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The Bio-economyFermentation, and Wine
David ZilbermanUniversity of California Berkeley
Presented at the Pre-Conference Workshop on The Economics, Technology, and Sustainability of the Wine and Beer Economy
16th ICABR Conference
Feudi di San GregorioJune 24, 2014
introduction Last year I spoke about the lessons of the
fermentation to the evolution of the bio-economyToday I want to emphasize the impacts of the
emergence on the bio-economy on wine and other fermented productsBut I will repeat some points made last yearMy comments will have elements of science fiction – but the
bio-economy is an application of science fiction
On the relationship between Wine and Beer and the Bio-
economy The bio-economy consists of industries that use biological processes to produce new products Fermentation base of “traditional bio-economy”
The new bio-economy relies on new discovery in molecular and cell biology- relies on Biotechnology Biofuels Green chemistry
Partially motivated by environmental concerns Reducing GHG emissions and other pollution Replacement of non renewables with renewables Desire to address lifecycle problems and and reach sustainability Driven by science regulations and desire to a economic competitiveness
(Walmart sustainability criteria)
Fermentation- key to the traditional bio-economy- ( key element
of agribusiness)It has been used to
To produce wine beer and cider To create leaven bread Create lactic acid to preserve and produce sausages, or
yogurt Create vinegar for pickling foods
Fermentation enables to move from perishable crops to preserved products
Fermentation key to bio-fuelsThe modern bio-economy expand the science base
of the traditional one to include modern knowledge of molecular and cell biology and take advantage of information technology and nano science
Gains from fermentation
With fermentation humans have overcame seasonality constraints-
The range of locations where they can survive increased
Efficiency of food use enhancedThere is an element of disease control
Fermentation expanded the range of output of farming
With fermentation agriculture become more than source of nourishment Wine and beer provide heath and fun Quality and value depend on taste- not nutrition Fermentation provide fine chemicals and fuels
No gain without painConsumption of alcohol is risky180.000 dead on drunk driving Many other wrecked livesBut it has immense benefits
Taste/fun Alcohol is the best pain reliever Great disinfected Nourishment
Multiple efforts to ban alcoholProhibition tried to eliminate this risky activityIslam banned itThroughout hisSmelled of “the precautionary principle” Prohibition Failed ( smuggling, Mafia)
Now alcohol use is regulated Negative Externalities are penalized Sin-taxes source of revenue and acceptance
fermented products are differentiated products
Thousands of wines & beers, hundreds kimchi)Division between normal vs luxury goods
generic low end mass products ( Bud) fine products- with high quality premium• Hedonic price analysis suggests that price is
convex function of quality
Need research on earning distribution (Ginni) small percentage of top wines has high percentage
of revenue
Heterogeneity of product affects industrial structure
Differentiation will affect the bio economy
With less costly regulation we expect generic biofuel vs. specialized fuels and lubricants Biotech flowers not only corn Novelty products ( based on university patents)
capture private research-
Moralistic censorship of biotech products will hurt industry- NGOs do not know best and can not pick winners
Preventing generating products for the rich will hurt the poor
Light regulatory touch is a must
Importance of Supply chain in wine and other fermented products
Supply chains control quantity and quality Different parts of supply chain have different structure
Production diverse Distributions concentrated
Large emphasis on use of contracting - not only market transactions- within the chain
Processor may provide guidance and inputs to farmers
The Bio-economy will transform fermentation from
craft to scienceThe bio-economy increase the scale of fermentation activities biofuel requires large volume low cost fermentation
Proposal to switch from of batch to continuous production New types of enzymes are being discovered Alternative and complements to fermentation ( through
bioengineering) are being introduced
New products (fuels, chemicals, feeds, foods) New processes Capacity to introduce new traits to old products New feedstocks
Life cycleEmphasis on life cycle and pollution control will
enhance fermentation and modify it concern about residue and waste will provide more
feedstock for various fermentation activities ( Biofuel, compost, various chemical)
Waste management system of fermentation system (cheese, wine, beer) will be redesign
Redesign will respond to carrots ( PES) and sticks
biotechnology has the potential to demystify wine
and its productionGenomic model gradually will reveal the secrets of wine attributes and how to manipulate them
New traits may be discoveredPlants disease that constrain the spread of
Wine across location are likely to be controlledSupply of wine may increaseMay challenge the status quo depending on
relative growth of demand and supply
Future of Biotechnology in wine
it may pose a threat to value of attributes and control of supplies
Cause of resistance by incumbents to application of biotech
introduced only to avert disaster
Some regions will apply biotechnology to enter wine sector
Cause of differentiation and dispute
• Major theme in wine economics– keeping the premium of the incumbents ( terrior)
• It will affect the adoption and future of biotechnology in wine• Biotechnology will affect the distribution of power within the
industry
Bio-economy will enhance control of diseases affect feedstock for
fermentation
Conclusions-1Fermentation- first step of a likely progressionThe bio-economy will derive the future of
agriculture Enable a transition to a renewable ( sustainable)
economy
Key requirements continuous increase in productivity Enlightened regulations
Bio-economy will require taking worthy risks Will encounter resistance
Conclusion II Bio- economy will enhance fermentationIt may provide disruptive innovations that
may change the wine industry and encounter resistance
Eventually biotechnology and similar method will enter to the wine industry Will expand wine producing regions May affect distribution of value within the industry
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