Why processing beans, peas and lentils could solve Canada’s ‘commodity conundrum’

Why processing beans, peas and lentils could solve Canada’s ‘commodity conundrum’

Plant-based protein craze a uncommon and fleeting probability to lastly construct Canadian food-processing into international powerhouse

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Durum wheat is nearly as good a spot as any to attempt to wrap your head round one of many extra cussed issues in Canadian meals manufacturing. Hundreds of thousands of acres are dedicated to rising the crop. Native producers then mill and ship it world wide, making the nation a serious participant within the international export market.

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What occurs subsequent is the issue.

“It’s being processed elsewhere and we purchase it again in pasta,” Agriculture Minister Marie-Claude Bibeau mentioned.

That pasta represents a missed alternative for the Canadian financial system. That wheat that sells comparatively cheaply on the commodities market results in one other nation, the place corporations create jobs and pay taxes to show it into client items that may then be bought at a wholesome markup.

“We are able to undoubtedly do extra as a complete trade,” Bibeau mentioned in a current interview about rising Canada’s meals processing capability. “That is one thing I’m fighting.”

It’s not a brand new wrestle. Canada’s skill to develop crops in abundance has lengthy outmatched its skill to course of these crops into higher-value client items, however that might be about to vary, due largely to beans, peas and lentils.

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Wheat grows in a field before harvest near Brunkild, Manitoba.
Wheat grows in a discipline earlier than harvest close to Brunkild, Manitoba. Photograph by Shannon VanRaes/Bloomberg recordsdata

These crops — referred to as pulses, all grown in large portions in Western Canada — are a number of the fundamental gamers behind the plant-based protein craze. The marketplace for these merchandise — Past Meat Inc. burgers and the like, protein dietary supplements, and dairy and egg substitutes — is projected to hit $250 billion within the subsequent 15 years, in accordance with a report by Ernst and Younger.

Federal cupboard ministers, trade advocates and meals processors all consider that development in plant-based merchandise represents a uncommon and fleeting probability to lastly construct the Canadian food-processing sector into a world powerhouse. If it does, some estimates counsel homegrown processors may seize 10 per cent of that $250-billion market. At present, they’ve simply 3.3 per cent.

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“Now we have a once-in-a-generation alternative,” Worldwide Commerce Minister Mary Ng advised the Monetary Publish in an interview final month.

Incomes extra money isn’t the one benefit. The pandemic has uncovered the issues of being depending on different nations to provide your meals. In occasions of disaster, surprising surges in demand and logistical problems can shoot via the worldwide provide chain, and a few buying and selling companions can get a bit sensitive about sharing.

Now we have a once-in-a-generation alternative

Worldwide Commerce Minister Mary Ng

Exporting processed, packaged items — resembling canola oil — can be thought of much less dangerous than exporting commodities, since bulk shipments can face intense, generally political, scrutiny at international ports for food-safety issues and pests.

For instance, China in 2019 began rejecting canola seeds from Canada after alleging that inspectors detected pests in samples from a Canadian cargo — a transfer that many interpreted as retaliation for Canada’s arrest of Huawei Applied sciences Co Ltd. government Meng Wanzhou.

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Treated canola seeds on a farm in Manitoba.
Handled canola seeds on a farm in Manitoba. Photograph by Shannon VanRaes/Bloomberg recordsdata

Bibeau mentioned the chance of such “non-tariff limitations” is increased for uncooked commodities than it will be for, say, a Canadian firm that processes the crop into “a bottle of oil.”

The chance to spice up Canadian processing isn’t simply in making veggie burgers. Most within the trade consider that Canada’s wealth of pulse crops make it uniquely suited to extract proteins from the crop after which course of them into concentrated protein elements for plant-based merchandise. These elements are required in decrease volumes than uncooked commodities, however fetch increased costs.

The rising want for plant protein may spell the top of Canada’s “commodity conundrum,” mentioned Murad Al-Katib, chief government of Saskatchewan pulse processor AGT Meals and Components Inc.

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“As a substitute of promoting yellow peas to China, we’re going to promote pea protein concentrates,” he mentioned. “We’re seeing the limitations breaking down and the imaginative and prescient altering.”

However ramping up the manufacturing of such elements relies on a serious wave of private-sector funding, infrastructure growth and regulatory reform to pave the best way for state-of-the-art amenities specializing in isolating and extracting protein from pulses.

A farmer holds a yellow pea plant on a farm in Alberta.
A farmer holds a yellow pea plant on a farm in Alberta. Photograph by Shaughn Butts/Postmedia recordsdata

A number of of these initiatives are already underway, together with a $600-million undertaking constructed by France-based meals processing large Roquette Frères SA in Portage la Prairie, Man.

