The plant protein ship hasn’t sailed — but time is running out

Manitoba and Saskatchewan are part of the pulse-processing boom — but in Alberta, nothing

After five years of effort, Chris Chivilo expects to start construction on his pulse-processing plant at Bowden this summer. But during those five years, Roquette has built the world’s largest pea-processing plant in Portage la Prairie, Man. (left), Merit Functional Foods is now commissioning its new facility in Winnipeg, and Verdient Foods (right) is expanding its processing operation at Vanscoy, Sask.
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For nearly five years, Chris Chivilo has been ready to break ground on a new pulse-fractioning facility near Bowden.

And every year, his plans have been pushed to next year.

First, the bottom fell out of the pulse market. Then the capital just wasn’t there. Then the pandemic.

But you only get so many ‘next years’ before the window of opportunity closes for good, said Chivilo, president of W.A. Grains and Pulse Solutions in Innisfail.

“There’s probably room for three or four (plant protein-processing) plants the size we’re going to build, whether they’re in Alberta or not,” he said.

“The problem is, if they’re not in Alberta, they’re going to be somewhere else. Eventually it’s going to happen, and whoever gets it done in the next three years is going to win.”

That’s already happening.

In Portage la Prairie, Man., the world’s largest pea-processing plant — a newly completed $600-million facility built by French company Roquette — is currently in startup mode. When fully operational, it will process 125,000 tonnes of peas annually.

An hour’s drive to the east, Merit Functional Foods completed construction of its $150-million Winnipeg processing plant in December. It will use 25,000 tonnes of peas and canola annually and officials say the facility is designed with an expansion in mind and if that happens, it would need 100,000 tonnes of those two crops yearly.

Southwest of Saskatoon, Verdient Foods (now fully owned by global ingredient company Ingredion) is expanding its processing facility and expects to be using 100,000 tonnes of pulses annually.

But in Alberta, nothing.

“There is plant protein processing happening, and being invested in, around the world — and yet we don’t have one in Alberta, even though we produce a large chunk of the product and we need to diversify our economy,” said Dan Brewin, CEO of the Plant Protein Alliance of Alberta.

“We need to start extracting and capturing that extra value — by processing our commodities, isolating their components, and selling them as isolates at a much higher value — rather than shipping them off as commodities and letting someone else capture that value.”

Multiply by five

And that added value isn’t exactly pocket change.

Take peas for example. Alberta grows about 1.9 million tonnes of high-protein, high-quality peas, almost half of western Canadian production. At a commodity price of $340 a tonne, Alberta’s pea crop is worth about $640 million annually.

But take those same peas, isolate their protein, fibre, and starch, and sell those components separately, and each tonne of peas becomes worth $1,727 — more than five times the commodity price.

And demand for plant-based proteins is skyrocketing.

Chris Chivilo says he’s close to starting construction on a new pulse- fractioning plant at Bowden. But it’s been a long grind and other jurisdictions have been encouraging him to build outside of Alberta. photo: W.A. Grain and Pulse Solutions

The global market hit US$10.3 billion last year and is forecast to grow another 40 per cent by 2025, according to Research and Markets, an Irish analysis firm. Swiss banking giant UBS is even more optimistic, predicting sales of plant proteins will hit US$85 billion by 2030.

“If we can convert just 35 per cent of the peas to the new value and keep the other 65 per cent at the old value, it adds almost a billion dollars to our economic activity in Alberta,” said Brewin, adding there’s similar potential for other Alberta crops

“This sector alone will not replace oil and gas. We’re not talking about the same kind of hundred-billion-dollar industry — but it is worth billions.

“For our economy, the sooner we can get into this space, the better.”

Raising capital

But as the old saying goes, you’ve got to spend money to make money.

And not too many people are spending money on plant protein processing in Alberta.

“The main challenge for everyone — except the huge multinationals — is money,” said Chivilo.

“If I put an ad in the paper and said, ‘Hey, I want to build a $100-million ethanol plant,’ I’d probably have 10 energy funds call me the next day. But when I say I want to build a $60-million fractioning plant, nobody calls me.”

Typically, banks will only front 50 per cent of the budget for a build like this, so Chivilo has had to find private equity for the remainder.

And that’s been a slog to say the least.

“I don’t know if agriculture isn’t sexy to private equity companies, but we’ve talked to a pile of equity investment firms over the years, and they all say, ‘Hey, that’s a great idea. Let’s talk again in six months,’” said Chivilo.

“Now we’re at the point where we’ve found some serious investment firms. But out of the five we’re going to be talking to, I don’t think there’s one Canadian.”

It’s the same story for other potential processing facilities in the province, said Allison Ammeter. As Plant Protein Alliance chair (as well as past chair of Pulse Canada and Alberta Pulse Growers), Ammeter has talked to industry players from across the country about capitalizing on pulse production on the Prairies.

