David Dzisiak is chief operating officer at Botaneco, a natural-ingredient manufacturer based in Calgary.
It is not that often an opportunity exists to transform an industry.
Canada has the rare opportunity to generate $100-billion in new GDP through our agriculture and food industry over the next decade. It can only happen if the industry can shift its traditional base of exporting commodities by adding an innovation-driven strategy. The industry and our public policy must take advantage of the transformational changes and investment flooding into the ag/food space.
Our society is in the midst of a great demographic change. Along with it comes major changes in food choices and diet patterns, which has been referred to as the death of breakfast, lunch and dinner. By 2025, Generation Z and young millennials will become the demographic with the largest consumer purchasing power. This generation has different food preferences, eating habits and purchasing behaviours. Healthy snacking and hand-held foods are replacing the traditional three square meals a day. Consumers want more convenient, but healthier, foods to assemble meals at home. New plant-based foods are at the heart of these trends, with more than 900 plant-based food product launches in North America last year.
In a study by FleishmanHillard, more than 80 per cent of the respondents in the Gen Z and young millennial demographic said they felt they could make a difference in the kinds of food they ate and how it is grown, with 4 of 10 respondents saying they cared about food safety, access to good food, reducing food waste, transparent food labelling, treatment of animals, environmental impact and sustainable food supply. COVID-19 put a spotlight on the connection between agriculture and our food supply. It has opened consumers’ minds to new food system innovations and reliable supply.
While the global animal protein market is in the realm of $1.1-trillion, the plant-based segment is forecast to become a $180-billion market in the next 15 years. Meanwhile, the dairy market has seen greater penetration – plant-based dairy gained about 10 per cent share in North America, worth $3-billion in value. Globally, dairy alternatives are forecasted to become an $8-billion market by 2025. This does not mean an end to our consumption of meat or traditional dairy products. Most plant-based food consumers may enjoy grilling meat one night and then choose a plant-based burger at the drive-thru the next.
These trends preview the future, creating a once-in-a-generation opportunity for the Canadian ag/food industry if we can act upon it.
To do so requires high-quality, plant-based protein ingredients. Canadian farmers excel at the production of peas, lentils and canola. This gives us a vast reservoir of raw material for value-added processing. We are a leader in plant science and production agronomy technologies, giving Canada an edge in developing new quality traits to improve taste and functionality that can globally differentiate us. Canola can supply a scalable, high-value protein feed ingredient for the rapidly expanding global aquaculture feed market. Our core prairie cropping system is based on a unique, sustainable rotation. Developing this strategy also helps mitigate climate change, as this prairie system stores more carbon in the soil than it takes to produce it.
By processing more of these crops at home, we would export concentrated, high-value-added ingredients and lessen reliance on shipping bulk commodities, accruing greater benefit to Canada. We often talk about this, but the capital has not flowed this way.
Globally, the flow of private capital into ag/food tech is surging. But not in Canada. AgFunder reports that in 2020, just more than $30-billion was invested globally into this space, up about 40 per cent from 2019 and triple from 2015. Last year, the United States had $13-billion invested in ag/food tech, the U.K. had $1-billion, while Canada attracted only $400-million – just ahead of Colombia and behind Israel.
While Canada has yet to meet this investment pace, progress is being made. Protein Industries Canada (PIC) has proven to be a critical catalyst to accelerate Canada’s participation in this new plant-protein industry. Currently, PIC has co-invested more than 80 per cent of its capital, for a total of $124-million, with private companies committing an additional $214-million. This brings $338-million in new investment to help create and scale novel plant-protein technologies and companies in Canada. The 19 projects in this portfolio are creating intellectual property and commercializing new plant-protein products and processes for high-value food and feed applications. They’re helping to build a new ecosystem to create commercial networks and public-private collaborations.
PIC must not be just about projects, though, but about bringing transformational change. Canada must improve upon building our ag/food value-chain innovation, developing related intellectual property and keeping our talent. Several studies that have assessed the growth of the market generally estimate new plant-based foods to grow to more than $200-billion by 2035. PIC analysis shows that if we processed much more of our pulses and canola and further converted those ingredients to consumer-ready plant-based foods, it would add $20-billion in new annual sales and attract more than $15-billion of capital. This requires greater public and private investment to create, nurture and scale Canadian companies that can stand up as global leaders in the sector.
Demographics are destiny – they portend a forever change. We are on the cusp of perhaps one of the most consequential disruptions of the agriculture, food and feed industries. Agriculture also needs to double food production for a growing population that wants to eat better. The flow of technology and capital into the sector is staggering. Canada has the right pieces and some key advantages to create a global leadership position in these markets.
I once heard a young leader bring an interesting perspective to innovation, saying: “Most innovation is not about genius – it is mostly the ability to learn, reimagine and apply. It is about courage, not breakthrough.”
Opportunities seldom last. Let us seize this one to transform ag/food tech to be a growth driver for the new Canadian economy.
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