Jun 04, 2026
On June 4, The Capitol Forum held a conference call with Andy Fitch and Cynthia Hanawalt of Columbia Law School’s Sabin Center for Climate Change Law to discuss their recent study, “From Tech to Table: Moving Sustainable Proteins Beyond Marketplace Bottlenecks.” The full transcript, which has been modified slightly for accuracy, can be found below.
TEDDY DOWNEY: Hello, everyone, and welcome. I’m Teddy Downey, Executive Editor here at The Capitol Forum. Today, I’m very pleased to be joined by Andy Fitch and Cynthia Hanawalt of Columbia Law School’s Sabin Center for Climate Change Law.
Andy is a Climate and Business Law Fellow at the Sabin Center, previously worked at the Department of Justice Antitrust Division. Cynthia is Director of Climate and Business Law at the Sabin Center. And they are the authors of a recent study, “From Tech to Table: Moving Sustainable Proteins Beyond Marketplace Bottlenecks.” It’s really interesting. I highly encourage everyone to read it. I learned a ton. And Andy, Cynthia, thank you so much for doing this today.
ANDY FITCH: Happy to be here with you. Thanks for your interest.
TEDDY DOWNEY: So, for those of us who are not familiar, can you walk us through what are alternative proteins and how you became interested in this market?
ANDY FITCH: Yeah, so the most basic way to think about this is that there are three categories that the industry usually identifies as alternative proteins. There are plant-based alternative proteins. And this is what you’re probably most familiar with. This is a soy burger, okay? These are products that are already in the marketplace. You at least pass them in the grocery shelves, whether or not you buy them.
Plant-based soy and pea protein are by far the biggest crops that are the basis for those. But there are a lot of alternative crops, and we can talk about this. As concentration continues in the soy and the pea protein markets, you see a lot of startups trying to figure out other crops that they could work with.
Fermented proteins would be the second category. These are derived from microorganisms. And please don’t ask us about the science of this, because you do not see us in a science lab, but we can get into a bit of it if it’s useful. This is probably most used right now in vegan markets, often for dairy or egg substitutes.
I am not a vegan. I was at a certain point in my life. And I remember the endless frustration of reading down a grocery product’s ingredients label, and then finding whey, w-h-e-y, at the end, which would suggest there was some dairy. Why did my loaf of bread at the grocery store—why did it need to have dairy in it? I didn’t understand this. And so, a lot of the time, the fermented protein market is helping to allow for some sort of vegan alternative. But it won’t necessarily be a product that you can see. It’s an ingredient in your products.
And then there’s cultivated or lab-grown meat—and those phrases of how this is described often say what side someone’s on here. But cultivated meat is kind of the most generative, still formative. It does get sold very little in the world as a whole right now. But for cultivated meat, you take stem cells from an actual animal and you mix them in this kind of sugars and amino acids mixture. Everyone has their different kind of trade secret formula for it. And you grow what is presented as genetically equivalent protein to an animal. And so, that would be the kind of most nascent stage of these alternative proteins.
Cynthia, do you want to talk about interests, how we got there?
TEDDY DOWNEY: Yes. Well, I have a quick question.
ANDY FITCH: Yeah, yeah.
TEDDY DOWNEY: Just, you mentioned cultivated lab-grown. So, lab-grown is like the pejorative version, and cultivated is like the nicer version?
ANDY FITCH: Yeah.
TEDDY DOWNEY: Okay, okay.
ANDY FITCH: Yeah, I always—I still love—like if you ever go into co-op and you see posters of Dr. Bronner—I don’t know if you’ve ever seen those where he has on like the welder glasses and stuff, and he’s manufacturing organic soap. I personally think “lab-grown” sounds cool. But yeah, if you basically want to kind of make this the exotic weird other that you never in your life want to try, you call it “lab-grown.”
TEDDY DOWNEY: Got it. That makes sense. Yeah. And so, how did you two stumble upon this or find this as something you wanted to write about from a competition standpoint?
CYNTHIA HANAWALT: We’ve been looking at where antitrust and sustainability intersect for several years now at the Sabin Center. We think it’s a really interesting field of research that we’ve been trying to help develop. That work has gone in a bunch of different directions. Some of it bumps into the political arena, like the anti-ESG movement, taking aim at climate collaborations. We’ve published legal analysis trying to respond to those concerns. Some of our work, I guess, is more theoretical, thinking about: is there room in the consumer welfare analysis to expand the lens beyond price, to consider consumer preferences around climate? There’s a huge body of law you’ve got to shape there.
That’s not a nimble strategy, which is where I think this project comes in. This paper is the first in a broader green innovation series we’ve just launched. We’re trying to identify nascent industries that we think are crucial to the climate transition and might benefit from some sort of antitrust intervention. You don’t need to think about sustainability exceptions or anything. This is relying on traditional antitrust concerns and just inviting them into new spaces, right? Killer acquisitions, supply chain integration, patent thickets, all the stuff in this paper, those concerns aren’t new.
