汇丰银行全球农业行业ESG食物的未来201810831页

Disclosures&DisclaimerThisreportmustbereadwiththedisclosuresandtheanalystcertificationsintheDisclosureappendix,andwiththeDisclaimer,whichformspartofit.Issuerofreport:HSBCBankplcViewHSBCGlobalResearchat:Halfoftheworld’santibioticsareusedinagriculture,increasingtheriskofantibioticresistance,withsevereimplicationsRegulationsarebeingtightenedinEurope;otherregionsarefurtherbehind,butweexpectthemtocatch-upintimeWehighlightimplicationsforcompaniesinfoodretail,pharma,producersofmeatanddairy,andrestaurantsAproblemwemustaddressTheprospectofwidespreadantibioticresistanceisarealanddevastatingscenario,whichisnowwidelyacknowledged.Akeycontributingfactoristhehighuseofantibioticsinagriculture,especiallyinmeatfarming,whichisnow50%oftotal(humanandanimal)useglobally,and70%intheUS.Thisisbeingexacerbatedbytherapidriseinmeatproduction,up90%percapitasincethe1960s.Chinaisthelargestuserofantibioticsinagriculturewithanestimated60%ofglobalusebyweight.TheUSissecondat7%,theEU5%andBrazil5%.GlobalactionisbuildingmomentumEuropeistakingthestrongestaction,withupcomingregulationstobanmostpreventativeuse,withtheUS,LatAmandAsiafurtherbehind.Thereareearlysignsofactioninotherregions,andwebelievethatotherregionswillcatch-upbecauseoftheimportanceofthisissue,andconsumerdemandforantibiotic-freemeatwillincrease.Thishassignificantimplicationsforcompaniesproducing,processingorsellingmeat-basedproducts.CompanyimplicationsEuropeanfoodretail:UKsupermarketsaremostprogressedonactiontoreduceantibioticuse,weexpectmorepressureoncontinentalpeerswithupcomingEUregulation.Tesco(Buy)whichisnotnormallyviewedasanESGleader,scoreswell.Restaurants:Aslargeprocurersofmeat,restaurantshavecomeunderpressurefromNGOs.Mostcompaniesaretakingaction,thoughprogressisquitevaried.Forexample,TheRestaurantGroup(Hold),GreeneKing(Hold)andWhitbread(Hold)bantheuseofantibioticsforpreventativeuse.AsianandAmericasmeatproducers:Meatproducersintheseregionsarethemostexposedcompaniesasmanystillhavehighantibioticusage–Tyson(notcovered),JBS(Buy),BRF(Buy),andWHGroup(Buy).Pharma:Thereisminimalimpactonhumanhealthcompaniesasthemajorityofantibioticsforagriculturearesoldbyanimalhealthcompanies,forwhichthereissignificantrisk–Zoetis(notcovered),Elanco(notcovered)andOurofino(notcovered).8October2018LaurieFitzjohn-Sykes*,CFAAnalyst,[e-mail][phone]TessiePetionHeadofESGResearch,AmericasHSBCSecurities(USA)[e-mail][phone]*Employedbyanon-USaffiliateofHSBCSecurities(USA)Inc,andisnotregistered/qualifiedpursuanttoFINRAregulationsESG:FutureofFoodESGGLOBALAntibioticsinagricultureESG●GLOBAL8October20182Keypoints3Theproblemandprogress5Whatistheproblem?5Whereismeatproduced?8Whyandhowareantibioticsusedinagriculture?9Howcanantibioticusagebereduced?9Whatprogresshasbeenmade?12Companyimplications17Europeanfoodretail17LatinAmericafoodretail20Meatprocessors20ChineseDairy23Pharma23Restaurants24Tradedmeatcommodities25Disclosureappendix27Disclaimer30Contents3ESG●GLOBAL8October2018Risingantibioticresistanceisaproblemwemustaddress(p.5)“Increasingly,governmentsaroundtheworldarebeginningtopayattentiontoaproblemsoseriousthatitthreatenstheachievementsofmodernmedicine.Apost-antibioticera—inwhichcommoninfectionsandminorinjuriescankill—farfrombeinganapocalypticfantasy,isinsteadaveryrealpossibilityforthe21stcentury.”WorldHealthOrganisation(WHO),AntimicrobialResistance–GlobalReportonSurveillance,2014.Antibioticuseinagriculturecontributestothis(p.5-7)Over50%ofantibioticsusedgloballyareforuseinagriculture(primarilymeatproduction),ratherthanhumanmedicine.Thishighusageiscontributingtorisinglevelsofantibioticresistanceinfarmanimalbacteria,whichcanthentransfertoantibioticresistanceinbacteriacausinghumandisease,viamechanismssuchashorizontalgenetransfer.Whereismeatproducedandantibioticsused?(p.8)Percapitameatproductionhasincreasedfrom23kgperyearin1961to44kgin2016,suchthattherearenow83bnfarmanimals,11foreveryhumanintheworld.Antibioticusagevariessignificantlybetweenanimals.Cattlewhichis21%ofglobalmeatproductiontypicallyuse20-250mg/kgantibiotics.Porkwhichis36%ofglobalproductionuse150-400mg/kg,andchickensare32%ofglobalproductionuse15-75mg/kg.GloballyitisestimatedthatChinaaccountsfor60%ofantibioticsusageinagriculture,theUS7%,EU5%andBrazil5%.Importantly,antibioticscanbereducedcommerciallywithinagriculturethroughtheuseofalternativesandimprovedfarmingpractices.Therearenumerousexampleswherethishasbeenachieved.Thereisbuildingmomentumtotackleoveruse(p.12)Thereisincreasingactionbygovernmentsaroundtheworldtoreduceantibioticusageinagriculture.ThemostprogressedistheEUwithanupcomingpackagetobanmasspreventativeuse.Otherregionsarefurtherbehind,butstartingtomakeprogress.Chinahasthehighestuseglobally,butin2016introducedafive-yearactionplantotackleantibioticresistance.IntheUSprogressisbeingdrivenbyrisingconsumerdemandforantibioticfreemeat.Globalcompanyimplications(p.17)Thereareimportantimplicationsforallcompaniesproducing,processingorsellingmeat-r