Taste, money and power: Growing Canada’s alternative proteins industry

Canada has numerous strengths that could make it a global leader in producing plant-based and other “alternative” proteins, but also faces several challenges, according to a new report.

The advantages include huge agricultural capacity, R&D expertise, government support, cohesive industry innovation networks, sustainability commitments, and market and regulatory access, says the report “Game Changers: Canadian Opportunities in Alternative Protein.”

“We’ve got an incredible amount of agricultural expertise and systems already well established, because we’ve been supplying the world with other agriculturally based products for a long time,” report lead author Sue Coueslan, vice-president, strategy and partnerships at Natural Products Canada, told Research Money.

“Because the challenge is so huge and the opportunity is so huge, I think the biggest challenge is investment, both public and private,” she said.

The report’s co-authors are a coalition of organizations involved in the alternative protein sector: Natural Products Canada (which supports early-stage biologically based innovation); Protein Industries Canada global innovation cluster; Humane Society International Canada; and the Protein Highway initiative for bilateral cooperation.

Proponents say that alternative proteins are needed because current systems for producing animal-based proteins, such as intensive livestock operations, are unsustainable. They cause serious health and environmental problems, from increasing antibiotic resistance to emitting greenhouse gases and polluting waterways.

“There is real economic opportunity here for Canada to do something that is going to make a difference to the world,” Coueslan said.

Plant-based proteins are produced directly from plants, including beans and legumes, grains, nuts, seeds, and seaweed. Companies also are working on “cultivated proteins” produced directly from animal cells, and proteins made through fermentation.

Forecasters predict that alternative proteins will comprise 10 per cent of all protein servings by 2035 and represent an annual global market of $290 billion, according to the coalition’s report.

But achieving that kind of growth will require industry to find solutions to the issues of taste, texture, nutritional quality, and variety, compared with industrially produced meat and other conventional protein products, Coueslan said.

“Few consumers today (only 30 per cent) believe that plant-based meat tastes as good as or better than conventional meat,” according to a 2021 state-of-the-industry report by the U.S.-based Good Food Institute. “To maximize the category’s potential, plant-based meat must compete with conventional meat products on the table stakes of consumer choice — taste, price, and accessibility.”

Another challenge to consumer acceptance is that plant-based meat alternatives are, on average, 38 per cent more expensive at the retail level than conventional meat, according to a report by Dalhousie University’s Agri-Food Analytics Lab.

Plant protein sales down but investments up

Plant-based protein sales in Canada rose by 34 per cent in 2020, but growth slowed to seven per cent the following year. Nevertheless, retail sales of plant-based foods hit nearly $982 million in 2021, according to research by Plant-Based Foods of Canada, an industry organization.

Proponents argue that the recent slump in sales is because every new industry has growing pains. “The computer game industry didn’t stop at Pong,” Coueslan noted. “They evolved and went on from there.”

The coalition’s report mentions more than 150 Canadian companies in the alternative protein space, including dozens of firms pursuing innovative ways to solve the key challenges in product quality, she said.

When it comes to R&D, the report notes that the National Research Council’s Sustainable Protein Production program is working to increase the value of plant-based proteins and their co-products.

FOODTECH Canada, a network of leading innovation and commercialization centres across Canada, is focused on turning R&D into innovative products for the food and bio-products industry.

On the investment side, Protein Industries Canada has so far contributed $173 million to a range of technology and capacity plant-based protein projects worth $478 million. Project partners contributed the remaining $305 million.

Natural Food Products Canada has invested a total of $2.5 million in 13 startups that are all growing and attracting more investment, Coueslan said. The organization also established the separately run NPC Ventures Fund, with a $50-million target for raising funding for early-stage, biologically based startups.

Despite the slump in retail sales, investments in plant proteins were up 60 per cent between 2021 and 2020 according to the Good Food Institute, said Christina Connelly, trade commissioner with Global Affairs Canada in Minneapolis, in an interview.

In another positive sign, in the U.S. there are now many private label versions of some “legacy” plant protein products, such as nuggets and burgers, that are much closer to price parity with conventional meat products, Connelly said.

International research collaboration on alternative proteins also is growing, she added, including the Minnesota-based Protein Highway initiative, focused on enhancing bilateral cooperation among the U.S. upper Midwest states and Canada’s Prairie provinces.

The Protein Highway’s work helped establish the Plant Protein Innovation Center at the University of Minnesota, Connelly said. The pre-competitive research centre – the first of its kind in the U.S. – now has 42 members, including a cadre of university researchers, from across the U.S. and Canada.

Huge potential to add value to crops

Alberta, which grows about 2 million acres of protein-rich pulse crops (such as field or "dry" peas, lentils, and chickpeas), has “immense opportunities” in plant-based proteins, says Allison Ammeter, a director of the Alberta Pulse Growers Commission. She and her husband Michael, operate a third-generation grain farm near Sylvan Lake.