I think the contribution we’re trying to make here is to spotlight where intervention in one of these early markets could be beneficial. And you don’t have to accommodate climate goals in any particular way. It’s just like: hey, look over here. These markets actually need some support to develop at the pace necessary to meet the moment on climate.
TEDDY DOWNEY: So, I want to talk a little bit about the environmental and ethical reasons to do alternative proteins. Because there’s a problem that they’re solving, right? And I would love it if you two can talk about that problem. What are the environmental and ethical benefits to having a thriving market here?
And then also, at the same time, if we can talk about how much of that problem could be solved by addressing a more competitive and ethical ecosystem around farming when it comes to plants and animals. Just a better competitive environment there seems like you could—and better rules, better ethical rules, better environmental rules – it seems like you could get a big amount of a solution that way. So, I would love to hear from you both about that.
ANDY FITCH: I can start with the climate stuff. And we know, Teddy, that you have some qualms about alternative proteins. So, we’re happy to address those in whatever direct way.
TEDDY DOWNEY: I’m a skeptic. I want to out myself as a skeptic here.
ANDY FITCH: Yeah, if it’s useful to know my wife is a nutritionist and I’ll ask her late at night, can we go somewhere and try cultivated meat? And she’ll say like: I have a headache. Go away. So, this sort of thing is happening across dinner tables throughout the country, I believe, right now.
But for us, from a climate perspective, agriculture is a significant contributor to global warming, to greenhouse gas emissions. About a third of human-caused greenhouse gas emissions are coming from agriculture right now. More than half of that—so, we’re talking about more than 15 percent of global greenhouse gas emissions—are coming specifically from animal agriculture. And methane is a particularly potent greenhouse gas that obviously is coming out of a lot of cows. That’s actually 25 times more potent than carbon dioxide on a 100-year timeline as a global warming contributor. That’s where there are these real significant concerns for us.
Also, there’s a very live debate going on. How much will we actually reduce emissions if we transfer from the fields to these labs? Do they become these new warehouses spewing out their own emissions? How can you say this is a clean technology? Blah, blah, blah. But 40 percent—I think this is the most striking statistic—40 percent of the Earth’s habitable land is right now devoted to animal livestock. And so, if that whole 40 percent of the world were transferred to other uses, I’m sure some of it would go to Grand Prix racing tracks and there would be these new emission spikes that are very localized.
But we have to assume that when we’re talking about places like Brazilian rainforest being converted for animal agriculture, that there is significant potential to suck—this is called a carbon sink, to remove greenhouse gas emissions from the climate. That possibility is being lost or overlooked right now because of our default practices.
The last thing I’ll say— in terms of ethics, this is a very live debate too. Historically, this has been a very fraught dynamic in cultivated meats, because they still were derived from a very kind of horrific animal harvesting practice. Very recently, that technology has had significant breakthroughs as well so that that’s no longer done.
So, I can explain that in more detail. But it used to be the case that harvesting, even cultivated meat, was going to cause significant animal use that you could consider deeply unethical if you wanted. And that is no longer the case. But anyway, Cynthia, I can go into the antitrust stuff, but I’m already blabbing about climate. So, what do you think?
CYNTHIA HANAWALT: I’ll add is that I’m not sure we see it as a choice, honestly, Teddy. It’s not: do you want a robust alternative protein market, or should we pay more attention to the agriculture and animal livestock production issues that arise with respect to competition? I think we would like to see both addressed.
We’re not coming to this as boosters of alternative proteins necessarily. But they obviously do have huge climate change mitigation value and other benefits around animal welfare and human health and food safety pandemic issues coming up with antibiotic use. I mean, there’s a waterfall of social issues that this can touch on.
So, we’re interested to see this become a robust market and are trying to spotlight our concerns in a nascent industry. You also have sort of the opposite overly mature problems in agriculture and livestock markets that also could use real attention.
One of the other areas that we’re thinking about exploring – you know, this project, as I said, it’s a series. We’ve got a dozen papers planned over the next 12 to 18 months, hopefully, in lots of other sectors, but also in agriculture, thinking about spreading smart technologies or biogas digesters, things that also intersect with climate concerns and may or may not have problematic competition issues in them.
ANDY FITCH: Yeah, and I would just add, in terms of these kinds of secondary effects. Many countries now – as well as advocates in the U.S. of alternative proteins—are very much focusing on national security, food security issues. We’ve obviously seen a lot of supply chain interruptions. At the same time, countries with emerging economies might still have populations growing very quickly, and increased expectations for what we would consider an average diet, as they justifiably should. So, for many countries, this is a basic serving the needs of our people type of question.
