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The Economics Behind the Cost of Plant-Based Meat

This is why plant-based meat is so expensive

If you’ve ever found yourself in the meat section of the grocery store, contemplating your dinner options, and been tempted by the plant-based meat options like Beyond or Impossible, you’re definitely not alone. It’s hard not to love the idea of something that tastes like meat, feels like meat, and provides the same nutritional value without the environmental and humanitarian costs of factory-farmed beef or chicken. But more than likely, you’ve already experienced what happens next: one look at the price tag, and all those good intentions can go out the window.
According to Vox, the average price of a meat alternative in the U.S. was $9.87 per pound. Beef was only $4.82 a pound, less than half the price. So why is the newer vegan meat that has taken supermarket shelves and fast-food menus by storm so darn expensive? Shouldn’t veggies be cheaper than meat? As one Reddit user put it, “Fewer or no government subsidies + smaller market + smaller scale of production = higher prices.” You’re close, but let us explain.

The plant-based meat industry faces new challenges

The meat industry is well entrenched in the U.S. market, thanks to a lot of practice in cutting costs, which makes meat artificially cheap. According to Zak Weston of the Good Food Institute, who spoke to Vox, “It’s not like plant-based meat is weirdly expensive or labor-intensive or anything. The animal protein industry has spent decades wringing incredible efficiencies out of every part of the program. Animal meat gets to externalize a lot of its negatives – externalities like health care, ecology, worker welfare, animal welfare. The meat industry is also heavily subsidized by the U.S. government – as much as $38 billion, according to an estimate in the book Meatonomics, which helps keep costs down.
Plant-based meats, especially those that have grown rapidly and gained a lot of hype, haven’t had as long to establish supply chains and build up a lot of competition that would drive down prices, according to Business Insider. For example, high-quality yellow pea protein, a key ingredient in plant-based meat substitutes, isn’t easy to come by (via Inbound Logistics). What’s more, consumers have shown so far that they’re willing to pay a premium for plant-based meats – and they’re flying off the shelves (via Business Insider). Chances are, prices will eventually come down, but for now, you’re paying extra for that pea protein patty (via Business Insider).
In summary, the higher cost of plant-based meat compared to traditional animal-based meat is due to several factors. The meat industry’s ability to externalize costs and benefit from government subsidies keeps animal-based meat prices artificially low. On the other hand, the plant-based meat industry is still in its infancy and faces challenges in establishing efficient supply chains and sourcing quality ingredients. In addition, consumer demand and willingness to pay a premium for plant-based alternatives contribute to their higher prices. As the industry continues to grow and mature, economies of scale and increased competition are expected to help drive down the price of plant-based meats, making them more accessible to a wider range of consumers.


Why is plant-based meat more expensive than conventional meat?

The higher cost of plant-based meat can be attributed to several factors, including the lack of government subsidies, the smaller market size, and the smaller scale of production compared to the well-established animal-based meat industry.

Are plant-based meats more labor intensive to produce?

No, plant-based meats are not inherently more labor intensive to produce. The animal protein industry has spent decades optimizing production processes to achieve significant cost efficiencies. In contrast, plant-based meat companies are still in the early stages of establishing efficient supply chains and scaling up production.

What role do government subsidies play in meat prices?

The animal meat industry benefits from substantial government subsidies that help keep prices artificially low. In contrast, plant-based meat companies do not enjoy the same level of subsidies, which contributes to the higher cost of their products.

Why is sourcing quality ingredients a challenge for plant-based meats?

Plant-based meats often rely on specific ingredients, such as high-value yellow pea protein, which can be more difficult to source in large quantities. Limited availability and higher costs associated with these ingredients can contribute to the overall higher cost of plant-based meat products.

Will the price of plant-based meats eventually come down?

It is expected that as the plant-based meat industry continues to grow and mature, prices will likely decrease. As supply chains become more established, economies of scale are achieved, and competition increases, plant-based meat prices are expected to become more competitive and affordable.

Do consumers influence the cost of plant-based meat?

Consumer demand plays an important role in determining the price of plant-based meat. If consumers are willing to pay a premium for these products, manufacturers have the opportunity to charge higher prices. As the market expands and competition increases, consumer demand and preferences will continue to shape the price dynamics of plant-based meats.

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