However, she added, with a new plant protein processing facility costing anywhere from $20 million to $600 million, depending on the size, the biggest challenge for the industry in Alberta and the rest of Canada is “money, money and money.”

Forecasters indicate that 800 “mega-factories” will be required to produce the 30,000 tonnes of plant-based meat required to meet the global demand by 2030, according to the coalition’s report.

But many investors in Alberta and elsewhere in Canada incorrectly perceive the alternative proteins industry as “nascent” and too risky, which  makes it difficult to secure funding from institutions such as Farm Credit Canada or the Agriculture Financial Services Corp., Ammeter said.

Studies show that Canada processes only 20 per cent of all the crops grown in the country, and would need to process another 40 million tonnes to satisfy just the global alternative meat market.

“I do not understand why we would ship a bushel of peas for $10 to China [for processing], when we could add value to it and be shipping it for $500 a bushel to other places,” Ammeter said.

Government could help reduce the risk for private investors by providing loan guarantees for new plant protein facilities, along with an investment tax credit on new machinery and equipment, she said.

However, the biggest challenge in Alberta is a bureaucratic mindset stuck on conventional livestock and food production, Ammeter said. “Frankly, we need a cheerleader in the government as much as anything.”

While governments in Saskatchewan and Manitoba have established mandates to grow their plant protein industries, the Alberta government last year suddenly and with no explanation cancelled an annual $250,000 grant for the Plant Protein Alliance of Alberta (PPPA), she said.

The voluntary organization, which Ammeter chaired, had been bringing together all parts of the province’s plant protein sector, including industry and government representatives, to form alliances and grow the sector.

"We've had a number of members of PPAA, now that it's defunct, tell us that it's just so much harder to find the people to connect with because the organization is not there," she said.

Despite such challenges, the push for sustainability, which includes locally grown and sourced products and ingredients that consumers trust, will continue to propel the plant-protein industry forward, Ammeter said.

Problems go deeper than product quality, say critics

Many of the companies now acquiring plant-based protein firms and brands are the same multinationals responsible for the harmful practices in the conventional, factory-farmed meat and dairy production system, according to a report by the independent International Panel of Experts on Sustainable Food Systems (IPES-Food).

Those problems include environmental degradation, concentration of power across the food system, exploitative labour, agricultural monocultures and other unsustainable practices.

“The biggest food companies in the world, including JBS, Nestle, Tyson Foods and Cargill, are buying out plant-based meat substitute firms,” the report’s lead author, Dr. Philip Howard, PhD, professor of food and community sustainability at Michigan State University, told Research Money.

Brazil-based JBS, the world’s largest meat processor, as well as Tyson Foods and Cargill, have paid millions of dollars to settle lawsuits that accused them and several other major meat companies of conspiring to dominate the industry and fix prices.

“These firms have a goal of increasing their power, that’s what their shareholders demand. It’s going to come at the expense of everyone else,” Howard said.

There is no global shortage of protein, as many proponents of so-called alternative proteins claim, he insisted. Protein deficiencies are rare, but are most prevalent in parts of the world where people are poor and have insufficient access to food more generally, he said.

Proponents assume that alternative proteins will displace industrially produced meat, as people reduce their consumption of conventional products, Howard said. But increasing sales of plant-based meat substitutes haven’t made a dent in overall global sales of meat, he noted.

Agriculture is a primary source of global greenhouse gas emissions, contributing about 11 per cent of total GHGs. In Canada, the sector is the fifth-largest source of GHG emissions, accounting for 10 per cent, or 69 million tonnes.

However, claims about the environmental and health benefits of alternative proteins — relying largely on industry-provided data — are limited and speculative, Howard maintained. “They’re often making simplistic assumptions by comparing their products to just industrially produced meat and dairy, rather than smaller-scale agroecological production which has much lower impacts.”

Many meat-from-plant products contain high levels of sodium and saturated fat (such as palm oil or coconut oil), and constitute “highly processed” food, which Canada’s Food Guide cautions consumers to limit their intake of.

“Highly processed alternative proteins may therefore be more harmful than animal source foods in some contexts, depending on how they are produced,” says the IPES-Food report.

Proponents’ obsession with protein reinforces a reductionist approach to food and diet, by replacing meat with convenient and often unhealthy meat substitutes, Howard said. “But the most healthy, nutritious and culturally appropriate approach is to have more diverse diets and not rely so heavily on a handful of crops and breeds of livestock.”

According to the IPES-Food report, alternative proteins “represent a new phase of food industrialization that could undermine resilience, jeopardize the livelihoods of millions of food producers, and reinforce a ‘centre of the plate’ approach to diets — rather than supporting transformational changes in the way we eat.”

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