But also, as Cynthia was saying the pandemic showed us that supply chains are inherently fragile in a lot of these markets, and that having this kind of robust array of possibilities is not bad for anybody. There is a federal task force now devoted to competition concerns in the food sector that is offering this argument that we need to shore up our supply chains and make sure that there is ample access to these basic forms of sustenance of life. And so, that’s also in the background here.
TEDDY DOWNEY: I’m very curious about how big you think this market can get, and also, like, who are the big players? And what are the problems you really see in the market right now?
ANDY FITCH: For how big it can get, I do think this is a subjective question that I don’t know if I can answer. When I comb the shelves right now, I’ll admit it’s not like my grocery cart is filling up with this stuff, okay?
So, a lot of it seems like—I think a lot of it is: if you’re in a family and you already are eating some processed foods because you need to put stuff out on the table for your kids, I don’t think this is a huge step for you necessarily. If you are someone who feels like you’re devoted to farm-to-table practices and sustainable farming, and you want to see the apple before it becomes the applesauce and hold it in your hand, then this is a leap. And there are also, of course, cost questions. These are still premium products, at a time when grocery prices are skyrocketing in part due to consolidation. So, there are all of those elements at play here.
But in terms of your question, kind of, who are the players? The easiest way to start to talk about this is that there are innovative startup companies, which are often tech-based companies, kind of low profile in terms of public recognition. And if they’re relying on venture capital, usually there’s been a huge cut in venture capital accessibility over the last several years for a lot of these startups. We can talk about that if you want.
So, there are the startups who have the tech. And then you have kind of traditional agriculture—often the giant meat processors, for example, who are starting to invest more in and acquire a lot of these companies or their technologies and moving into the space with their own products.
So, JBS, world’s largest beef processor, has invested significantly in three of the better known plant-based firms in Europe over the last five years. Sorry, two were plant-based and one was cultivated meat. So, you see that sort of development happening too.
You see suppliers like Cargill, which is one of the big suppliers for pea protein, for example, for Beyond Meat. They also have their own downstream brands now. They’re not necessarily called Cargill Burgers. It doesn’t sound that appetizing. But they have their own brands. And so, they are both the suppliers providing these pea protein commodities to their competitors, and then they are this brand name product that is competing with Beyond Meat at the same time.
So, there are some confusing issues there. But the biggest concerns for us are, for startups, there’s a lot of regulatory complexity. So, can they kind of navigate this time when their access to capital is already diminishing in different ways? They have to prove themselves to investors. These are expensive technologies. And if we want to talk about this, there are a ton of new regulations and laws, state laws, they face. So, there’s that group.
There are the kind of dominant agricultural players who, everyone on this call knows, have been involved in a whole lot of lawsuits related to collusive coordinated effects practices in the last ten years. And they’re moving into this space. And they may be—and we could talk about this—trying to kill off some of these technologies, but they also may be just trying to diversify into this market, and to do so at a pace that serves their bottom line.
So, again, Cynthia and I are coming at this from a climate perspective. We need an urgent growth in these fields because we urgently need to reduce emissions. These companies are thinking maybe there’ll be some people who just want the soy burgers down the road. So, we’re going to stick with our legacy products, but we’re also going to dabble in that stuff. So, they’re kind of this new pressure point in the marketplace. Anyway, I can hold off there, but those are actually the biggest ones to talk about here.
TEDDY DOWNEY: Okay, great. And you mentioned one of the problems, which is—well, you mentioned several problems there. So, we’d love to touch on that. Let’s actually start with the VC access. I’m curious, how is VC access drying up for some of these companies?
ANDY FITCH: The most immediate thing has been just a redirection of a lot of VC to AI over the last several years. There was a time where solving kind of a niche climate tech concern was maybe a bit more relevant for a lot of the venture capitalists who have these funds available. So, that’s the biggest pressure point here.
Today, you have companies like the big meat producers, JBS, Tyson. They have their own capital. They have their own revenue streams already out there. They can kind of endure this era when it is a little harder to find capital if you need it to develop these products.
That is concerning for us, particularly for the possibility of killer acquisitions with an analogy to the pharmaceutical sector, buying up a technology that hasn’t yet been monetized. So, maybe you can even purchase it for a price where you don’t have to report it to antitrust regulators. And maybe, again, you use it—you kind of incorporate it into your own existing business, maybe, and kind of slowly shift what you’re doing. Or maybe you just let it sit on the shelf and wither and die. And there is a legacy of that and ongoing examples of that in the pharmaceutical industry that we point to through several different studies in the paper.
TEDDY DOWNEY: And what’s a good solution there? You mentioned HSR reportable transactions, maybe state. Clearly you’re not going to get any attention from the DOJ or FTC right now on this. I would imagine just given their anti-ESG philosophy, they seem very committed to that and just their general laissez-faire attitude toward antitrust and monopoly beyond that.
