A matter of time – and the clock is ticking.
This week saw the Future Made in Australia Bill tabled in parliament and the first creditors’ meeting for Australia’s first protein isolate manufacturer, which went into voluntary administration two weeks ago.
Australian Plant Proteins was founded in 2016 and began commercial operations four years later, after developing and patenting its innovative manufacturing process that extracts protein from pulses without using enzymes or solvents. The result is a premium protein isolate powder with more than 85 per cent protein made from Australian grown pulses, using its clean manufacturing process to creates a highly functional protein ingredient with neutral taste and odour, and a smooth mouthfeel. It won this year’s Hive Award for Best Ingredient for its innovation.
Its founders, Brendan McKeegan and Phil McFarlane from the EAT Group, oversaw the commissioning of Australia’s first fractionation plant in regional Victoria in 18 months. It has custom fabrication of extraction and separation modules and involved a calculated leap of faith to commission a purpose-built spray dryer from the US, with no comparative blueprint due to its unique extraction process.
The creation of this company and its capabilities had the potential to be the pebble being dropped in the middle of the pond, with ripples extending through manufacturing innovation, skills development, regional employment, added revenue streams for farmers, the opportunity for Australian plant-based companies to create products using 100 per cent Australian ingredients, and export of a highly valued ingredient in a growing market.
According to Deloitte Access Economics, the market size for plant-based meat in Australia is now tipped to reach $1.65 billion in FY33, contributing more than half-a-billion dollars in value added to the Australian economy and supporting more than 6000 jobs.
But this pebble is still in a pond, compared to the ocean of opportunity offshore. To our north are 4.5 billion people – 60 per cent of the world’s population - that are quite partial to our ‘clean and green’ provenance perception and reputation as a reliable trading partner of safe and quality produce.
Looking specifically at protein isolates, we can’t compare let alone compete with China on scale or price. But nor should we – in Food Frontier’s recent State of the Industry Report, the value of those products to China is different to the value of Australian protein isolates. Our value is not in cost, it is in quality, traceability, consistency and functionality – and also in offering plant proteins from less common sources.
For example, APP predominantly offers faba bean protein, but can also supply yellow pea, mung bean, yellow lentil, and red lentil varieties.
Food Frontier’s report said that currently, the agricultural sector is the largest indirect beneficiary of the economic activity generated from the plant-based meat industry. In FY23 it received a 21 per cent share of the total value added and a 32 per cent of total jobs in FY23.
Deloitte predicts that by 2033, those values could be $96 million and 1137 jobs, with scope to increase even more if there was increased domestic processing infrastructure.
The think tank said that the agricultural opportunities for the entire plant-based food industry was “largely untapped in Australia due to a lack of domestic plant protein processing infrastructure”.
“Expanded domestic production and increased availability of Australian grown plant protein ingredients offers new economic opportunities for Australian farmers to sell their commodity crops into value adding supply chains, with strong demand in both domestic plant-based food industries and in overseas export markets looking for high-quality and consistent plant protein products,” it said.
Australia is the third largest producer of pulses in the world, the potential of this industry is immense.
It can be done
“Foreign governments, companies and consumers are driving global demand for a diversification of protein offerings, and nations with comparable agrifood, R&D and innovation strengths to Australia have already begun capitalising on this demand. Australia must not let this opportunity pass by,” Food Frontier said.
Canada, China, Denmark, and South Korea are examples of governments thinking long term and putting policies in place now to promote and support growth in their domestic development, supply, consumption, and export of plant-based ingredients and products.
Food Frontier said Canada, with a comparable pulse industry to Australia has established a government-backed, industry-run innovation supercluster called Protein Industries Canada (PIC). Through its CA$25 billion by 2035 plant-based roadmap, the country intends to become a sovereign food, feed, and ingredients manufacturing powerhouse, backed by world leading crop, process, and product R&D.
PIC was established in 2018.
In 2019, it updated its national dietary guidelines to recommend that among protein foods, plant-based options be consumed the most often.
