12 Dec 2017 --- Questions are being raised as to the likelihood of a livestock levy in years to come as part of new analysis examining how meat could follow the same path as tobacco, carbon emissions and sugar and become subject to a so-called “sin tax,” with implications all around the globe.
The analysis from the investor network Farm Animal Investment Risk and Return (Fairr) Initiative argues that a levy on meat in a bid to cut consumption is highly likely in five to ten years time.
The Executive Summary of the report says that practically every government in the world faces challenges when it comes to balancing their budgets and an increasingly attractive target for revenue creation is a tax on goods deemed to be unhealthy or damaging to the environment or both.
For example, over 180 countries now impose a tax on tobacco, 60 jurisdictions tax carbon and at least 25 tax sugar. The Livestock Levy report explores whether meat may be the next product on this list.
In the global livestock production sector, sustainability megatrends and changing dietary patterns driven by a growing global middle class are creating enormous challenges, says the summary.
“Population growth has driven up global meat consumption by over 500 percent between 1992 and 20161 and this trajectory is likely to continue in the future, especially in emerging markets. For example, demand for meat produced in Asia alone is predicted to grow a further 19 percent in the twelve years to 2025.”
However meeting this growing demand has proven a difficult endeavor for the global livestock industry, and in recent years the sectors have been linked with a range of environmental, health and social problems, says the report. This includes emerging evidence connecting meat consumption with greenhouse gas emissions that exceed emissions from the transport sector; an increasing incidence rate of global obesity and associated higher risks of type II diabetes and cancer; increasing levels of antibiotic resistance; threats to global food security and water availability; and soil degradation and deforestation.
Could taxation of meat products be a way to mitigate these global challenges?
The Fairr report asks how a meat tax could reduce these issues explaining that the pathway to taxation typically starts when there is a global consensus that an activity or product harms society.
“This leads to an assessment of their financial costs to the public, which in turn results in support for some form of additional taxation. Taxes on tobacco, carbon and sugar have followed this playbook,” it says.
Meat taxes are already on the agenda in Denmark, Sweden and Germany, but no proposals have advanced into actual legislation. However, it was in the Nordics that the first carbon tax was introduced in 1990.
Fairr which was established by Jeremy Coller, Founder and Chief Investment Officer of Coller Capital, believe that a worrying knowledge gap has emerged among investors in relation to the material investment risks and opportunities connected with intensive livestock farming and poor animal welfare standards.
The FAIRR Initiative aims to close that knowledge gap, ensuring that investors understand the risks and opportunities to emerge from this growing method of livestock production and to support investors to assess these issues as part of their investment processes.
The Executive Summary of the report concludes that meat taxation is not a short-term risk for investors. Yet large pension funds and asset managers would be remiss not to put it on their agenda.
“As the international community works to implement the Paris Agreement and the UN Sustainable Development Goals, governments and other international institutions will need to create a pathway to a more sustainable global food system – meat taxation may well feature on that road,” it says.
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