by 4%. Mootral is also launching the world’s first carbon credit generated from cattle methane emission reduction. Chemical giant Royal DSM has also joined the herd with its product Bovaer recently approved by the Brazilian government to commercialize its feed supplement. Bovaer will now be sold in Brazil and the Netherlands and can be fed to cows, sheep and goats. Based on trials conducted in Australia, DSM says that just a quarter-teaspoon of Bovaer administered per cow, per day can reduce enteric methane emissions by about 30% for a dairy animal and up to 90% for beef cattle.

Sustainable animal feedstock that offers a replacement to soy or fishmeal have also been generating some buzz with insects like the Black Soldier Fly and Mealworm larvae on the menu as viable alternatives. In 2021, the French insect farming startup Ÿnsect, raised an additional $224 million to its initial $148 million raised in Series C funding, bringing the total round to $372 million. With the recent authorization by the EU Commission allowing the use of PAPs (Processed Animal Proteins) in pig and poultry feed, Ÿnsect plans to extend its feed line to include this sector. Investors in this round included Astanor Ventures, Upfront Ventures, actor Robert Downey Jr’s FootPrint Coalition, Happiness Capital, Supernova Invest, Armat Group and a bank consortium including French government-linked investor Caisse des Dépôts, Crédit Agricole Brie Picardie, and Caisse d’Epargne Hauts-de-France.

Agriprotein, which produces feed from fly larvae raised on food waste, has raised over $135 million in equity and debt from 2016 to 2018. The company has over ten years of R&D and aims to replace fishmeal. Investors include Twynam Agriculture Group. DryGro, a UK-based startup that produces a feedstock based on Lemna - a high-protein variety of duckweed - closed a $4.7 million Series A round in May 2020. Founded at Oxford University in 2015, DryGro has previously received funding from Sustainable Ventures, Hatch, Innovate UK, the European Institute of Innovation and Technology Climate-KIC programme, the European Commission’s Horizon 2020 initiative and the European Space Agency (ESA). Lemna has also come to the attention of companies looking at alternative protein for humans. An example is Plantible, which recently secured a $26.4 million Series A funding round led by FTW Ventures.

Technology is increasingly being used for pasture management as a way to mitigate climate change and to avoid overgrazing and land degradation. Vence, a US startup focused on virtual electric technology, raised $12 million in a Series A round that took place in April 2021, led by Tyche Partners and included participation from existing investors including Grantham Environmental Trust subsidiary Neglected Climate Opportunities, Rabobank‘s Rabo Food & Ag Innovation Fund, Eniac Ventures and Trailhead Capital. Other startups focused on virtual fencing solutions include Agersens, an Australian company which secured $15 million in funding from New Zealand farm equipment maker Gallagher in 2019. In 2023, New Zealand agtech startup Halter, which developed a GPS-enabled solar collar that guides cows around pastures using sound and vibrations, raised U$52 million in a Series C round. This round was led by US VC Bessemer Venture Partners and backed by existing investors Blackbird, Rocket Lab founder Peter Beck, Kiwi VC Icehouse Ventures, and DCVC. The subscription collar, powered by what the company calls its trademarked “cowgorithm”, is designed for fenceless farming and can keep livestock away from waterways and other sensitive environments. It also enables round-the-clock herd monitoring and remote herd shifting. US dairy co-op Organic Valley is currently piloting satellites as a way to help its dairy farmers better manage their pastures through enhanced imagery and other data sets. If successful, the tool will be scaled to all Organic Valley operations during 2022, covering over 189,000 acres of pasture.

Although large meat producing companies have diversified their protein offerings to include alternative meat protein substitutes, there has been little investment in sustainable livestock management. This however could change rapidly as Brazil meat giant JBS committed to net-zero by 2040 in April 2021. Although not directly related to sustainable livestock management, the company has launched a fund - Fundo JBS pela Amazônia that aims to promote and finance initiatives and projects for the sustainable development of the Amazon. Reports of the company also noted that it is working extensively on traceability of its beef supply chain.

Tyson Foods, the largest US meat packer, also announced its net zero commitments by 2050. Cargill, another large food and meat processing company, stole headlines earlier this year with its methane-absorbing cow masks. The company teamed up with ZELP, a UK startup producing methane-absorbing wearable devices for cows that claims it can reduce methane emissions by more than half. Cargill plans on offering these devices to European dairy farmers in 2022. This experiment is part of its BeefUp Sustainability initiative committing to a 30% GHG reduction across its North American beef supply chain by 2030.

In Oct/21, Brazil - the world’s largest beef producer - announced plans to cut 1.1 billion tonnes of ag-related emissions by 2030. Its ABC+ program will subsidize interest rates for farmers who adopt emissions-reducing practices. Such projects include adding methane-reducing supplements to feed. Australia included methane-reducing feed supplements for livestock among the key technologies in its 2050 net-zero roadmap.

