According to FAIRR, an investor group focusing on ESG risks in the global food sector, 40 of the world's largest meat and dairy producers could see their profits fall by almost $24 billion in 2030 from 2020 levels as a result of climate change. This forecast reduction in profits mainly reflects a jump in feed prices and carbon taxes. The group of 40 companies could see profit margins fall by 7%. Without mitigation, half of the 40 livestock companies assessed would be operating at a loss in 2030. North American companies, including Tyson Foods Inc. and Cal-Maine Foods Inc., will be among the hardest hit as profit margins fall by 11% on average, while others such as Brazil’s JBS SA and China’s WH Group Ltd. will also be affected.
Livestock producers are vulnerable to climate change because the supply of feed crops such as maize and soybeans can be affected by excess heat, drought, and shifting rainfall patterns. Of the 40 companies analyzed, only six have carried out climate scenario analyses. According to FAIRR, the potential hit to industry profits is driven mainly by higher climate-related costs, which are forecast to increase by over 9% on average, with 5% relating to higher feed prices and 4% to expected carbon taxes on livestock emissions.
FAIRR suggests that large meat and dairy producers can mitigate the risk by diversifying products, using alternative feed ingredients, and tilting portfolios toward plant-based alternatives. However, North American companies appear to be the most exposed to potential losses, with profit margins falling by 11% on average by 2030, driven by a 15% average cost increase that mainly reflects higher feed prices.
