Stem cell agriculture could revolutionize the world food system.

The U.S. government needs to invest in it now to reap the economic benefits.

By Ariel Ron and Alex Smith

The world’s population is growing in numbers and affluence, two trends that will drive rising demand for protein-rich foods. The problem is that there is not enough land to keep the animals necessary to meet that demand and sequester their associated impacts.

Against this backdrop, cultivated meat offers the promise of real meat produced in ultra-clean, resource-efficient and cruelty-free conditions. Simply dispense with the animal. Instead, cultivate stem cells, differentiate them as they grow, and coax them into the meaty shapes and tastes we know and love.

It is not, of course, “simple.” It is actually a bold new paradigm for the world food system, involving complicated issues of technological development, process engineering, commercial upscaling, value chain buildout, crop specialization, workforce training and more. All of this might be encompassed by the umbrella term, cellular agriculture (CA), which includes processes such as precision fermentation and nonfood materials such as leather and cotton fiber.

American scientists, startups and venture funds are very much at the forefront of alternative proteins, including CA. Cellular agriculture can offer the U.S. new sources of employment, economic growth and quality food in the face of growing climatological and geopolitical crises. But unless the federal government makes greater investments in the field, other countries will overtake the U.S. in production, and the country will miss out on the economic benefits.

The Dutch government, for example, awarded €60 million in April to Cellulaire Agricultuur Nederland (CAN), a new association of universities, foodtech companies and consultancies aiming to turn the country into a global hub for the production of cultivated meat. The Netherlands is drowning in nitrogen runoff from its intensive livestock operations, and CAN’s plan to build “a fully-fledged CA ecosystem” could help the country remain Europe’s biggest meat exporter while reducing its livestock population.

Singapore’s Agency for Science, Technology and Research, a governmental development agency, and Temasek Holdings, a sovereign wealth fund, have pledged tens of millions of dollars to support cultivated meat and other alternative protein companies throughout the process, from R&D to market. Israel, meanwhile, has just opened a new cultivated meat hub with an initial government grant of $18 million. The UK, Japan and China, among others, have also signaled increasing interest and support.

“Cellular agriculture can offer the U.S. new sources of employment, economic growth and quality food in the face of growing climatological and geopolitical crises.”

The U.S. government, in contrast, is bringing up the rear. Over the past two years, private investment in plant-based, fermented and cultivated meat companies has accelerated rapidly, with 2021 seeing more than $5 billion in new commitments. This is encouraging, but it also raises concerns. If the goal is to reach parity with conventional animal products in both price and quality, we are not quite there yet, and whether we can get there remains an open question.

Will venture funds have the patience to stick with companies through the inevitable commercialization challenges? Will new funding dry up as macroeconomic conditions turn more stringent? Do private investors have the wherewithal to orchestrate the larger changes that a deep restructuring of the food system will necessarily entail? In short, are market forces alone up to the task that CAN and the Dutch government have set for themselves, of “building a fully-fledged CA ecosystem”?

The answer is almost certainly no. A transformation of this scale requires significant public sector vision and support, from proper regulation to appropriate investment incentives. Yet the federal government has done relatively little. By our estimates, it has devoted perhaps $20 million to the CA space, a paltry sum given the size and importance of the American protein market. It has to do more. Otherwise, we risk missing a major opportunity for economic growth, as has happened in the past when we have taken the “innovate here, produce there” approach. If we do not make the necessary public investment to turn cellular agriculture into a beneficial revolution in food production, other countries will.

Global Competition For The Future Of Meat

The federal government has made some positive recent moves, committing $10 million to a scientific research consortium led by Tufts University. But scientific research is just one aspect of the problem. As new companies move from proof of concept to product launch, the “commercialization valley of death” looms ahead. This is the difficult phase in which a young company must scale up production and win space for itself in the market. Among other things, this means sourcing inputs reliably and cost-effectively, which ultimately means working with farmers, ingredient processors and equipment makers to build new value chains.

Cultivated meat is on the technological cutting edge of a broader set of alternatives to conventional meat, dairy and eggs, and in the area of plant-based foods, Canada is among those leading the way. Protein Industries Canada (PIC), an industry-led nonprofit established and partially funded by the Canadian government, invested more than 350 million CAD — of which up to 173 million CAD came from public sources — in developing the technologies and industry capacity to make Canada into a plant-based food superpower. PIC’s strategy to increase production of key crops, expand ingredient processing capacity and engage in product development stands in stark contrast to the U.S. approach, which modestly funds R&D and leaves the rest entirely in the hands of the private sector. All told, PIC believes that Canada could make up 10% of the global plant-based food sector by 2035, bringing in an additional $25 billion in revenue to Canadian firms annually.

While Canada sees alternative proteins as a major economic opportunity, other countries increasingly perceive it as a strategic interest, even a necessity. As small countries in a world of growing climate and geopolitical uncertainty, the Netherlands, Israel and Singapore see cultivated meat as a way to address food security concerns.

China and Japan are both expected to face rising domestic demand for meat and have signaled in recent months that they intend to pay more attention to alternative proteins. In a March speech, President Xi Jinping underlined the importance of alternative proteins to China’s national food security strategy, and the Ministry of Agriculture specifically included cultivated meat in its latest five-year plan. The continuing threat of epizootic diseases no doubt contributes to a sense of urgency. A recent analysis found that between 2018 and 2019, around 40 million pigs died as the result of an outbreak of African swine fever, costing China an estimated 1% of its GDP that year. The upshot is that the pressures driving government interest in alternative proteins — and of cellular agriculture in particular — are powerful and durable.