Several innovative initiatives and networks are starting to shape the future of the livestock sector. FAIRR, a global investor network whose membership manages $45 trillion in assets, has been instrumental in shining a spotlight on the ESG risks in the food sector, and particularly around livestock. One of its tools - the Coller FAIRR Climate Risk Tool, helps investors assess the financial implications of climate-related risks in the sector. The company also recently released an investor statement - “Where’s the beef”, supported by a $5 trillion investor group.

The newly launched Innovative Finance for the Amazon, Cerrado and Chaco (IFACC) initiative aims to catalyze mechanisms for the expansion of deforestation-and conversion-free (DCF) cattle and soy production in the three biomes. Backed by the United Nations Environment Programme, the Nature Conservancy and the Tropical Forest Alliance, IFACC has $3 billion in commitments and $200 million of new disbursements, as of 2023. The goal is to reach $10 billion of commitments and $1 billion in disbursements by 2025. Industry group networks are also key with the Global Roundtable for Sustainable Beef being one such group.

The business care for farms and farmland investors is built around increased productivity per unit resulting in increased carcass weight, higher quality and therefore higher prices. There are additional benefits from reduced wastage, reduced feed input (high digestibility, high quality feed) and generation of carbon credits.

Market Size Estimates

Estimates vary based on the specific definition of "sustainable livestock management" and the range of technologies and practices included.

However, several market research reports provide insights through the proxy of “global livestock monitoring”:

• Precedence Research: Estimates the global livestock monitoring market (a key component of sustainable livestock management) to be USD 5.8 billion in 2023 and projects a CAGR of 8.4% through 2032. They attribute this growth to increasing demand for animal health monitoring, rising adoption of technology, and regulations around animal welfare.
• Grand View Research: Estimates the global livestock monitoring market to be USD 5.2 billion in 2022 and projects a CAGR of 17.99% from 2023 to 2030. They cite similar factors as Precedence Research, along with the growing poultry segment.

Estimates for the CAGR vary from 8.4% to 17.99%. This range reflects the uncertainty surrounding the market's future growth and the different methodologies used by research firms.

Animal agriculture occupies 67% of the world’s agricultural land, yet it only provides 18% of global calories consumed. The global food system is the largest single contributor to habitat conversion and biodiversity loss, and the agriculture sector alone threatens over 85 percent of the 28,000 species at risk of extinction. Consumption of animal products, especially bovine meat, accounts for over half of the biodiversity loss within key areas, with bovine meat contributing to around 31% of total loss.

Furthermore, agriculture accounts for about 90% of the world's water footprint, currently utilizing 70% of all available freshwater—three times more than half a century ago. Livestock feed crops require significantly more water than crops grown for direct human consumption, such as fruits, vegetables, and beans. The production of a single pound of beef requires about 8,183 liters of water. Moreover, crops for livestock feed are often treated with high volumes of various fertilizers and pesticides (including herbicides, insecticides, fungicides, and bactericides), the surplus of which infiltrates nearby water bodies. Brazil, a country that houses 20% of global biodiversity, leads in pesticide consumption due to its extensive soybean and corn production, widely used for livestock feeding. These pesticides are classified as seriously hazardous to human health and the environment.

The increasing demand for beef is a major driver of deforestation, particularly in the Amazon, where 81 million hectares of forest have been cleared and converted to new pasture land from 1985 to 2022, the equivalent of 19% of the Brazilian Amazon. In Brazil, cattle are often raised in an extensive production system with low stocking density and no additional feed supplementation or agricultural inputs. As a result, more land and time is required for livestock to reach slaughter weight, leading to more habitat conversion (and more GHG emissions.) . Livestock accounts for 75% of deforestation on public lands in the Amazon. With forests harboring more than 80% of the world’s terrestrial biodiversity, conserving them is essential to halting the current biodiversity crisis.

Additionally, in 2022, 80% of produced soy, a significant contributor to deforestation, was used as livestock feed (Fig 2). As of 2023, soy production worldwide is at its peak, 13 times higher than in the early 1960s. Brazil, the world's largest soy producer, experienced a 557% production increase between 1993 and 2023. The area dedicated to soy production during this period also grew by 306%, from 10.7 million hectares in the 1990s to 43.5 million hectares in 2023.

Figure 2: End use of soy production. Source: Our World in Data - Soy

Fishmeal is also a crucial ingredient in some livestock feeds. However, overfishing, the primary cause of marine biomass loss, has resulted in nearly 90% of the world's marine fish stocks being fully exploited, overexploited, or depleted, as of 2023. Sustainable alternatives to fishmeal and soy could potentially reduce the overharvesting of marine resources and habitat conversion for soy expansion.