Nonetheless, extra vegetation should be constructed. The Roquette plant is predicted to course of 125,000 metric tonnes of peas per yr when it reaches full capability subsequent yr. Canada might want to course of an extra six or seven million metric tonnes to have a shot at capturing that 10 per cent of the plant-based market within the subsequent decade or so, in accordance with Protein Industries Canada (PIC), one of many 5 federally funded superclusters designed to spur innovation and funding in rising sectors.

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“This isn’t trivial stuff,” mentioned Invoice Greuel, PIC’s chief government. “I hope I’m supplying you with a way of the scope and the size of what’s at stake right here for Canada.”

The priority for Greuel and others is that Canadian traders and legislators gained’t act quick sufficient, thereby permitting one other nation to take up the chance as an alternative. At present, Canadian ingredient producers’ share of the plant-based market is barely within the low single digits, he mentioned.

There’s a race on proper now to construct out the ingredient-processing capability, as a result of as soon as it’s constructed, it’s constructed

Invoice Greuel

“There’s a race on proper now to construct out the ingredient-processing capability, as a result of as soon as it’s constructed, it’s constructed,” he mentioned.

Rather a lot wants to vary if Canada goes to compete in that race. First, Greuel mentioned, the expertise pool for meals sciences and engineering must develop. The federal and provincial governments additionally want to supply higher incentives to draw international multinationals to construct right here.

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Buyers have to step up, too. PIC has supplied authorities funding to roughly 22 initiatives since its inception in 2018, together with an funding in Benefit Purposeful Meals Corp., which just lately constructed a brand new pea and canola protein processing facility in Manitoba. However many home startups which have developed new manufacturing methods can’t spherical up sufficient capital to construct a plant.

“They’re lengthy on mental property and quick on belongings,” Greuel mentioned. “The VC neighborhood or the capital neighborhood is just not actually taken with them, as a result of it’s an extended maintain, it’s dangerous as a result of they don’t have belongings to borrow in opposition to and so they’re not money constructive.”

However he mentioned one of the vital pressing wants within the chase to ramp up plant-protein processing is altering Canada’s “archaic” laws on plant-based protein.

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The present system hasn’t saved up with adjustments and innovation within the trade, and what’s left is a complicated mixture of guidelines that usually contradict each other.

For instance, Greuel mentioned plant-based rooster nuggets must be fortified to a protein stage increased than that anticipated of actual rooster, whereas oat milk is just not allowed to be fortified to the identical commonplace as commonplace milk.

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“I may go off for about an hour on this one,” he mentioned, including that laws are so out of step with the USA that some Canadian producers have stopped supplying their merchandise domestically to focus totally on the American market.

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“If we don’t take into consideration modernizing our regulatory system in Canada to help the expansion and growth of plant-based meals, we’ll by no means be aggressive on a world scale,” Greuel mentioned.

Maple Leaf Meals Inc. — a Mississauga, Ont.-based packaged meats processor that has made main investments in plant-based alternate options — just lately cited regulatory points as one of many causes it determined to construct a US$310-million manufacturing facility in Indiana for its plant-based wing, Greenleaf Meals.

Chief government Michael McCain mentioned the choice was “not as a result of we choose Indiana over a Canadian jurisdiction, however as a result of 95 per cent of our enterprise is in the USA.”

Plant-based Lightlife burgers at a grocery store in Alberta.
Plant-based Lightlife burgers at a grocery retailer in Alberta. Photograph by Vincent McDermott/Fort McMurray As we speak/Postmedia Community recordsdata

Greenleaf makes plant-based merchandise for shoppers via its Lightlife and Discipline Roast manufacturers, and they’re heavier than powdered plant protein elements, so it makes extra sense to each purchase the elements from agricultural areas and make the merchandise nearer to the patron to chop down on delivery prices — one of many enterprise’s fundamental bills.

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McCain mentioned there are frequent hurdles in the best way of each potential ingredient and client items producers that wish to arrange a brand new operation in Canada.

“It’s definitely no secret that the U.S. regional jurisdictions are far more aggressive in attracting investments per capita in the USA than in Canada,” he mentioned. “U.S. governments roll out the pink carpet to draw funding. They normally do it within the type of infrastructure help and that’s normally not aggressive in Canada.”

Processors in Canada provide some elements to Greenleaf, although McCain mentioned the Canadian ingredient manufacturing sector is just not at the moment a serious participant within the international market.

However that, he added, may change.

“There are very important investments being made.”

Monetary Publish

• E-mail: jedmiston@postmedia.com | Twitter:

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In-depth reporting on the innovation financial system from The Logic, dropped at you in partnership with the Monetary Publish.

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