But the states have picked up a lot of slack. The states are interested in having more attention on these types of killer acquisitions that you’re mentioning, spending more time with HSR, requiring their own HSR forms and things and reporting. Is that one option for addressing this issue? And what are some other proposals? What do you think needs to happen to stop the big meat producers from dominating this nascent market?
CYNTHIA HANAWALT: Yeah, I would say a couple of things. One, just as a frame, I’m not sure how political this is. Antitrust is appealingly more bipartisan than other dimensions of climate concerns. And you don’t really have to come at this with a climate lens to care about the antitrust issues here, right? It’s not necessarily about an emission strategy or climate strategy to be looking at some of these technologies and identifying where there might be risks to competition that maybe even federal enforcers would care about. Certainly, we think this could get traction at the state level as well.
But the thing I want to acknowledge is that we’re not sitting in the seat of an enforcer, right? Antitrust investigations are notoriously complex and fact-specific. So, we’re not trying to suggest with any certainty that enforcement action is warranted here. We’re not coming to those conclusions. I think what we’re saying is: we see characteristics of these three markets that we think raise some questions, right? The incumbents, like Andy was mentioning, the sort of big meat processors exploiting their market dominance or first movers acting aggressively to protect their turf. And it feels like these merit some scrutiny.
ANDY FITCH: As Cynthia was getting at earlier, kind of the bigger project we have here is looking at a variety of different climate industries. And the question is the timing and pace of intervention, say of antitrust intervention. We tend to, for good reason, defer—often during formative technological moments—to an industry to kind of sort itself out. Regulators may not feel like they have adequate information to intervene. Courts certainly are not going to feel comfortable intervening at that point and reshaping a market or anything like that. That can be totally valid.
But we do think that a conceptual vocabulary can start to be developed at an earlier stage in some of these clean technologies of our near term future. And that concern especially comes for us out of seeing during the Biden administration admirable whole of government initiatives, both in terms of competition and in terms of climate, that were not effectively harmonized. They ended up being kind of half of government, or even two steps forward, two steps back.
For example, Tesla had a monopoly, I would say. Again, this is kind of informal. I’m not saying this as an enforcer. But Tesla in the early 2020s had more than 50 percent share of EV charging in the U.S., and of EV sales in the U.S. It excluded non-Tesla brands from using its charging network.
And it was maybe engaging in something like product tying. Like if you wanted to buy an EV in the U.S., it was really hard not to buy this premium Tesla product with self-driving capacity. That was all going on. But we were also devising subsidies for EVs that were going to end up helping reinforce Tesla’s dominance in that space. And there was some pushback. There was a little bit of pushback to get Tesla to open up its network, but nowhere near the extent that we see in a country like Norway.
So, anyway, that’s a huge diversion to the EV market. But the point is, well let’s say we are a little wary of the Trump administration taking this topic on directly. Because we don’t know if Trump will just say something that makes no sense, but it becomes the logic for enforcement for the next three years. So, we’re kind of worried about that part.
But when people, on both sides of the political aisle, start thinking about technologies of the future that we kind of know are going to be shaping our future—and where other countries are very actively thinking of coherent industrial policy (maybe we want it, maybe we don’t), we just want there to be greater harmony in thinking through this sector as an important sector to look at.
Maybe we’re not going to enforce right away there, but let’s get to know that sector. Let’s break down its conceptual categories. Let’s see where the pressure points are. And then let’s monitor it, especially for M&A at this point. A lot of this is just not letting some sort of dominant power solidify before it can be addressed.
TEDDY DOWNEY: Is a lot of the market for this product in California? Not just because California is like the lefty state. But that’s what I think of when I think of the Soylents and VCs and food innovation and some biotech. I mean, obviously, there’s biotech in Boston. But would this be an interesting issue for California?
I’m asking this because I really see zero chance of the DOJ or FTC. Like, I mean, as close to zero as I could possibly put it for you. Spending resources that—they don’t have any resources. They’re not doing much with them anyway. And we can get to a market that’s tangentially related in a second that they are looking into. But where are the sales of this stuff? And where is it popular? And which state might be interested? I guess it’s kind of what I’m thinking about.
ANDY FITCH: Yeah, so it’s definitely not selling a lot in Texas. Because my reading of Texas state law is that you could go to jail for a year right now if you sell a cultivated chicken patty. So, it’s complicated in a lot of ways. So, basically, again, we’re talking about technologies to some extent of the future, okay?
But when I was bringing up EVs, it’s this analogy of: well, now China has figured out low cost EVs that—basically if we didn’t have tariffs, would be dominant in our country too. And they’re going to be doing that with this other stuff.
