Australian Plant Proteins enters administration

Australia’s first plant-protein isolate manufacturer, Australian Plant Proteins (APP), has entered voluntary administration, with industry leaders expressing frustration at the lack of government support, a reliance on imports, and drop in R&D investment in a sector with “enormous opportunity” for Australia.

APP was founded in 2016 by Melbourne-based agricultural investment management company, EAT Group founders Phil McFarlane and Brendan McKeegan.

It spent four years developing and patenting an innovative manufacturing process that extracted protein from pulses without using enzymes or solvents. This clean manufacturing process creates a highly functional protein ingredient with neutral taste and odour, and a smooth mouthfeel.

The company produces neutral tasting, highly functional plant protein isolate powder with more than 85 per cent protein from Australian grown pulses, including Faba Bean, Lentil, Mung Bean, and Pea, which could be used in plant-based dairy, bakery, nutrition, beverage, and alternate meat products.

APP has a manufacturing plant in Horsham, Victoria, and a dedicated R&D facility in Melbourne.

Horsham was the first of its kind built in Australia and was fully commissioned in 18 months. Along with custom fabrication of its extraction and separation modules, it had to commission a purpose-built spray dryer from the US, with no comparative blueprint due to its unique extraction process.

It attracted international attention early, with global agrifood company, Bunge, investing $45.7 million in 2021. Australian food ingredient distributor, Scalzo Foods, had already invested in the company in 2019.

In 2022, just before the federal election, the Coalition government allocated $113 million from the Modern Manufacturing Initiative (MMI) to a major project led by APP with partners Thomas Foods International and pulse and ingredient supplier, AGT Foods Australia, to quadruple to production of pulse protein in South Australia.

With an additional $65 million from the South Australian government, the project was earmarked to cost $378 million, with APP contributing $230 million. Projections were that it would create 384 direct manufacturing jobs by this year and 8500 in the supply chain by 2034. It was forecast to generate up to $4 billion in exports by 2032.

The MMI funding never eventuated, with the newly elected Labor government withdrawing funding from eight projects because they “no longer meet the conditions of the program”.

In APP’s submission to the House Standing Committee on Industry, Science, and Resources inquiry into Food and Beverage Manufacturing in Australia, it said there were three material non-commercial clauses in the MMI Collaboration agreement that put “significant risk” on the partners by preventing any third party ‘gap funding’ to be raised.

“After repeated requests to change the agreement or give time to find a better solution, the Federal Government withdrew their offer mid 2023 which was duly followed by the South Australia government withdrawing their support some months later with little consultation,” APP said.

At the time (June 2023), department secretary Meghan Quinn told Senate Estimates, “For these collaboration grants, which were specifically targeted at bringing together different entities to collaborate to transform industry, there was quite a lot of detail that was left to the negotiation and execution stage rather than the initial filtering and application stage.

“Some external events have happened in that time that have made it difficult for some of the proponents to be able to provide certain aspects. There have been state government changes that have meant that some of the funding or policy arrangements under state programs changed. There were also changes in the business landscape for some of the collaborations. So, it is a more complex program. It has taken a fair bit of time to work through these agreements.”

In May this year, APP was awarded Best Ingredient at the inaugural Hive Awards.

The company said it was reporting 220 per cent year-on-year growth and to meet demand it was planning to expand its processing capacity (currently 1000MT) over the next 18 months.

APP is also constructing a starch and fibre processing facility at their Horsham site, with the goal of transforming a current by-product stream into human-grade native starch and dietary fibre products.

APP had created Australia’s first global export channel for plant-proteins, positioning the company – and Australian grown pulses – as a key player in the global supply of plant-base protein ingredients.

Just five weeks later APP went into administration.

Food Frontier CEO, Dr Simon Eassom, said APP’s predicament should not be seen as a failure of an individual company but an example of the lack of forward thinking by government.

“This is a warning that building a long-term sustainable industry takes time, ongoing investment, and commitment from government. This is especially important in regional areas where employment and valued added industries are needed,” Eassom said.

APP employed 30 full-time workers at Horsham, and two at its R&D facility.

“If we contrast Australia with a world leader in this sector, the Canadian government sponsored Protein Industries Canada has co-invested $190 million in the time since APP was founded in 2016, and is strategically assembling and supercharging Canada’s domestic plant protein industry to reach $27.5 billion by 2035,” 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.”

In its inquiry submission, APP 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.

“It is advisable that any Government body considering providing a funding grant or in any way considering participating in the investment stack of a viable food manufacturing business case ensures that they focus on the economic benefit that such an investment will generate for the wider economy as a whole that supports that investment opportunity (i.e. trades, freight suppliers, farmers, employment directly and indirectly) rather than solely using the outdated metric of direct jobs only.

“The reason is that modern innovative food manufacturing in this day and age is not about mass direct jobs but rather the use of advanced technology in undertaking many of the processing tasks to ensure that what is produced is of the highest quality and is achieved on a repeatable basis. This way, many ‘direct’ jobs are moved to more ‘value-add’ roles along with the generation of significant economic value to the immediate business ecosystem (and beyond) that supports the business and the emerging industry itself.”  

Eassom said, “Australia is a major producer of pulses crops, the world’s largest grower of lupins, for example. These crops are currently sold on the international commodity markets, often as feedstock for the animal farming industry in Asia.

“If processing facilities aren’t supported, Australia will miss an enormous opportunity to enhance its domestic supply of high-quality protein ingredients for the food manufacturing sector. It will prevent significant and necessary R&D into utilising these products to feed large sectors of the community, such as those in aged care facilities, who need food manufactured from high quality, digestible protein at affordable prices.”

“Sadly, the potential closure of Australian Plant Proteins pushes Australia further behind countries such as Canada and China and resigns Australian manufacturers to relying on the importation of soybean concentrates and protein ingredients, often of variable quality and suitability.”

Continuing a 14-year decline, ABS data shows Australia’s national spending in R&D dropped again in 2023, jeopardising our opportunity to be a global early mover in food development and alternative proteins, he said. 

“This, combined with a lack of manufacturing capabilities such as that provided by APP puts Australia at risk of entrenching our reliance on imports rather than leading as a major exporter of innovative food products. We hope that APP finds a buyer before it’s too late but, really, the support needs to come from government.”

Romanis Cant has been appointed administrators. The first creditors meeting was held on 3 July.