According to a study by the Climate Policy Initiative published in 2021, implementing practices that increase pasture productivity could boost the value of livestock production by 17.6 - 29.4% without increasing deforestation. That said, livestock intensification must be managed to minimize potential welfare issues that can arise from higher stocking densities, including the development of antibiotic drug-resistance, increased disease incidence and transmission and stress-related behaviors due to restrictions of natural behavior.

With the appropriate strong anti-deforestation policies and enforcement, sustainable livestock intensification therefore has a land-sparing effect, conserving vital habitats, ecosystem services and biodiversity.

Social Justice Impact

Over 1.3 billion people, including nearly 930 million poor individuals in Africa and South Asia, rely on livestock production for their livelihoods. For many, livestock is their primary source of income, and maintaining these animals also serves as a form of insurance, offering some protection when other income streams falter. Sustainable Livestock Management (SLM) presents a promising avenue for achieving positive social justice impacts. By improving breeding, feed management, and healthcare practices, SLM can enhance both livelihoods and food security, particularly for small-scale producers in developing countries, ultimately boosting their productivity and income.

SLM can also contribute to empowering women and marginalized communities by promoting inclusivity, providing accessible resources, offering targeted training, encouraging women's leadership in decision-making, and ensuring equal access to land and resources. Consequently, SLM can enhance family health and well-being.

By promoting practices such as rotational grazing and improved pasture management, SLM can reduce land degradation and enhance soil fertility, ensuring equitable access to productive land. This can address historical injustices related to land ownership and access, contributing to conflict resolution and suppressing the emergence of violent conflicts.

SLM values and builds upon the traditional knowledge and practices of indigenous communities and local farmers. This approach preserves cultural heritage and encourages the continued use of sustainable practices. By valuing diverse knowledge systems, SLM promotes inclusivity and collaboration among stakeholders.

Finally, SLM also promotes environmental justice and fair trade by reducing environmental pollution and promoting efficient resource use. Fair trade practices within the livestock value chain can ensure fair working conditions for all workers involved. By promoting transparency and accountability, SLM can contribute to a just and equitable food system.

Animal agriculture is one of the major contributors of greenhouse gas emissions (GHG), responsible for 18% of all greenhouse gases worldwide. Out of the annual estimated 10.4 GtCO2e of agriculture-related emissions in 2021, raising livestock directly contributes 7.1 GtC02e. Livestock emissions have risen by almost 20% since 2000, demanding urgent action towards sustainable livestock practices to mitigate climate change. In 2021, Meat Atlas, using data from GRAIN and the Institute for Agriculture and Trade Policy, found that emissions from just the top 20 largest meat and dairy producers were responsible for more GHG emissions than Germany. The most important GHG emissions from this sector are methane (CH4) and nitrous oxide (N2O), with the majority of GHGs originating from four main categories of activities: enteric fermentation, feed production, manure management, and energy consumption.

Additionally, clearing forests for livestock production contributes significantly to climate change. From 1990 to 2020, an estimated 420 million hectares of forests have been destroyed primarily for agriculture, releasing more than 165 GtCO2e. In 2020, livestock production (meat and milk) alone accounted for 60% of total food system’ emissions, the equivalent of 12.6 GtCO2e (Fig. 3)

Figure 3: Global food systems emissions in 2020 (A) and estimated global food systems emissions 2010–2050 (B). Source: COSTA et al. (2022)

According to Poore and Nemecek (2018), one kilogram of beef (beef herd) produces an average of 99.48 kilograms of CO2. Under current average production practices, meeting the 2050 projected food production would increase food system’s emissions by 38% (~ 8 GtCO2e/y) compared to 2020. These findings are consistent with recent analyses that have suggested that the global food system’s emissions might increase 30–50% by 2050.

However, the implementation of practices and technological solutions to improve production efficiency at both animal and herd level could reduce net emissions by about 30% by addressing the various point sources of emissions. Also, implementing sustainable livestock management practices could mitigate 28.4 - 46.8 GtCO2e by 2050 (Fig 4).

Figure 4: Technical mitigation potential of supply-side options for reducing emissions from the livestock sector. Red represents the range for each practice, where available. Source: Herrero et al 2016. Note for our calculations, “ Carbon sequestration due to legume sowing” was not included.

An analysis of 113 countries in Asia, Africa and Latin America suggested that US$994 billion per year in livestock value is exposed to various climate hazards. These hazards primarily include rainfall variability (US$198 billion) and heat stress (US$130 billion). Therefore, a cycle is observed between livestock management and climate change, which is becoming increasingly difficult to break. To ensure the sustainability of livestock production, it is essential to adopt adaptation and mitigation management practices that reduce the sector's impact on the climate and increase its resilience to climate change.