So, that’s a background concern for us here with how this is all playing out. At the moment, though, to answer your question, there are, at any given time in the last year or two when I’ve been monitoring, there are literally one or two restaurants in the country that may be offering a cultivated meat product, okay? That’s how emerging of a market.
That’s for cultivated meats. Plantbased is now kind of a standard American dietary possibility. You can go to McDonald’s and get a plant-based burger at this point.
Again, the fermented proteins are also out there and less conspicuous to most people, because they serve a niche. I’m guessing you’re asking about cultivated meats.
TEDDY DOWNEY: Or just in general. I mean, you’ve got antitrust issues in all three. We’ve got state AGs on this call right now. You’ve got state AGs listening to this. Which of them do you think should be poking around here?
ANDY FITCH: This is one thing I will say. So, I’m not looking at the chat, okay? So, I don’t know who’s on the call here. I mean, what we’d really love to see is to not have this become a big partisan issue, because there are very genuine just transition concerns here too.
There has been a ton of pushback at the state legislative level already. And it happens to be primarily in what we would consider agriculture intensive states. Part of it is about labeling, food labeling, which again seems totally valid. Like you should know what you’re eating, right? Part of it has to do with states banning sales, like I was saying, or banning research or funds, access to research funds or something like that, for these products.
But the national meat industry is not opposed to legalizing cultivated meats. They are actually often quietly endorsing—quietly resisting these efforts to make these products illegal. And what we’re seeing there again is that these companies are going to be able to diversify and they are going to be able to kind of survive this transition.
There are a whole bunch of smaller scale animal livestock producers in the U.S., 600,000 plus of them. And it’s going to be harder for them. There’s no doubt. There are, again, other countries—we could talk about this—have proactive policies to be dealing with this just transition right now. That’s things like fostering development of cultivated meat facilities in agricultural communities, developing technology for alternative protein related sidestream products. What are the other products that are necessary for these alternative proteins to come to market? What source of supplies are necessary for that? What else could farmers be growing instead?
This is being sorted out in any number of countries. It’s sort of a non-issue in the U.S. right now. But it should be more proactively addressed. And I’d say that the people most proactively addressing a lot of these questions, are the Good Food Institute, if listeners are not familiar with them, as a credible source that is trying to both inform the public and encourage open access research. That means that a lot of this stuff doesn’t become patent protected and siloed and probably just the domain of Big Agriculture as we know it today.
So, in terms of what states should be doing something, to be honest, I’d say whoever can come up with an effective strategy so that you’re not just building a blue state coalition and saying this is the tech future and agriculture is bad for the environment. Not: let’s have our good team win over the bad team. That’s not the approach I’d be looking for here.
I’d be looking for how can we effectively figure out a transition in which everyone is going to be—you don’t have to buy the products, but where we’re not going to see a state level patchwork of laws that both stifle the growth of this market, and make it so that only the big incumbents can survive all of the regulatory complexities and all of the uncertainty about when their products can go to market and things like that.
From a competitive standpoint especially, I think the best thing to do is to foster a political climate that would allow for these punitive regulations to become obsolete.
TEDDY DOWNEY: Cynthia, you want to jump in?
CYNTHIA HANAWALT: I would pick up on two things that Andy was nodding to. One is just the tremendous regulatory complexity that exists right now, sort of stemming from inconsistent state laws and the way in which that fundamentally favors a small handful of firms that can then navigate those political and regulatory hurdles, as incumbents with more sophistication and more resources.
The other point around timing, I think, is really important when you’re thinking about enforcement. If you are the bureau chief of an Antitrust Division in some AG’s office, with five or even 15 lawyers, Big Tech is the high-profile target right now. Antitrust reinvigoration has happened around anti-monopoly work in the last number of years, which is incredibly important and also incredibly resource intensive. And I think it is a novel idea to suggest that you should be intervening much earlier at these sort of nascent stages of markets. I think there’s room there, and I think there are blueprints for it in other jurisdictions.
In Europe and in the UK, we’ve seen competition policy makers sometimes include sustainability considerations in their enforcement agenda, which I don’t think we have an appetite for in the U.S., even at the state level. I think there’s an expectation that social benefits flow from competitive marketplaces. I certainly agree with that. But I think intervention earlier in a market’s development can be aligned with those goals.
TEDDY DOWNEY: One thing you mentioned in the paper is that startups, to be successful in this space, need access to contract manufacturing infrastructure. What are other countries doing to provide that type of infrastructure and why is that important?
ANDY FITCH: This has to do with the so-called valley of death scenario where you have a startup that is trying to appeal to funders. It has what is already a pretty expensive technology it’s developing. But it also needs ongoing testing of that product to fine tune it, to have demonstrable success with it.
