The Future of Food: What to Expect from Australia’s Latest Shortage

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This week has been a testing week for Victorians.

Our newfound ‘state of disaster’ has seen emotions boil over.

People are angry, people are scared, and most of all, people are confused.

We have never faced a situation quite like the one we’re currently in: . A situation that has stripped us of almost every sense of normalcy.

It is hard to convey just how miserable it is to be allowed just one measly hour outside a day. Let alone the fact that we have a curfew for the first time in history.

This it seems is the price for our safety…and a hefty one at that.

Troublingly, these likely won’t be the last sacrifices we have to make either.

The reality of this harsher lockdown is only just starting to be felt. With many more restrictions likely to follow. Which will mean foregoing even more of our ‘normal’ lives in the coming weeks and months.

And this won’t just impact Victorians.

No, this lockdown will have national consequences.

I can say that with certainty because the writing is already on the wall. You need only look at what is happening in supermarkets and restaurants right now to see that…

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A shortage in the making

If you haven’t heard, Victorians are once again getting antsy in the aisles.

Don’t get me wrong, panic buying hasn’t reached the TP madness of March just yet. But, from what I’m hearing from others and seeing for myself, people are stocking up.

Now, as hindsight has shown us, the previous panic buying was pretty dumb. All it did was cause some massive logistical headaches. There was never any real threat of a shortage.

This time though, things may be a little different…

See, no one can afford to ignore the impact to supply chains. Because right now in Victoria, the businesses and systems that keep shelves stocked and fridges full are under pressure. Just like every other industry, they are facing mandatory shutdowns.

And one of the biggest sectors likely to be hit is meat.

As Australian Meat Industry Council CEO Patrick Hutchinson tells the ABC:

Overall it would move towards a 30 per cent reduction, give or take, in supply chain production, which would in turn lead to a reduction of saleable meat within the Victorian community, as well as a reduction in the opportunity for product to also be exported around the world.’

This should come as no surprise given the prevalence of COVID-19 in the meat industry.

Victoria has at least 300 confirmed cases across five abattoirs and meat processing plants. All of which have been forced to close temporarily. And with ongoing confusion over what businesses can and can’t stay open now, more may follow suit.

Needless to say, this is already prompting early fears. As well as calls from supermarkets and officials that everything is fine…

Whether people will heed this warning though, is yet to be seen.

However, the fact that even KFC restaurants are having to limit opening hours, or close completely, is telling. Forced to make the decision after chicken supplier Ingham’s suffered an outbreak at one of their facilities.

So, temporary or not, this meat shortage is very real. A fact that will likely lead to higher prices, or a lack of products, or both.

Not just in Victoria might I add, this could become a national problem. Because while other states certainly have their own suppliers, it will still lead to a net shortage.

You have to take into account that Melbourne is home to 40% of our national lamb processing, for example. A state-wide closure would therefore strain the supply for every state and territory.

Edible extremes

To be clear, the reason I’m telling you all this isn’t to urge to rush out and buy meat.

Far from it.

I still think panic buying — of any sort — is silly. All it does is make an already egregious problem worse.

But, I also think this shortage will be more impactful than some think. Because even if it leads to price rises, that will be enough to change some eating habits.

After all, we’ve got to remember that we’re in a recession. A lot of people are out of work or are earning less than they used to. A few extra dollars a week could be the difference between eating well or not eating at all.

That’s why I suspect we’ll start to see some diversity. People choosing to explore new ways to get the nutrition they need.

And when it comes to protein, meat isn’t the only option consumers have nowadays.

Love them or hate them, plant-based foods are a viable alternative. More than that, they’re becoming an increasingly popular choice too.

Which is precisely why we’re seeing a whole lot of new products in this segment as well.

Take Maggie Beer Holdings Ltd [ASX:MBH], for example. Formerly known as Longtable Group, this tiny stock just announced a range of its plant-based products will be soon hit Coles shelves. Set to debut sometime in mid-October.

Or how about Wide Open Agriculture Ltd [ASX:WOA], which has also begun exploring plant-based protein as of May. Signing a key agreement with Curtin University to develop a lupin-based formulation. Even going as far as to engage the CSIRO to help scale up the project.

My point is plant-based products could be the big winner in all of this. An alternative that could help alleviate the meat shortage we’re currently facing.

For the companies behind these products, like MBH and WOA, it could also be the start of some serious gains. Because if their plant-based foods take off, then so too will their share prices.

It’s all part of a much bigger trend in food. One that will likely see most of us eating plant-based or lab-grown proteins. Some of which may be designed to mimic meat, and some of which won’t.

Either way, expect the future of food to dish up a few surprises.

Because as much as Australians love meat, we might have to get used to some alternatives. A sacrifice that could lead to some serious innovation — as well as some serious gains.


Ryan Clarkson-Ledward Signature

Ryan Clarkson-Ledward,
Editor, Money Morning

Ryan is also the Editor of Australian Small-Cap Investigator, a stock tipping newsletter that hunts down promising small-cap stocks. For information on how to subscribe and see what Ryan’s telling subscribers right now, click here.

PS: Our publication Money Morning is a fantastic place to start on your investment journey. We talk about the big trends driving the most innovative stocks on the ASX. Learn all about it here.

About Ryan Clarkson-Ledward

Ryan Clarkson-Ledward is an Editor at Money Morning.

Ryan holds degrees in both communication and international business. He helps bring Money Morning readers the latest market updates, both locally and abroad. Ryan tackles all the issues investors need to know about that the mainstream media neglects.

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