By Kristin Bakker

Cellular agriculture is the production of animal products, such as meat, seafood, milk and eggs, with no or minimal use of animals.

The U.S. Department of Agriculture’s Food Safety & Inspection Service (FSIS) and the U.S. Department of Health & Human Services’ Food & Drug Administration have joint responsibility to oversee the production of human food products derived from the cells of animals. Under their 2019 agreement, FDA oversees cell collection, cell banks, cell growth and cell differentiation, while FSIS has oversight in the cell harvest stage as well as for the production and labeling of the resulting human food products.

Cellular agriculture has often been called cell-cultured meat, lab-grown meat, clean meat and even fake meat, and it has been the subject of a wide range of opinions from industry groups, governments and consumers.

While FSIS first approved the sale of cell-cultured chicken by California companies GOOD Meat and UPSIDE Foods in June 2023, a bipartisan group of lawmakers introduced the Fair & Accurate Ingredient Representation on Labels Act of 2024 (FAIR Labels Act) this January that seeks to require cell-cultured products to be labeled as “imitation” to distinguish them from conventional meat products derived from live animals.

Related:Cranswick acquires pig genetics group JSR

According to a new report from USDA’s Economic Research Service (ERS), an analysis of comments submitted in response to a previous FSIS proposed rulemaking notice in the Federal Register on the topic found that “83% of respondents believed cellular meat and poultry should be labeled differently from their conventional counterparts,” with the most frequently suggested labeling phrase being “lab-raised.”

Because regulation of cultured meat continues to evolve and labeling regulations vary from country to country, this also could present a challenge for global trade, such as the potential for tariffs if countries are not aligned on their labeling requirements, according the U.S. International Trade Commission.

Research on economic aspects of sector

While the regulatory issues play out, the new ERS report introduces the economics of cell-cultured and precision fermentation foods and documents the growth in the sector. Areas of emphasis are market drivers, structural aspects of the industry, the U.S. regulatory environment, government research funding and market challenges as of 2023. The report summary follows:

Meat, seafood, milk, eggs and other animal products are a significant source of protein in the diets of U.S. consumers and the foundation of important revenue streams for U.S. farmers, the food processing sector and other food businesses. However, some consumers in the U.S. and abroad are increasingly purchasing alternatives to conventional animal-sourced foods that involve minimal or no use of animals.

Related:Pork producers raise concerns about USDA salmonella regulation

These dietary changes have been partly facilitated by the increased availability and variety of plant-based substitutes for animal products, such as soy patties as an alternative for hamburger meat and nut-based dairy alternatives.

However, a set of novel technologies allows animal products to be made largely without livestock that are biologically similar (either at the cellular or protein-based level) to their conventional counterparts. Cell-cultured meats and seafood are created by using a sample of animal cells without the need for animal slaughter. Precision fermentation can be used to produce conventional proteins and fats by encoding genetic material into an organism like yeast or bacteria.

Although the sector is in its infancy, investments in cell-cultured and precision-fermented food companies have increased substantially. FSIS and FDA have implemented processes to ensure the safety of these foods.

To date, little has been written about the economics of cellular agriculture. This report fills that void by providing an overview of the policy-relevant economic dimensions of this sector, detailing market drivers, current industry structure, government regulation and investment and market challenges.

Related:Could Germany's foot and mouth disease outbreak disrupt global pork trade?

Research findings

For their study, the report authors analyzed data from literature reviews, the Good Food Institute, the U.S. Patent & Trademark Office/Google Patents and federal regulatory websites.

While having similar end product goals, the ERS report summary noted that the production process differs significantly between cell-cultured and precision fermentation-based technologies in the following ways:

The ERS report revealed at least four major drivers of the cellular agriculture industry: consumer concerns surrounding environmental considerations; animal welfare; public health and food safety, and food access.

The authors found economic evidence to indicate a range of consumer attitudes about these products: Some people have negative perceptions of the products’ “naturalness,” while others have a positive view regarding the animal welfare dimensions. The extent of how the environmental impact shapes consumer demand remains to be seen, ERS reported.

Although the report found that federal regulatory changes and funding are accommodating growth in the sector, several market challenges are currently still limiting product commercialization and production at scale, the report concluded.

The ERS report, “The Economics of Cellular Agriculture,” is authored by USDA economists Sharon Raszap Skorbiansky, Jonathan McFadden and Monica Saavoss and can be found on the ERS website.