So, a startup might need a lot of lab infrastructure that is very expensive. It’s often too expensive for a university research lab, but the payoff isn’t guaranteed enough to justify developing your own infrastructure. So, a lot of startup firms are relying on contract manufacturing organizations, CMOs, where they can basically rent the space for use in this way.
There’s relatively scarce opportunity to do that in the U.S. I can’t give you a precise number. But I know that advocates in the alternative protein industry have been celebrating for a year the opening of one single alternative protein conducive CMO in Janesville, Wisconsin as transformational. This is anecdotal, but that gives me a sense that there aren’t a whole lot of them out there.
There are also any number of opaque contractual elements here. Who gets access to that one space? How much do they get charged? Is it a fair market price? Or can someone just gouge them because there’s no other opportunity out there? Hard to say.
In terms of your question, what are other countries doing? So, just within the last year, the Netherlands, Canada, and China all have opened publicly sponsored and/or owned infrastructure of this sort, specifically targeting alternative proteins because they see this as a market of the future that they want to be thriving in. That’s the most basic example of what can be done here, accessible publicly funded infrastructure.
TEDDY DOWNEY: That seems super interesting as a way to have these companies sell out or worry about their VC money drying up, a lot more opportunity to actually be successful as a startup. I’m a small business. I appreciate that opportunity there.
Now, you also write about the inputs into these products—some of these products at least being soy and pea proteins—and those markets already being very consolidated. What is that? Is it just a cost issue? Or what’s the biggest problem there? And how big of a benefit would it be if those markets were opened up to more competition?
ANDY FITCH: Yeah, and first of all, credit to you again to always go back to that question of: is what we need robust competition throughout the U.S. economy? And the answer is yes. Like we’re working on a paper on this right now. Again, a little bit of a tangent, but on cool roofs, roofs that are good for not absorbing too much heat, and then being energy efficient from an HVAC perspective. But the truth is that, from a competition policy perspective, you have to deal with roofing manufacturers, roofing distributors, roofing contractors who actually lay the stuff out there, roofing maintenance people. All of those are potential bottlenecks. And they have things like certification programs. Or maybe the manufacturer only will deal with certain distributors. Actually, the distributors are the most concentrated, Attorneys General out there, if you want to know.
But this is another scenario where there are an infinitude of potential bottlenecks. And that’s one of the main concerns we had when we were starting to think through this project. If you look, for example, at a lot of the advocates of alternative proteins, when these big players come into the market, the advocates get excited and think: awesome. JBS is in here. We’re for real. It’s validating for them. And there’s no doubt that, with a lot of these costs that are out there, the need for mature companies to enter these markets is clear. It certainly helps the products actually make it all the way to consumers sometimes. But only sometimes.
So, our point is: it shouldn’t be a default assumption that when the big players come into these markets, they’re going to make the market better. That’s a possibility. Certainly, sometimes that’ll help, but it won’t always be the case. So, that is a concern for us as well in terms of how this consolidation can happen.
TEDDY DOWNEY: Yeah, there’s so much going on here. But yeah, I just want to ask how big of a problem is the high input costs and the consolidation of the soy and protein market? We’ve written a lot. And actually, these are areas that the state—we just wrote an article—a dozen states are investigating, or two dozen states, are investigating the seed market. And soy is super consolidated. To be honest, I wasn’t aware that pea protein was also consolidated. You mentioned that in the paper. I’m curious about that. I guess my question was is it just the input costs there that is harming the startups in this space that rely on that? And what would the benefit of lower costs there be?
ANDY FITCH: Well, there is a useful European Parliament study that came out in the last two years, showing that there are supply chain concerns within this market. There is an inadequacy of supply, combined with an opacity of pricing, and what seems like exclusivity scenarios playing out, in terms of who has access to these commodity supplies coming from the upstream suppliers.
That’s the basis of our concerns here, combined with the idea that sometimes these pea protein suppliers or soy suppliers are also then competing through their own products lines further downstream. We make the analogy to 19th century scenarios where you have a conglomerate that owns a railroad, but they also maybe sell perishable food products that are delivered on that railroad network. And their competitors are trying to deliver on that network too. Who’s going to get their products to the refrigerator in Chicago faster, so they don’t spoil?
It’s a somewhat analogous scenario here where someone’s operating quite far upstream in a market that has scarcity concerns already, opacity concerns in terms of contractual provisions, and then downstream is competing.
TEDDY DOWNEY: Cynthia?
CYNTHIA HANAWALT: Yeah, it’s a distribution problem as much as it’s a cost problem. But it’s also a translation challenge to understand what even is the pea protein landscape, right? This is all sort of unfamiliar turf. Part of why we are looking at these industries is to try and help make them a little bit more legible to players in the antitrust space.
