Displacement Risk in Agricultural Commodity Markets : The Impact of Plant-Based Meat

Plant-based meat is an innovative and sustainable type of food that has been received with enthusiasm by consumers and investors. It is also a threat for the demand of traditional meat and for those crops used primarily as animal feed. In 2019, 59% of global corn and 83% of global soybean production were used as inputs for meat production. In this paper we condition on plausible animal meat displacement scenarios for 2030 and couple them with production, efficiency and price elasticity measures from the literature. This allows us to generate simulated corn and soybean negative demand shifts and their associated price change distributions, relative to an OECD baseline projection for 2030 without plant-based meat. Expected (std. dev) declines for corn and soybean prices under low plant-based displacement scenarios are -13% (4%) and -21% (6%) respectively. For high displacement scenarios, corn and soybean price declines are -23% (5%) and -35% (8%). Permanent shocks of this magnitude would be economically significant and comparable, but of opposite sign, to that caused by the ethanol mandate on the price of corn in 2005-2010 and reported in the literature. Corn and soybean producers at the farm and regional scales are at risk of suffering from technological displacement