A new report by the Farm Animal Investment Risk & Return Initiative warns global investors that food safety remains a “very high and immediate risk” in Asia’s meat, dairy, and seafood sector.
It also brings antibiotic overuse and poor environmental management to the fore as sustainability risks likely to impact upon value and viability in the global food supply chain.
The report cites recent scares, such as the dioxin-contaminated eggs in Taiwan this year. It also cited the avian flu H7N9 causing deaths in China.
Consumers certainly have good reason to be wary of health risks in south-east Asia in particular. Foodborne illnesses are responsible for more than 175,000 deaths a year in the region — more than any other part of the world.
Perhaps the most significant issue for investors in the initiative’s new report is the alarming increase in antibiotic use projected in the Asian livestock sector.
The World Health Organisation has declared the rise of antibiotic resistance one of the biggest threats to global health today — yet Asia is set to increase the administration of antibiotics in its poultry and pork sectors by 129% and 124% respectively by 2030.
Around 23,000 US citizens a year already die from antibiotic resistance, and increased use by Asian factory farms undermines global efforts by regulators, the UN and the investment community to tackle the rise of antibiotic-resistant superbugs.
Antibiotic usage is rising in Asian aquaculture such as shrimp farming. A 2017 study on shrimp production in China found 52% of tested samples had anti-microbial residues, with 10% of these residues exceeding legal limits.
In 2016, the US Food and Drug Administration reported a record year for refusals to import Asian shrimp due to contamination with banned antibiotics.
Meanwhile, a boom in Asian megafarms poses major environmental risks. Around 35% of Brazil’s total soybean output goes into China’s soaring demand for animal feed. Soybean production is a key cause of the Amazon’s deforestation.
The report is timely, as many global investors see Asia’s industrialising animal protein companies as a smart play on rising middle class incomes and the growing demand for meat.
Chinese meat and feed producers such as New Hope Group and Wen’s Group are among the 10 largest global animal feed manufacturers. Chinese firms such as chicken giant Fujian Sunner Development supply the likes of McDonalds and Walmart.
However, investors must be responsible owners and engage with Asian food companies to improve food safety and environmental standards.
From fraud to food safety, emissions to epidemics, these issues have potential to damage returns and impact global health and environment.
How Asia responds to these challenges will define whether the region can satisfy investor appetite.
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