From grocery store aisles to restaurant menus, consumers around the world are being offered more and more plant-based options when it comes to dishes rich in protein. And based on the success of plant-based meat substitutes like those offered by Beyond Meat, whose entry into the stock market three years ago sent investors into a frenzy, the sector is a lucrative one with plenty of room to grow.
With an increasing consumer demand, and possibly need, for plant-based protein, could Alberta become a global leader in supplying it? Canada is already the planet’s largest producer of dry peas and lentils. At 4.6 million tons in 2017 alone, the country is also a global power in terms of the production and exportation of pulses. In terms of producing the crops needed, Alberta appears ripe to capitalize on the opportunity.
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“There’s been very few trends in the food industry in the last 25 years that have given this level of opportunity,” says Bill Greuel, the CEO of Protein Industries Canada (PIC), a not-for-profit organization tasked with propelling Canada’s plant protein and plant-based product sector to becoming a major global provider.
“When you think about the stars that are aligning here (consumers seeking healthier food options, diets that have less negative impact on the environment and animals)… growth of the plant-based food sector is real, and it’s growing at an unprecedented rate.”
The federal government anticipates the sector will deliver $10 billion in GDP impact over 10 years, along with over 4,500 jobs in the same time frame.
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While Alberta is not a Canadian leader when it comes to soybean production, it is when it comes to the production of pulses: chickpeas, lentils and perhaps most importantly — because of their increasing popularity as a plant-based food ingredient — dry peas.
According to crop production projections released by Agriculture Canada last month, Alberta is expected to make up 41 percent of dry pea production in the country in 2022-23. Alberta is expected to account for the second-largest share in terms of dry pea, lentil and chickpea production. Production of all three crops is expected to increase significantly in Canada compared to a year earlier.
But when it comes to processing those raw materials to create plant-based food products or the ingredients needed to do so, Alberta has yet to stake its claim as a leader.
Allison Ammeter is a grain farmer who also serves as director of the Alberta Pulse Growers Commission, a non-profit that advocates on behalf of thousands of farmers. She served as chair of the Plant Protein Alliance of Alberta (PPAA) until it ceased operations last year.
She believes Alberta needs to “get into the industry in a big way while there’s still room to get in.”
“I would say five or even 10 years from now, there will be all the plants built for the current need. Not right now — we’re nowhere near close to that.”
“It’s this whole ecosystem that we are giving away,” says Christine Lewington, the CEO and founder of PIP International, an Alberta-based agri-tech company producing pea protein.
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She adds that with increasing attention being drawn to the issue of food security, the ability to offer plant protein is a selling point.
“We have that in Alberta,” Lewington says. “Europe is all over food security.
“We bring in our finished products in Alberta… We don’t value-create here.”
Ammeter suggests Alberta could be on the cusp of capitalizing on the explosion of demand for the product, drawing an analogy to growth in the province’s oil industry in the middle of the 20th century.
“They unlocked the oil industry by bringing in the money,” Ammeter says. “We will unlock our industry when we have the investment.”
‘Let people know what the potential is’
In a bid to boost innovation in the economy, the federal government announced in 2018 it had selected five innovation superclusters, one of which was the protein industry. This led to the creation of PIC.
“There’s a lot of upside potential and excitement (in Alberta),” Greuel says. “It’s pretty favourable from an operating perspective.”
He cites Alberta’s low corporate tax rate and availability of land and feedstock as advantages the province has in trying to grow the sector. He also says Alberta has “lots to offer in terms of innovative farmers.”
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The PPAA used to advocate for the sector and help facilitate its growth in Alberta. It ceased operations after the provincial government announced last year it would not continue to provide it with $250,000 in annual funding, a move Ammeter says “spoke volumes” to a lot of people.
Ammeter believes Alberta’s government can play an important role in helping the sector reach its potential.
“I would like to see our government saying, ‘We have this incredible natural resource… We are going to do everything we can to promote value-add in Alberta.’”
