A Norwegian startup is pioneering a transformative approach for the well known conservative meat industry, with data and AI-based technology able to improve decision making, optimizing cutting and sorting while simultaneously providing environmental gains for an industry that accounts for 14.5% of global CO2 emissions.
Despite the widely recognized benefits of reducing meat consumption as a means to mitigate greenhouse gas emissions and improve health, the meat industry is expected to almost double by 2050, with this growth driven by increasing global demand for meat products as a larger population seeks access to these goods.
According to the Oslo-based AI-software startup Völur, working together with the industry and improving its efficiency properly assigning animals to products that can satisfy demand is one of the best ways to reduce its emissions: “There is the possibility of increase the value of the whole animal, as nowadays 24% of the animal meat is lost during processing phases,” said Robert Ekrem, CEO and Co-Founder of Völur, during a chat in the startup’s headquarter in Oslo.
By combining deep technical and industry knowledge and avoiding using more animals than required, Völur technology plans to maximize utilization of animals for an industry with low margins.
By combining deep technical and industry knowledge and avoiding using more animals than required, Völur technology plans to maximize utilization of animals for an industry with low margins.
The AI technology to improve animal utilization
Völur was founded in 2019, after Robert Ekrem extensively worked in the food industry, witnessing its deep complexity, whereas there are millions of outcomes when deboning an animal carcass and to produce meat products that can satisfy the consumers’ demand.
“So far decisions are made basically using Excel and strong know-how,” said Ekrem, who believes that with a technology able to comprehend all the complexity intrinsic to the field, it is possible to producing products following demands, avoiding overproduction or inability to deliver demand.
When meat processors receive animals’ carcasses in their facilities, they decide what products they want to get from the animals received, and the tools being used most often not being able to utilize the animals efficiently
The company developed an AI-technology able to analyze supply and demand forecast, animal characteristics, best cutting patterns, inventory levels and prices, so that daily production is fully optimized to produce what is needed.
The tool can programme so that carcasses are cut in the best way according to their characteristics and that reflect the inventory list of products wanted: “While the meat processors are producing 95 or 96 products in their make sheet, we create a plan to produce 100% of them,” told Ekrem.
The products in the startup’s portfolio are both a daily or a long-term planning tool, where production plans are done on a yearly production basis.
So far the startup is the first mover to tap into this potential market: “None of the current technology providers to the meat industry are taking the detailed information into consideration,” underlines the CEO.
By using Völur’s tool, Ekrem believes the industry could start avoiding negative margins, a recurrent issue for the sector which lacks the possibility to ensure meat offer matches demand, ultimately leading producers to push down prices when too much meat is in the market.
“We believe that by improving the balance between supply and demand, we should be able to produce the right products at the right time, improving utilization of animals and hopefully end up not pushing products with negative margins into the market.” argued Ekrem.
Knowing the meat industry
Ekrem has worked long enough in the sector to know its reluctancy to change due to its recurring and mature conservative methods: “So we’re certainly adapting ourselves to the industry. And I think that’s critical for us to succeed,” he said.
Völur has adapted so that the industry, will have to download and print out information like the usual make-sheet, but just a little bit different. “That’s probably the biggest change for some of them,” he said.
Their tool can be best used for industrialized production, ideally for companies having $20 to $30 million in revenue, up to tens of billions.
Despite the industry needing an extreme makeover, the meat businesses have been slow in jumping on new innovation and technology, though, Ekrem recognizes some early movers.
Among Völur’s clients are prominent companies such as the Brazilian JBS – currently also investing in cultivated meat and plant-based products, and the French Cooperl, which recently announced its collaboration with the software company this October.
JBS is set to integrate Völur’s tools into its cattle production operations at its US branch, while the French company is leveraging the technology for its pork production. Ekrem has also revealed that there are additional agreements on the horizon, underscoring the company’s intention to extend its technology solutions to cover lamb and poultry production.
He however outlined the intention to focus on cattle and pork as due to their volumes, these two animal species have the highest complexity making them the most influential in terms of impacting production efficiency and waste reduction.
Sustainability and Lower Emissions
Gathering investors in Europe to back the startup has not been easy as impact investors firms in the European continent mostly scrutinize new businesses from a rigid sustainability point of view.
Currently, the European meat industry is facing increased scrutiny and backlash due to investigations that have uncovered lobbying interests influencing European farming policies to lowering the sector’s environmental footprint, in favor of keeping ‘business as usual’ practices.
Investors in the U.S. have instead seen the potential of the impact their technology could bring to the sector.
Ekrem points the effect could be ‘immediate’ by introducing their AI-technology on to a $1,7 trillion industry when aiming to lower emissions of at such a gigantic sector: “If we’re able to remove a few percentage points (of climate emissions) the impact is significant,” says the CEO, adding that five to six percentage points in the meat industry correspond to half of the CO2 footprint from the global commercial flight industry.
Enhancing animal utilization could potentially lead to a decrease in the number of animals required to meet market demand, thus eliminating the need for vast inventories, a common industry practice that often results in pushing products into the market at negative margins.
This change could have a cascading effect, reducing energy consumption for freezers and warehouses, freezing thousands of tons of meat at temperatures lower than minus 18 degrees Celsius.
A potential scenario for the meat industry
In Europe, the current animal welfare law is in the process of being updated, where the European Food Safety Authority’s advice have called for broader space access for animals, which will consequently result in a reduction in the volume of animals raised per farmers. But this solution has worried many among farmers associations and food associations.
Making sure that that 24% of meat now wasted can re-enter the food supply chain could ultimately lead meat producers to meet the current demand with fewer animals, potentially paving the way for more acceptance for stringent animal welfare regulations.
Ultimately, the meat supply chain could see increased margins by reducing costs for their expenditures on feed and medical treatments for animals.
But on the flip side, helping the industry maximize utilization could potentially lead to the continued profiting and eventually meeting higher demand.
Read the full article here