Everyone knows that factory farming is bad for animals, humans, and the environment. Now, with our help, a growing number of financial institutions are realizing that it’s bad for investors, too. With input from Farm Forward, a groundbreaking new report calls into question the wisdom of investing in industrialized animal agriculture. Published by Farm Animal Investment Risk & Return (FAIRR), the report highlights the risks to investors posed by a wide array of environmental, governance, and social issues that stem from factory farming.
The FAIRR report calls upon investors to carefully consider the material risks factory farms pose to successful investment. Climate change and increasing water scarcity top this list of problems with industrial farms that demand more investor scrutiny.1 The report suggests that the profitability of factory farming is threatened by some of the very problems that it creates. For instance, factory farms are both significant contributors to climate change (livestock operations emit more greenhouse gases than the entire transportation sector).2 and are likely to face severe financial strain as the planet heats up (a 21 percent increase in “heat stress” days is predicted for the cattle industry by 2045).3 Similarly, California dairies are currently losing millions of dollars in the midst of the state’s historic drought, even as factory farms continue to use more of California’s water resources than any other industry.4
Savvy investors will also consider the inherent fragility of factory farming as a result of its reliance on direct and indirect government subsidies. Factory farms in the US enjoy approximately four billion dollars in annual benefits from the of grain subsidies provided by the US government.5 From 1997 to 2005, the Farm Bill put more than a billion dollars per year into the pockets of large corporate interests in the broiler industry, accelerating consolidation in the sector even though the Farm Bill should, hypothetically, support small farmers.6 Factory farms further benefit from the millions of dollars spent every year by the public to mitigate and remediate water pollution that they cause.7
Because industrialized agriculture relies so heavily on government assistance, FAIRR warns: “Changes in government policy, particularly subsidy support, present significant financial risks to animal factory farming.”8
FAIRR points to the risk of diseases like swine and avian influenza as another key concern for investors. In 2009, for instance, H1N1 Swine flu killed 150,000 people and cost the industry billions of dollars in lost revenue. According to Columbia University professor Raul Rabadan,9 evidence points to a factory farm as the origin of that outbreak.10 Just as alarming, however, is the rise of antibiotic-resistant pathogens, which public health officials have linked to the vast overuse of antibiotics in farmed animal production (80 percent of antibiotics in the US now go to farmed animals).11
Antibiotic overuse is especially problematic in the poultry industry, which continues to rely on antibiotics to keep breeding birds alive even as it has begun raising their offspring without them (to meet the growing demand for “antibiotic-free” chicken and turkey, increasingly the meat birds themselves aren’t being fed antibiotics). As FAIRR’s report puts it,12
If we see more comprehensive bans on antibiotics that constrain drug use in the entire chain of chicken production (including parent birds), we would see even more significant financial harm—it would require a complete restructuring of the infrastructure of the animal factory farm model.
—Farm Animal Risk & Return, Factory Farming: Assessing Investment Risk
Investing in the New Future of Food
As the risks of investing in factory farming become more apparent, plant-based companies dedicated to providing alternatives to factory-farmed products have become an increasingly attractive option. Meat consumption continues to fall in the US; meanwhile, companies like Hampton Creek Foods and Beyond Meat are growing at incredible speeds because they recognize the need for a new future of food, more humane and sustainable than industrial-scale animal agriculture.13
With smarter companies, smarter investors, and smarter consumers joining forces to shift the market away from factory farming, the future looks brighter than ever. Farm Forward is leading the way with innovative tools like BuyingPoultry, which makes it easy for consumers to add their voices to the cause and find food that aligns with their values.