USDA report: Growing investments in cellular agriculture reflect shifting market and environmental priorities

The production of animal-based foods without conventional livestock is advancing rapidly, driven by concerns over the environment, animal welfare, and food security. According to a recent report by the USDA’s Economic Research Service (ERS), titled The Economics of Cellular Agriculture, cumulative investment in cell-cultured meat and seafood reached US$3.1 billion between 2015 and 2023. Meanwhile, the precision fermentation sector, which produces proteins and fats using bioengineered microbes, attracted US$2.1 billion in investments over the same period.

The report, authored by Sharon Raszap Skorbiansky, Jonathan McFadden, and Monica Saavoss, offers a detailed examination of the sector’s growth drivers, regulatory landscape, and challenges. “This research highlights the economic factors influencing cellular agriculture and provides a snapshot of the industry’s trajectory as it seeks to complement or substitute traditional animal agriculture,” the authors noted.

Several key factors are propelling the development of cellular agriculture. Environmental concerns associated with conventional livestock farming, such as greenhouse gas emissions, land use, and pollution, are pushing interest in more sustainable alternatives. Animal agriculture accounts for approximately 60% of food-related greenhouse gas emissions, and innovations in cellular agriculture could potentially reduce these impacts.

Animal welfare is another significant driver. A growing number of consumers are seeking products that minimize harm to animals. The report cites surveys indicating that 83% of consumers in the USA are inclined to switch to brands that ensure higher animal welfare standards.

Public health and food safety also play roles. Concerns over zoonotic diseases—such as avian flu, SARS, and COVID-19—have underscored the vulnerabilities of traditional animal farming. Cellular agriculture, which involves controlled environments for producing food, may offer reduced risks for disease transmission. Additionally, the use of antibiotics in conventional animal farming has raised alarms over antimicrobial resistance. By bypassing the need for live animals, cellular agriculture could mitigate these concerns.

Finally, global food security and equitable access to protein are motivating investments in this sector. Cellular agriculture has the potential to provide more efficient, scalable production methods that are not limited by the challenges of traditional farming, such as land availability and livestock breeding cycles.

The ERS report highlights a dynamic and still-evolving industry structure. By 2023, there were over 200 firms globally with a significant commercial focus on cellular agriculture. The majority are startups, with new companies rapidly entering the market in the past decade. The USA leads in both cell-cultured and precision fermentation companies, followed by Israel and several European nations.

While cell-cultured companies primarily focus on meat analogs—with beef, fish, and chicken being top priorities—precision fermentation companies are concentrating on dairy alternatives. Firms are also innovating in ingredients, bioprocessing infrastructure, and manufacturing capabilities, reflecting a need to develop the entire ecosystem necessary for cellular agriculture to thrive.

Navigating regulatory frameworks is essential for the commercialization of cellular agriculture. In the USA, the FDA and USDA share oversight of these products. The FDA regulates the early stages of cell cultivation and precision fermentation, while the USDA’s Food Safety and Inspection Service (FSIS) oversees the final products derived from livestock cells. The two agencies formalized their collaboration in a 2019 agreement to ensure safety and proper labeling of cell-cultured foods.

According to the report, the labeling of cell-cultured meat remains a contentious issue. Public comments on a 2021 Advance Notice of Proposed Rulemaking (ANPR) revealed that 83% of respondents believe these products should be labeled differently from conventional meat. Terms like 'lab-raised' and 'cultivated' were among the most suggested.

Despite growing investments, the report notes a slowdown in capital inflow in 2022 and 2023, reflecting broader market trends and economic uncertainties. However, investments remain significant, with venture capital firms and accelerators playing a key role in supporting early-stage companies.

The road to large-scale commercialization is not without obstacles. High production costs remain a major hurdle. Life-cycle analyses suggest wide variability in the per-unit cost of cell-cultured products, and achieving price parity with conventional animal products is a challenge yet to be fully addressed.

Consumer acceptance also varies. While some consumers are drawn to the environmental and ethical benefits, others express skepticism regarding the naturalness and safety of these products. Education and transparent communication will be key in shaping public perception.

The environmental impact of cellular agriculture itself remains an area of ongoing research. While initial studies suggest potential benefits over traditional livestock farming, the full extent of these advantages, particularly when considering energy use in production facilities, requires further validation.

The ERS report concludes that while cellular agriculture is still in its early stages, it holds promise for addressing several critical issues in food production. Continued investment, regulatory clarity, and technological advancements will be crucial in determining the industry’s long-term success.

“The future of cellular agriculture depends not only on technological breakthroughs but also on how well the industry can navigate costs, consumer perceptions, and regulatory landscapes,” the authors write.

As cellular agriculture continues to develop, its potential to transform the way we produce and consume animal-based foods remains a topic of significant interest for policymakers, investors, and consumers alike.