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The economics of vegetarianism

Vegetables
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What do Confucius, Albert Einstein and Leonardo Di Vinci have in common? Well, not much professionally, but they were all vegetarians. Einstein once claimed that “Nothing will benefit human health and increase chances for survival of life on Earth as much as the evolution to a vegetarian diet.” With recent record meat prices, some might wonder if, all ethics aside, he had a point.

On the supply side, consumers now have greater access to vegetarian and vegan options than ever before. Recently, the world’s first vegetarian drive-thru opened in California, and some airlines now offer seven different varieties of vegetarian options for longer flights, including raw and lacto-ovo meals. Similar changes have been made in the hospitality and tourism industries. Despite these advances, however, it remains unclear if more consumers have opted to go completely meat-free, or have adopted a more ‘vegetarian-inclined’ diet. What is also currently unknown is whether increasing meat prices have pushed consumers away from animal protein products.

Indeed, most reports suggest that the number of vegetarian consumers in the Western world has not significantly increased over time. In most surveys recently published, vegetarians only comprise 4 to 5 per cent of the population. That number increases slightly if consumers who are inclined to occasionally go meatless are added to the mix. Consumers who do become vegetarians or vegans do so for an array of reasons. However, the economics of vegetarianism have attracted little attention in recent years; but, in the light of recent protein price hikes, they should.

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Economists, however, do agree on a few facets of meat production. First, many studies suggest that it costs significantly more to produce energy and protein from animal-based sources than from some plant-based sources. While some might dispute this claim, there is little or no doubt among most economists of this cost, which is the prime factor driving research in bio-meat engineering. Second, a significant shift in dietary preferences towards plant-based consumption would result in lower commodity prices, including corn. As a result, the economic implications of a rapid adoption of a plant-based diet for our agricultural economy would be significant. However, the reality is that, according to many studies of consumer behavior, customers still place a higher value on buying and eating meat than on any other food group. Canada’s relationship with animal proteins has deep cultural roots, particularly during holidays and summertime.

Additionally, meat prices are unlikely to decrease anytime soon, since pressure is mounting on farmgate as many emerging markets are consuming more meat products. With a weaker Canadian currency and a shift in U.S.-based protectionist measures, Americans will likely increase their purchases of Canadian meat, forcing retailers to pay more to keep domestically produced products within our borders. It gets even trickier on the retail side of things as grocers know that playing around with meat prices can be perilous, at best.

The rise of beef and pork prices may one day discourage consumers from purchasing their favorite chops or steaks, but likely not for the foreseeable future. However, the most significant and immanent threat to the meat industry are not higher prices, but food fraud. Major incidences like the European horse-meat case, sausage mislabelling investigations and many other occurrences have been troubling to consumers, to say the least. Given our general commitment to protein, the economic case for meat consumption remains strong for consumers, as long as they know what they are buying and eating. As more fraud cases are reported, consumers may start to think twice before spending 25 per cent to 30 per cent more on meat. Consumer confidence is strong, but may quickly erode. The meat industry ignores this possibility at their peril.

Eating meat is a consumer choice that Canadians have made for generations. Our culinary traditions have given animal protein pride of place, and have served our communities well. However, as meat prices increase, many Canadians might wonder if they can still afford to treat themselves to a delicious steak or roast beef. So far, Canadians seem to remain committed. However, if they realize that their favorite steak actually came from a troubling source, or was improperly processed, the industry shouldn’t expect consumers to continue making the traditional choice. They may end up finding the growing alternatives to be more appetizing and affordable.

Dr. Sylvain Charlebois is senior director of the agri-food analytics lab and a professor in food distribution and policy at Dalhousie University.

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Sylvain Charlebois

Sylvain Charlebois is a Canadian researcher and professor in food distribution and food policy at Dalhousie University in Halifax, Nova Scotia, Canada. He is Dalhousie's past Dean of the Faculty of Management and is a professor and Director of the Agri-Food Analytics Lab.

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