Growth of intensive units has potential to increase antibiotic resistance and could result in spread of bird flu beyond region
August 14, 2017 — The use of antibiotics in factory farms in Asia is set to more than double in just over a decade, with potentially damaging effects on antibiotic resistance around the world.
Factory farming of poultry in Asia is also increasing the threat of bird flu spreading beyond the region, with more deadly strains taking hold, according to a new report from a network of financial investors.
Use of antibiotics in poultry and pig farms will increase by more than 120% in Asia by 2030, based on current trends. Half of all antibiotics globally are now consumed in China alone. The Chinese meat and animal feed producers New Hope Group and Wen’s Group are now among the 10 biggest animal feed manufacturers in the world.
The growth of Asian meat production in intensive units is also producing a rise in greenhouse gas emissions from the food chain, with emissions likely to rise by more than 360m tonnes, the equivalent of running 100 coal-fired power plants for a year. There are knock-on impacts such as deforestation, as China’s need for animal feed is responsible for more than a third of Brazil’s soybean production.
The report, Factory Farming in Asia: Assessing Investment Risks, comes three years after a meat scandal in China, in which suppliers to McDonalds, KFC and others were found to be using dirty meat and products past their sell-by date. It also comes in the midst of a growing food scandal in Europe, which has required the recall of millions of eggs tainted with harmful chemicals, and as concerns have been aired over the impact of Brexit on imports of farm products to the UK.
Asian food companies have rapidly expanded their meat production in response to growing populations and the tastes of the rising middle class, but this expansion has come to the detriment of food safety.
Jeremy Coller, of Coller Capital, said: “Investors have a big appetite for the animal protein sector in Asia. But the growth is driven by a boom in factory farming that creates problems like emissions and epidemics, abuse of antibiotics and abuse of labour. Investors must improve the management of sustainability issues in the Asian meat and dairy industries if they want to avoid a nasty bout of financial food poisoning.”
However, the report also found that deploying modern techniques could assist in reducing the impact of factory farming – for instance, by using barcodes to enable consumers to check the provenance of eggs, by reducing greenhouse gases and improving the health of livestock.
Avian flu is an increasing threat, with the latest strain to take hold in China, H7N9, proving more deadly than previous strains. It has already killed 84% more people in the four years since its emergence than the H5N1 strain that came to public attention in 2006. Affected industries in China include suppliers to McDonalds and Walmart. An outbreak of bird flu in South Korea in 2016-17 resulted in the cull of a fifth of the country’s flock.
The authors of the study recommended that investors assess the risks of food production in the assets they hold, as financial firms can persuade the companies they fund to make improvements in their supply chain. But they said awareness among investors was currently too low and should be raised.
Previous food scandals have damaged the finances of multinational companiessuch as McDonalds and KFC. Jaideep Panwar, sustainability and governance manager at APG Asset Management Asia, said: “[This] reminds investors to keep a close eye on the long-term risks of food assets in Asia.
“The evolution of what are now early stage regulatory moves in Asia, supplier conditions introduced by international brands and import restrictions can have an impact on the productivity of Asian producers and their access to markets. Investors will assess the ability of companies in the meat supply chain to position themselves ahead of these risks.”
Melissa Brown, partner at Daobridge Capital in Hong Kong, added: “Few issues are as politically sensitive in Asia as food safety. Yet far too many food sector equities have been priced as if [these] risks don’t matter and that good risk management won’t be recognised in the market.”
The report was published on Monday by the international investment network FAIRR and the Asia Research and Engagement consultancy.