Avoiding “Innovate Here, Produce There”

The United States is certainly capable of remaining at the forefront of CA innovation, but given current trends, it must be wary of repeating past mistakes and ceding large-scale production to other countries. Take photovoltaics. As late as the 1990s, American firms produced 32% of the world’s solar panels, but that position eroded quickly. First Japanese and then German firms took over the market, each aided by major government interventions. By the 2010s, highly capitalized Chinese firms rose to dominance, thanks, in part, to billions of dollars in government-provided credit. If cellular agriculture indeed emerges as a key piece to the green economic transition, history could repeat itself.

China is uniquely positioned to move quickly, should its leaders decide that CA technologies are proving themselves. It has been preparing for this kind of development for years by dramatically upping government support for agricultural R&D. Its recent decision to begin using genetically modified seeds in the production of soybean and other potential CA feedstock crops signals a highly technological approach to food and agriculture. The impact on American farmers could be considerable if, for instance, greater Chinese self-sufficiency and growing displacement of conventional meat demand led to a collapse in global soybean prices.

“Other countries increasingly perceive alternative proteins as a strategic interest, even a necessity.”

But CA should be regarded less as a threat and more as an opportunity to combine economic growth with climate mitigation. Market estimates from firms like the Boston Consulting Group and Kearney indicate that alternative proteins could reach up to 45% of the multitrillion-dollar global meat industry within about a decade. More muted estimates suggest a value in the range of $400-500 billion. Either way, making sure that the U.S. remains an alternative protein leader would mean growth and jobs, with all the beneficial multiplier effects of manufacturing domestically. Meanwhile, the inherently efficient use of land by CA and other alternative protein processes will ensure reduced emissions.

The United States continues, of course, to provide enormous governmental support for agriculture in the form of price-support subsidies and R&D funding. Precise figures for conventional livestock’s share of that largesse are hard to come by, but they certainly run into the billions of dollars annually. Directing just a small percentage of that amount toward CA would go a very long way.

Consider, for instance, that in January 2022, the Biden administration announced $1 billion in funding to reduce corporate concentration in the meat processing industry. The plan included $375 million in grants for small meat processors aiming to increase capacity, up to $275 million in support of small processor financing through guaranteed loans and other means, and $100 million for workforce development, among other policies. Given the market dominance of the big four meat processors, the effect of these programs is doubtful. Yet were these same measures to be aimed at developing the alternative protein industry, particularly CA, the effect would likely be transformative.

How Federal Policy Can Make A Difference

The key to an effective federal alternative protein policy is to think in terms of value chains and organizational ecosystems. Problems of premarket R&D, product development, manufacturing at scale, ingredient sourcing and worker training tend to occur all at once, rather than in an orderly sequence, and need to be addressed together for alternative proteins to scale up. Put differently, there are multiple simultaneous bottlenecks, any one of which can choke off promising growth.

Ideally, an interagency office, modeled on the National Nanotechnology Initiative, would coordinate efforts across the U.S. Department of Agriculture, National Science Foundation and other relevant federal agencies. However, less ambitious models are more readily available. The Manufacturing USA program was established in 2014 to bring together academic researchers, government agencies and business partners within thematic “innovation institutes.” It has proven an effective way to build advanced manufacturing hubs, particularly in deindustrialized regions. An Alternative Protein Institute would, among other things, provide common research facilities and expertise for member firms to solve both shared and proprietary R&D problems. Such a hub would also facilitate networking between new firms and potential financial backers.

“If we do not make the necessary public investment to turn cellular agriculture into a beneficial revolution in food production, other countries will.”

Funding for additional university research will be essential. This can best be done by establishing interdisciplinary centers of excellence that promote scientific cross-fertilization. The resulting knowledge should be made open, facilitating broad access and avoiding duplication of effort. For instance, databases of characterized plant and animal proteins, growth media and scaffolding materials should be made widely available. In addition, university grant management offices should help researchers take advantage of existing federal opportunities such as the Small Business Innovation Research (SBIR) program.

Sustained focus on workforce training is equally key. University research programs must be coupled with a focus on teaching and agricultural extension. The USDA can be enlisted to retrain conventional meat processing workers for employment in alternative protein facilities. Apprentice programs should be established, such as those already supported through Manufacturing USA.

Finally, close attention must be paid to regulation and labeling. The USDA and FDA have already agreed to share regulatory oversight of cultivated meat, which has yet to be approved in the United States. It is important that the rules ultimately achieve high standards for safety, clarity for consumers and a level playing field with respect to conventional meat.

Now is an important time for the federal government to act. The Netherlands’ cultivated meat association has laid out a 15-year horizon for making cellular agriculture work at scale. With each passing year, it will be harder for the United States to regain the technological forefront. Moreover, if large-scale production shifts toward other countries, they may gain unique innovative capacities that come from learning by doing, through close contact with advanced manufacturing processes. On the other hand, even a relatively small investment now could have a huge payoff in the future.

It will be tempting, for some, to pull alternative proteins into the maw of the culture wars. But that should be resisted by keeping attention squarely on the real issues: job creation, economic growth and food security. Alternative proteins in general, and cellular agriculture in particular, should be understood as a national priority.