So, fermentation happens in things like beer and wine and yogurt and cheese, right? That is legible to us on one level. But then also terribly confusing when you think about biomass fermentation and how these little microorganisms are turning into proteins. I think that is off-putting and inaccessible in a way that makes it harder to police.
TEDDY DOWNEY: You discuss weaponization of IP as a problem in this space. Can you give some examples of that and what needs to be done about that so that that’s not a concern?
ANDY FITCH: Here again, a lot of our analogies are to the pharma industry, for a couple of reasons. First you’re dealing with a biotech scenario. You’re dealing with biological elements and tech elements. That has its own complications in the U.S. patent system, where things have to be new, novel, and non-obvious. It’s a little more complicated to make those claims when you’re talking about biological components.
We’ve also been interested to watch legal counsel provide advice to the alternative proteins industry, to emulate the practice of cultivating patent tickets in the pharma sector. You have your breakthrough technology that is patentable in a legitimate way. But then you also patent any number of different subcomponents in alternative protein spaces. This would be things like texture enhancers, flavor enhancers. So you’re just kind of making litigation risk all-consuming for anyone who may have a somewhat similar product to yours. You’re just offering so many different possibilities for some sort of infringement claim.
And there are certain players—again, we’re not saying that they should go to jail, but Impossible Foods, by far, in terms of IP in the alternative protein sector, has filed for the most patents. They filed for over 300. Their nearest competitor has filed for about 100. By nearest competitor, I just mean someone else in this sector. They’re not even—it’s someone on the fermented side. So, Impossible has been very proactive in its filing.
Again, we’re talking about small firms. So significant litigation risk really can just make it impossible to stay viable. For example, there was a challenge brought against one of Impossible’s pretty significant patents for its heme protein. And ultimately it was determined that Impossible Foods did not hold a valid patent. However, the case settled. Impossible ended up buying the challenger’s competing project. And that firm then went under, I think the same week.
This would be a scenario where just having the resources to withstand this legal challenge in an IP space may make you invincible, in a field where your competitors might have better products, but they just don’t have the capital resources to sustain that sort of legal challenge.
Here we point to the orange book that the FTC has developed, in terms of looking at potentially anti-competitive patents, and making it known to firms that are engaging in this sort of practice that they are being observed. Again, under this current administration and how they could weaponize things, I’m not calling up someone at DOJ and saying: hey, this is a real cool climate tech space for you to check out right now, or anything like that. But it’d be great if, in general, competition policymakers were adopting some of those enforcement tools as the alternative protein sector grows.
We’re saying that we want the sector to develop. Patents are essential for allowing firms to commit the resources they need for this R&D intensive product development. But let’s make sure that they don’t prevent others from developing their own products and competing.
TEDDY DOWNEY: One thing I’ve been thinking as you two have been talking is that the monopolists here are the same meat packers that are often alleged to be colluding in their own market. And here we have them acquiring potential substitutes. So, like another way ostensibly to collude, to control supply, they can turn—you said they could sit on the innovation if they want. They could do nothing.
How big of a problem, I mean, is this almost part of the same problem that antitrust enforcers are already looking into? There are already federal and state investigations into the meat packers. I mean, meat packing consolidation has been an issue forever, it seems like. How do you think of this just being intertwined in that already identified problem? Cynthia?
CYNTHIA HANAWALT: Yeah, it’s an interesting question. I think thematically it makes a lot of sense, that these are the same players that are seemingly exercising the same types of behaviors that are problematic. But I think when you come to actual legal action, it’s really different. The way in which the consolidation manifests in the meat packing industry is classic monopoly behavior, right? And should be interrogated for sure.
The way in which those players are acting in lab grown proteins is really different. It’s more analogous to the fossil fuel companies buying up startups, or battery technology Ips, and then shelving all of that innovation.
So, I think the antitrust lens that you need to bring to bear, and the market analysis that you need to do, is actually really different and might lead you to different outcomes. I don’t know that it gets wrapped up, honestly, in the same set of investigations. Maybe it’s a useful education though, right? Like when I was in practice, it would take a few months to just learn an industry and get up to speed on who the players are. And that is probably going to contribute to more effective policymaking here. But I think it needs to be its own set of work, honestly, for it to be effective in this space.
TEDDY DOWNEY: More like Google got sued both for search and ad tech, right?
CYNTHIA HANAWALT: Right.
TEDDY DOWNEY: They’re two different markets, but monopolists in both.
CYNTHIA HANAWALT: Yeah, that’s a good example.
ANDY FITCH: As a think tank, we also are interested in what scholars can do here, what advocates can do in this space. We don’t solely focus on enforcers, in part because this is such a nascent sector.