“I asked one fellow who’s on the edge of building a plant and has been for a while, ‘Other than money, what’s holding you back?’ And he looked at me and said, ‘Money,’” said the Sylvan Lake producer.

“We’ve got a number of ventures that are so close. We have a list right now of 10 or 11 businesses that, with the right things falling into place, they’re shovel ready. But until those things fall into place, they’re not quite there.”

Part of the challenge is the relative infancy of plant protein processing.

“Investors know oil and gas. They don’t necessarily know plant protein,” said Brewin.

It was a similar situation when oilsands developments were getting underway, he said, adding government investment was crucial.

“Really what that did was show confidence to other investors that this was a space they were prepared to roll the dice on. That’s what we need right now.”

Government ‘spark’

The plant protein-processing industry needs that same support from the Alberta government, said Brewin.

For the new Merit Functional Foods facility in Winnipeg, for instance, the Manitoba government cost shared a $2.5-million upfront investment with Ottawa, as well as $1 million for cost-shared training and a $4.5-million rebate through the Manitoba Works Capital Incentive Program.

“In Manitoba, the provincial government was prepared to put a stake in the ground and claim that it was important for its economy to support this,” he said. “They got that spark from the government that we’re missing today.”

That’s the type of support Ammeter would like to see here.

“More than anything, I want to see the Alberta government say the same thing Manitoba did when they stood up and said, ‘We can be the protein capital of Canada, and we’re doing whatever we can to support our protein industry,’” she said.

“I think Alberta has bent over backwards to support the energy industry, and I think it’s time to say, ‘Hey, we’re growing all these crops that could contribute to an amazing plant-based food industry here.’”

It’s less about dollars and more about showing commitment, she added, saying the province should be reaching out to companies looking at plant processing and asking, “What can we do to help you? How can we help you get through those barriers? We will do whatever we can.”

In its 2020 budget, the UCP government set a goal of attracting $1.4 billion in value-added agricultural processing in four years.

“I’ve talked to them four times — not one call-back saying they’ve found an investor for me,” said Chivilo. “Not to take away from our resource industry here, but that is the focus in Alberta.

“I’m not saying that Manitoba and Saskatchewan threw a whole bunch of money at these companies to build there, but I’ve had more calls from the Ministry of Agriculture in Saskatchewan than I have from Alberta.

“I’ve had Economic Development Saskatchewan visit my office twice to see if I would change my mind and build in Saskatchewan. I’ve had three visits from folks in Montana, two calls from Nebraska, and they all say, ‘We have land, power and labour here. What would it take for you to move here?’”

Missing the boat?

But Chivilo wants to build in Alberta.

“We’re getting close. The plan right now is to start turning dirt July 1. That’s if everything goes according to plan, and we’re moving along very well right now,” he said.

“We’ve got a lot of work to do before we turn dirt in July, but we’re pretty confident now.”

That’s good news for producers like Ammeter, who hopes to sell to Chivilo once his plant is up and running.

“I would be quite happy if, instead of exporting raw product at $9 a bushel, we were exporting all of the byproducts and making four or five times the value,” she said.

“Why should we be exporting our raw product and letting everybody else get the jobs and the GDP involved in adding value to it? Why not keep that in Alberta and add that value ourselves?”

That’s what happened with canola, she added.

“I always wonder if we hadn’t set up any crush plants on the Prairies, would canola be worth $16 a bushel today? I don’t know, but it seems to me that because we have secondary processing here on the Prairies, it has given us not only a guaranteed market but more value,” she said.

“Any time you’re adding value close to where you’re producing it, the producers also benefit.”

The market for pulse protein and other ingredients is definitely there, said Chivilo, who started his business with wife Tracey by cleaning and selling peas for local farmers. They now have eight processing facilities and 55 employees.

His new facility at Bowden would employ a process called wet fractioning to extract proteins and starches from pulses, and would process up to 35,000 tonnes of peas yearly. Chivilo already has customers lined up to buy everything he can produce and he, too, expects the market to keep expanding for several years.

“If the trend continues — and we think it will — demand won’t be an issue.”

But eventually supply will catch up, he said.

“At some point, we’ll hit saturation,” said Chivilo. “I don’t think it’s going to happen for another eight or nine years, so it’s a matter of getting up and running and creating a profitable business model before that happens.”

And the clock is ticking.

“The opportunity only exists for so long,” said Brewin. “If we don’t get into this sooner rather than later, we will be standing on the shore, watching the ship sail by, wondering why we can only sell our pulses to the export market as commodities.

“Right now, the demand curve is tremendously steep, so this isn’t going to happen any time soon. There’s still time, but we can’t continue to talk about it and not have any action. We need to make a move.”

About the author

Reporter

Jennifer Blair

Jennifer Blair is a Red Deer-based reporter with a post-secondary education in professional writing and nearly 10 years of experience in corporate communications, policy development, and journalism. She's spent half of her career telling stories about an industry she loves for an audience she admires--the farmers who work every day to build a better agriculture industry in Alberta.

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