‘We think the global market for plant-based foods is going to be about $250 billion’
A 2019 analysis conducted by the National Research Council of Canada found that “annual global sales of plant-based meat alternatives have grown on average eight per cent a year since 2010, with projections forecasting that, in 25 years, 20 per cent of meat will consist of plant-based and clean meat.”
The NRC forecasted that global revenues when it comes to plant-based dairy substitutes will reach USD$34 billion in 2024 and added the plant-based beverage market also continues to grow significantly.
“In Canada, sales of plant-based protein products rose seven per cent to more than $1.5 billion in the 2016-17 fiscal year,” the report reads.
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A report for the federal government recently found over 40 per cent of Canadians are “actively trying to incorporate more plant-based foods into their diets.”
“If you’re looking at grocery stores’ sales of plant-based food, that has increased considerably over the last five years,” Greuel says.
But some point out the sector’s rise has not been immune to peaks and valleys. For example, in a fourth-quarter financial report released early this year, Maple Leaf Foods noted sales from its plant-based division saw a decline of 4.7 per cent in 2021, even though it generated more than $184 million in sales for the year.
“While work is continuing, analysis to date demonstrates a clear slowdown in projected growth rate for the overall category compared to very high growth rates predicted in 2019,” the Maple Leaf report reads.
Greuel acknowledges that since the COVID-19 pandemic hit, growth figures may have “softened to some degree” but adds the sector is “still seeing year-over-year growth.”
“When you think about that, we’re going to need startup companies (and) ingredient-manufacturing companies setting up shop,” he says. “We think the global market for plant-based foods is going to be about $250 billion… Our goal is that Canada owns 10 per cent of that global market.
“You could say that’s an aspirational goal.”
Lewington believes the plant-based food market’s growth could be at risk of temporarily stalling because “there’s no availability to increase and grow the market” as a result of insufficient capacity to process the protein needed for plant-based food products.
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“Manufacturers are being rationed,” she says. “When you can’t grow, consumers pull back.
“Before demand, you need to create a need. To create a need, you need to create capacity.”
Lewington says one of the keys to successfully growing the plant-protein processing sector in Alberta will be for producers to be able to assure companies they can keep up with supply needs as demand for those companies’ products grows.
‘We truly have a great new product’
Plans for two major plant-protein processing facilities in Alberta were announced in May: Phyto Organix Foods Inc. revealed plans for a $225-million wet fractionation plant in the Strathmore area while PIP International offered details on plans for a $20-million pea-processing pilot facility in Lethbridge.
“This is Alberta pea country,” Chris Theal, Phyto Organix’s founder and president, told Global News at the time, noting the plant’s location offers an opportunity to see output grow over time. “We’ve got roughly five times our capacity within 75 kilometres of the facility. We range out to 150 kilometres (and) we’ve got 10 times our capacity.”
Plant fractionation facilities use a process that separates grains or pulses into fibre, starch and protein, the latter of which can be used as an ingredient in plant-based foods and beverages.
“Getting projects like ours up and running successfully shows others it can be done,” Theal says. “The resource is there — it’s getting the right people and capital in place, including government grants and loans.”
Lewington’s excitement is evident when she speaks about her company’s facility.
“We truly have a great new product,” she explains. “Clean tasting, premium protein that they (plant-based food companies) can actually functionalize.”
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Lewington says to attract the necessary investment to grow, her facility is opening in phases.
Phase 1 is a pilot facility that will still deliver tons of product before scaling up for Phase 2, a $150-million yellow pea protein facility she says will be able to create 100 new jobs, process about 126,000 tons of yellow peas each year and support over $75 million in annual pea contracts for regional growers.
“We’re demonstrating that we can do what we say we do,” Lewington says of Phase 1, which began producing product this fall. She says Phase 2 is headed to detailed engineering by the end of the year and construction is anticipated to begin in the spring of 2023.
“We are raising money. I am open to finding the right partner,” she says, adding she believes the province could do more to help industry players achieve their goals.