For example, in terms of killer acquisitions in pharma, the European Commission retrospectively looked at something like 6,000 acquisitions in the pharmaceutical sector, in which there was some sort of overlapping portfolio of drug projects between the two firms, and then statistically analyzed the reasons why an acquired drug project did not make it to market. The EC found that, for a statistically significant percentage of them, you can’t come up with an explanation, aside from the fact that this was a killer acquisition. That type of research would be great to see happening in the alternative protein space as well. Some young enterprising antitrust law professor could make her or his career out of minutely following the alternative protein sector in detail. Please do so. We invite it.
The Good Food Institute also has acquired its own stem cell lines, which have been historically very expensive. These are the basis for cultivated meat. Now they are an open access material that researchers can make use of. The GFI funds a lot of research in the space, academic research that makes for what is called prior art in patent law. So that a patent filing would not necessarily be new or non-obvious, because research for it has already been publicly disseminated.
So, there are a broad range of interventions here. When we’re talking about enforcement, we understand enforcement is most likely to happen at a later stage. We’re largely just trying to set the conceptual groundwork for it, and hoping for all of these other players to be doing their part as well.
TEDDY DOWNEY: You mentioned there are all these patchwork regulations at the state level, efforts in Texas and other states, to call it lab-grown meat or ban cultivated meat, just attack this whole sector unilaterally. Who is paying for that? Have you guys looked into where is that coming from?
I mean, if JBS is also doing it, why would—I mean, I’m curious who’s doing that, who’s this animated to try to keep it from even having some research and productization? It seems like such a niche market right now. What is the existential threat of having some vegan protein on the shelf or whatever? So, I’m just curious how that came to be and if you’ve looked into that at all.
CYNTHIA HANAWALT: I’m not sure we’ve looked at actually who’s funding these efforts to that degree. Somewhat you can tell, but it doesn’t align necessarily with the entrenched interests or political alignment that you might think. It is not necessarily the case that the big meat packers are the ones trying to ban lab grown proteins.
There is a sort of health dimension, and a sort of product safety, consumer welfare dimension, to all of this that actually invites blue states in sometimes to the regulation in unexpected or constraining ways that are not necessarily wrong, but add complexity as well.
Andy was also pointing earlier to the just transition concerns. There are labor concerns here, and broader stakeholders involved that I think are playing into the way in which regulatory complexity is evolving at the state level.
ANDY FITCH: Yeah, I’m sure we all on this call have had that moment where you think: oh, I bet there’s a model law. I bet the usual suspects who develop all of the model laws wrote this law. And then you go search it and you’ve nailed them. We haven’t had that moment here, though we’ve looked for that sort of thing.
It does seem, again, that a lot of this, as Cynthia is saying, there are legitimate grievances here, legitimate anxieties at least. When I said there are 600,000 plus ranches and feedyards in the U.S. right now, I think that number is already down by something like 40 percent over the last couple decades.
There are very legitimate labor market questions here. And that was one thing that first made this an interesting topic for us, was that we may have our climate values, but let’s consider labor market values as well. Because this is a classic case where we’re shifting work from a human labor economy to a tech economy at scale.
And unfortunately, the agricultural producers who seem maybe most threatened here are sustainable farmers, something like an organic producer, who right now has people willing to pay for their premium product and knows that it’s going to cost a little bit more if they treat their animals better. Those might be the producers for whom a substitute tech product here is going to be the most challenging.
So, we’re very much aware of all of that and want to acknowledge those are legitimate concerns. This is where to have a climate policy that’s not looking at the labor market dynamics, that just doesn’t work. We’ve learned that, right? The hard way.
I will say too that blue states have enforced on some of these topics. Cynthia brought up, first of all, that there are health concerns. There’s like the MAHA side of things. But also, California has taken certain steps against certain food additives.
So, there are broader questions of why shouldn’t there be this greater regulation at the state level of our food supply? But also, California has enforced on labeling concerns—I think for a vegan product, where you could reasonably anticipate consumer confusion over whether this product was vegan or dairy.
So, again, this is not a narrative in which evil red states are solely interested in hurting the climate. It’s not a question of red state versus blue state, or good versus bad. There’s a complicated array of concerns that we’re trying to address.
TEDDY DOWNEY: Well, again, the paper was excellent. I enjoyed reading it. I’m super excited to see what you both produce in your upcoming—you said you have a dozen reports coming out on climate and competition. I’m looking forward to that.
ANDY FITCH: I got stressed when Cynthia said that.
TEDDY DOWNEY: And so, yeah. I just want to thank you so much for doing this today. It’s been a pleasure.
ANDY FITCH: Real pleasure, Teddy. Thank you.
CYNTHIA HANAWALT: Thank you for having us.
TEDDY DOWNEY: And thanks to everyone for joining us on the call. We’ll have the podcast out soon and you’ve already heard it here. But we also have our TCF Investigates podcast or other Second Request podcasts. Please check them out.
Thank you to everyone for joining us today. This concludes the call. Bye-bye.