Last year, the government committed a further CA$150 million over five more years.
In his original Future Made call to arms, Albanese said, “This is not old-fashioned protectionism or isolationism – it is the new competition.”
If it is, then on this front we are losing.
We can do hard things
Climate change, a growing global population, Covid, food insecurity, and poor nutrition have accelerated the need to overhaul our food systems. There is no quick fix for this, and there is not an option of doing things the way we have been doing them.
We have already seen with the early investment rush on plant-based meats in 2019-21, that reliance on private investment leaves an emerging industry particularly vulnerable when that channel moves on to the next shiny bauble of an industry.
When plant-based meat pioneer, Sunfed, closed in April, its founder Shama Sukul Lee was blunt in her assessment of private funding.
“Essentially, a lot of VC investors jumped into the plant-based Gold Rush thinking they could get fast valuation returns similar to what they’re used to in the virtual world.
“But manufacturing and FMCG are in the physical world, with a lot more complexity and moving parts. It is generally a longer-term play where you have to build real things,” Lee said.
The reality is a small-scale facility is going to be uncompetitive. At the other end of the scale is a manufacturer in full-scale production, providing a product that people want at a price that is acceptable. It’s the middle bit that can be torturous – and as we’re seeing, capable of pulling a company to its knees. It’s when you know you can do it, but you’re not quite there if being fuelled by your own resources or irregular investment.
As is one of the top food and beverage manufacturers’ mantras, “it is all about scale”.
And this is where we truly need to start thinking differently. This is not about the government handing out cheques with a pat on the back and well wishes.
This is about the entire ecosystem working together, from government procurement policies and investment, collaboration across industries, encouraging capital market to support the local market and, AND, having the policy that makes all of this possible.
We are getting there, projects like Turbine, CRCs, regional precincts like FAN, accelerators like Rocket Seeder and FaBA are making a difference, but the pace and scale needed to Australia to get itself on the map is just not there.
It also boils down to how you define value. If value is seen in terms of costs versus revenue, emerging industries in any sector are doomed. It costs a lot to get a food company operational, whether it is in a traditional market or new.
Food Frontier said to unlock the potential of Australia’s plant protein ingredient potential, our governments need to co-invest with industry to help build the required plant protein ingredient processing capacity. The capital outlay for processing facilities is considerable and requires government support to realise.
Food Frontier CEO, Dr Simon Eassom, said, “Any support considered to an emerging industry such as the plant protein industry must take a long-term view. To build any industry, it takes considerable time and patience. Whether it is investors, policy makers such governments (federal or state), or the food industry itself, they must understand that decisions are to be made with a seven-to-15-year view.”
Oh that
Future Made in Australia is ultimately about Australia looking like it’s doing something on the global transition to net zero.
According to Boston Consulting Group’s report, The Untapped Climate Opportunity in Alternative Proteins, investments in plant-based meat led to greater cuts in greenhouse gas emissions than other green investments. It found that every dollar invested in improving and scaling the production of meat and dairy alternatives resulted in three times more greenhouse gas reductions compared with investment in green cement technology, seven times more than green buildings, and 11 times more than zero- emission cars.
In 2022, The Good Food Institute outlined the projected ingredient, infrastructure, and investment needs for the global plant-based meat industry in 2030. It said US$27 billion in manufacturing facilities would be needed to meet the demand for both plant-based ingredients and finished plant-based meat products, “underscoring the importance and urgency of bold infrastructure investments” to advance the category.
At COP28 last year, Australia signed the Emirates Declaration on Sustainable Agriculture, Resilient Food Systems and Climate action, committing the country to integrating food into its climate plans by 2025.
It also signed the COP28 UAE Declaration on Health and Climate Change, recognising the urgency of climate change action as a health imperative, including by shifting to sustainable, healthy diets.
There are so many reasons – financial or otherwise – and so much potential for the country if the long term vision, commitment, and investment was made.
