Are consumers ready for a meat tax?
What we eat has an enormous impact on the environment. Scientists estimate that as much as 35% of greenhouse gas emissions stem from the food production process, with meat responsible for more than twice the pollution of fruits, grains and greens.1 But alternatives are still much more expensive than animal proteins. So, the question is, what do we do about that?
Although it’s not new, one idea is to create a tax on animal products, which would serve as a sort of carbon tax. It’s an initiative being considered by German policymakers in support of its goal to be greenhouse gas neutral by 2045.2
Animal proteins—which include meat and dairy products—are directly responsible for 18% of global greenhouse gas emissions.3 And that number is growing as more and more people are consuming meat and dairy products worldwide. Consumers generally aren’t aware of the link between climate change and meat though. While the primary protein source in the American diet is animal protein (69%),4 a recent survey found that nearly three-quarters (74%) of Americans do not think that eating meat is linked to climate change.5
Would consumers be willing to pay such a tax?
Surprisingly, when this idea got tested in Germany, consumers actually agreed to it. A majority of the Germans who participated in an online survey were ready to accept a reasonable tax on animal proteins of €0.20 to €0.40 per kilogram. Last year, 364 million tons of meat were consumed globally.6 This would create an annual revenue stream of €70B, with Germany, generating around €2B.
Market price test to raise consumer awareness
A German discount supermarket chain, Penny, conducted a week-long experiment from 31 July to 5 August 2023 to raise awareness of the impact animal protein-heavy diets have on the environment.
Prices on nine meat and dairy products were raised substantially to reflect a more realistic estimate of the "true cost” to people’s health and the environment. The experiment was aided by scientists from the Nuremberg Institute of Technology and the University of Greifswaldthe who will study consumers’ reactions to the prices. The market chain donated the difference between the regular and the “true cost” price to a community project that supports family-run farms in the Alpine region.7
What would we do with money from such a tax?
Research published in Nature Food finds that German consumers are much more receptive to such a tax if it is said to help animal welfare than if it’s targeted at climate change.8 So, part of the proceeds from the tax could help to improve the condition of farm animals. Or a tax could boost investment in alternative proteins. Another option is to help farmers transition from their current methods to the ingredients and processes that will feed the future of proteins.
If we believe that alternative proteins have a future and are capable of gaining significant market share, being the first country to adopt such a measure would make a lot of sense. With it, a country could have the time to:
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Taxing animal proteins is an idea worth keeping in mind.
Insights from MSCI
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