She acknowledges Phase 1 of her project received $1 million in funding from the province, something she is grateful for, but notes the cost of getting Phase 1 off the ground is $25 million.
‘Getting the capital lined up is certainly a challenge’
Access to capital is seen as a major challenge when it comes to trying to get plant-protein processing facilities up and running.
“(It is) far and away the No.1 issue,” Greuel says. “Processing facilities for protein extraction are very capital intensive.”
He notes most plant-protein facilities cost between $200 million and $600 million to build.
“It’s a real struggle,” Ammeter says of accessing capital. “The money is all around… (we just need) to let people know what the potential is.”
She would like to see the province backstop loans for proposed plants so they are better able to secure funding from institutions like Farm Credit Canada (FCC) or the Agriculture Financial Services Corp. (AFSC)
“I’m not asking for handouts,” she says. “Do what they’re already doing in a number of other industries.”
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Ammeter says she believes Saskatchewan and Manitoba are doing more to make “value-add a priority” when it comes to leveraging their ability to produce pulses to try and help fractionation plants get off the ground. She says when governments do more to help the sector, investors take notice.
Ammeter calls it a missed opportunity that so much raw product from Prairie growers is being sold overseas.
“It’s not good for Canada’s GDP,” she says, adding she believes an investment tax credit geared towards the sector would help.
“The plant-protein space in Alberta is going to suffer because it does not get the support it does in other provinces,” Lewington says. “Saskatchewan and Manitoba are very aggressive.”
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Like Ammeter, she would also like to see the province backstop loans.
“(It would allow entities like FCC and AFSC to) provide loans where we don’t have to provide personal guarantees — because they scare off investors,” she says. “The more creative you get, the more risk equity investors see.
“If I could take a loan guarantee with a syndicate and show investors there is no personal guarantee, they’re in all day long.”
Ammeter believes there is another challenge when it comes to securing financing. She says banks “are not nearly as quick or capable of evaluating” proposed projects as they are with proposals in other sectors.
Greuel says PIC is working to educate investors about the sector in an effort to loosen more capital.
“Canada is a natural place for investment for ingredient manufacturing,” he says. “Universities have taken notice of this (sector and are)… looking at training to create this talent.”
Lewington also notes the need for more skilled labour for the province’s plant-protein sector to truly take off. She says she is glad to see Alberta taking steps to make it easier to bring in foreign skilled workers in areas where there is a shortage of them.
Despite the challenges, Greuel says he believes there is recognition among all governments about the importance of Canada taking “ownership of this space.”
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Lewington believes growing the industry in Alberta is a time-sensitive endeavour.
“When you play with time, anything can happen,” she says, adding the industry will benefit growers and all Albertans through jobs and tax revenue. “From the heydays of Beyond Meat coming to market… Those days aren’t the same anymore.”
“There is a real sense of urgency for Canada here,” Greuel says of Canada’s plant-protein aspirations.
Lewington says she worries that if Alberta does not more aggressively pursue growth in the industry, larger producers will simply begin expanding existing facilities elsewhere in the country.
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Global News made multiple requests for an interview with Agriculture, Forestry and Rural Economic Development Minister Nate Horner about the state of the industry in Alberta but he was not made available.
Horner attended Phyto Organix’s media event to announce its Strathmore plant in May. At the time, he said “this is something we really want to double down on.”
“I know as a farmer, before I got involved in politics, I wanted to see this,” he said. “I wanted to see more of what we’re seeing in Saskatchewan and other jurisdictions. Let’s value add here close to home — and with all the issues with supply chains and resiliency, it really brings that even more to the forefront.
“We’re trying to work as Team Alberta to land these investments… if it’s ag-related and it’s value-added, we’re trying to land it.”
Horner suggested he believes the challenge when it comes to securing funding for such projects relates to the state of the global economy.
“The world is so crazy right now,” he said. “You’ve seen commodity prices spike and stay at those elevated levels — fuel… the inflation costs on the actual construction — so it has delayed some of these announcements.
“But the upside is still there.”