Frank Hart
Interim CEO,
Protein Industries Canada
Néma McGlynn
Manager of R&D,
EMN
Evolving Canada’s agricultural sector from pure commodities exporter to domestic producer of ingredients, foods, and bio-products holds huge economic potential.
For nearly a century, Canada’s agricultural sector has been a leading exporter of raw agricultural commodities, such as wheat, canola, soybeans, peas, lentils, and chickpeas. “The size and diversity of our crops along with our low-carbon-intensive cropping practices and farming technologies gives Canada a unique global advantage as a reliable and sustainable global supplier of healthy food,” says Frank Hart, Interim CEO of Protein Industries Canada, an industry-led, not-for-profit organization promoting Canada’s plant protein industry and one of Canada’s five Global Innovation Clusters.
While the sector currently represents about seven per cent of Canada’s gross domestic product (GDP) and employs about 2.3 million Canadians, continued reliance on our commodities trade alone is becoming increasingly challenging in an environment of growing global competition, geopolitical tensions, and climate change. However, by domestically converting Canada’s crops into new, high value ingredients and food products to be sold in international markets, Canada can improve its productivity, grow its national GDP and amplify its position as a global leader and an essential player in addressing the world’s growing demand for healthy food.
Giving farmers the option to sell their crop to local processors not only helps them reduce transportation costs and increase their net profits, but also creates new sources of demand that can help support higher prices…
Unlocking a $25 billion opportunity
Protein Industries Canada is supporting Canada’s agricultural evolution from pure commodities production to ingredient manufacturing through its Road to $25 Billion initiative. The Government of Canada has committed $350 million over 10 years to Protein Industries Canada to be co-invested into innovation projects conceived and led by industry consortia. For every dollar invested by Protein Industries Canada in these projects, the private consortia typically invest double the amount. To date, Protein Industries Canada’s $200 million investment has generated around $650 million of total private sector led innovation in this space, most dedicated to supporting value-added processing of Canadian crops. This fractionating of crops into their components — starch, oil, fibre, and protein — allows processors to turn them into novel food, feed, and industrial bio-products for integration into the wider global supply chain. “There are many examples of this, such as canola oil that has been traditionally used for cooking that can now be used to make renewable diesel fuel and sustainable aviation fuel, or protein from fava beans to make plant-based cheeses, starch from pulse crops to make gluten free pastas, and so on,” says Hart.
This transition is predicted to provide Canada with the potential to unlock an additional $25 billion in GDP, and create 17,000 jobs nationwide, while reducing our vulnerability to geopolitical factors such as trade disputes. These products can also help other areas of Canada’s economy by reducing emissions from fossil fuels, supporting domestic livestock production through lower feed costs, and ensuring supply chain resilience and food security. “It’s also creating a net economic benefit to farmers, whose net prices are diminished by the various costs of getting their crops from farm to export markets. Giving farmers the option to sell their crop to local processors not only helps them reduce transportation costs and increase their net profits, but also creates new sources of demand that can help support higher prices for their product at the farm gate by having both export buyers and local processors compete for their product,” says Hart.
Innovating to secure future economic prosperity
Innovation is critical to Canada’s future economic prosperity, and transforming our agrifood industry through innovation will help build greater prosperity for Canadians. However, capturing this $25 billion opportunity will require companies that are willing to innovate as well as investors willing to invest in Canada’s value-added future. Up to now, access to capital has been challenging for the sector. “While innovative companies in areas like health care or fintech have decent access to investment capital in Canada, there are relatively fewer venture capital and private equity firms with funds and expertise dedicated to innovations in the ag value-added sector in Canada,” says Hart.
Protein Industries Canada is working to fill this gap by connecting ingredient and food innovators with organizations that can fund them. “We use our knowledge of markets and opportunities to make the case with investors that the value-added ingredient industry is worthy of their interest and focus,” says Hart.
Supporting Canadian startups
One innovator benefitting from Protein Industries Canada’s support and expertise is Enhanced Medical Nutrition (EMN), a Canadian startup focused on developing medical nutrition products for the healthcare sector. The company is currently working with Gruppo Nutrition and Acenzia on a Protein Industries Canada-supported project using ingredients derived from Canadian crops, like pea protein, in medical nutrition products for surgical patients. “There are significant costs associated with launching novel products and growing our team within the medical food industry. The support from Protein Industries Canada is making a huge impact in our progress to bring these technologies to market,” says Néma McGlynn, Manager of R&D at EMN.
Another way Protein Industries Canada is having an impact is through its IP commercialization support. “Having IP in place is necessary to attract venture investment, but it’s a very complicated process. Protein Industries Canada is helping us protect our IP to ensure that our innovations remain secure, allowing us to maintain a competitive edge and confidently pursue further development and commercialization opportunities in the growing plant-based market,” says McGlynn.
As more countries adopt plant-based products into their food systems and look to Canada for ingredients, we need to move swiftly to take full advantage of the opportunity. “We’re in a race with other countries to capture these opportunities. By selling a commodity only once, we’re leaving a lot of economic value on the table,” says Hart. “The trade broker margin on a tonne of yellow peas is about $35 to $40. If we dehull and split that tonne of peas, or go further and fractionate them into starch, fibre and protein and ultimately de-flavour the flour, the further processed product can be worth anywhere from $100 to $4,000 of increased value per tonne depending on how much processing we apply. This is how, by turning our commodity crops into high-value ingredients and integrating them into global supply chains, we can sell them both domestically and internationally and grow our GDP by $25 billion.”
It’s time to change direction.
Here’s how we’ll make progress on The Road to $25 Billion:
Focus on innovation and support IP commercialization
Create an enabling regulatory environment to
support the competitiveness of the sector
Support the development of critical infrastructure
to help companies scale their business
Establish new markets for Canadian ingredients
Create new incentives and sources of capital
to grow ingredient manufacturing in Canada
Learn more about The Road to $25 Billion and how you can join by visiting theroadto25billion.com.
