June 3, 2019

by Lynda Kiernan

Canada’s Burcon NutraScience Corp. has formed a joint venture with an undisclosed investor group to build a C$65M (US$48.2 million) plant in Western Canada for the production of pea and canola-based protein ingredients.

Through the joint venture, Burcon and its partners have created Burcon Functional Foods Corporation (Burcon Foods), a new stand-alone operating entity that will own and operate the new facility.

Under the terms of the agreement, Burcon will hold a 40 percent stake in the venture, and the investor group, which is investing up to $16 million in capital to the JV, will control the remaining 60 percent.  The structure represents a positive position for Burcon, which will count financial support from Canadian and provincial government agencies, limiting its capital contributions to 12.3 percent of the total project cost in exchange for a 40 percent stake.

“Today’s announcements constitute a truly transformative event for Burcon, and a new chapter in Burcon’s development focused on bringing the company’s unique plant proteins to market directly as a producer.” said Johann F. Tergesen, president and CEO of Burcon.

Burcon Foods has also entered into a 20-year exclusive license agreement with Burcon to license the technology needed to produce, market, and sell Curcon’s novel plant-based proteins including its Peazazz® and Peazac™ pea proteins, as well as its Supertein®, Puratein® and Nutratein® canola proteins.

Burcon will have exclusive rights across all geographic regions and product uses for all aforementioned products as well as canola-protein technologies.

Can Canola Compete?

Global protein consumption is expected to climb at a CAGR of 1.7 percent, reaching 943 million tons by 2054, according to Lux Research. Over this same time period, alternative plant-based protein sources are forecast to command up to a third of the protein market as they fill the void created by slowing growth in meat and seafood production, while also meeting consumers desires to protect animals, the environment, and their health. These trends are driving the market for non-soy, gluten-free, plant-based proteins to a value of $1.5 billion by 2022.

Of these plant-based alternative protein sources, peas offer an additional benefit and appeal to consumers due to the fact that, unlike soy, they are not one of the major allergens and are not genetically modified. Identifying the potential of this market, companies and investors including Cargill, Roquette, Goldman Sachs, Ingredion, and well-known film director, James Cameron and his wife Suzy Amis Cameron, have all made significant capital commitments to gain a foothold in the pea protein space.

But can canola-based protein find its place in a highly competitive and charged food category? If it can, it would provide Canada’s canola farmers with a promising new market channel amid a trade dispute with China that has seen a blockade of Canadian canola shipments.

As the world’s top producer of canola, Canadian farmers harvested 23 million acres of the oilseed last year. The industry supports nearly a quarter of a million people in the country and accounts for $12.5 billion in wages, according to data from the Canadian Agri-Food Trade Alliance. However, as canola prices have fallen by $2 per bushel last year, the country’s farmers are already reacting by planting 1.5 million acres less this spring.

Now is the time, according to Burcon NutraScience  president and CEO Johann Tergesen for the launch of a canola-based plant protein, telling Food Navigator-USA, “Burcon’s confidence in bringing our canola proteins to market at this time stems from genuine demand we have received from numerous food and beverage companies, who have been trialing our canola proteins in their products.”

“In terms of taste, texture, and overall functionality, food manufacturers who have reviewed and trialed Burcon’s plant protein, including canola, have told us there is nothing comparable on the market.”

The new plant will also give Burcon Foods a market advantage by giving the company the ability to create new ingredients by blending proteins for broader functionality and application.

“Having the capacity to produce both our unique pea proteins, as well as our canola proteins, in our own production facility is a key pillar of our differentiation strategy,” said Tergesen.”The ability to blend our pea and canola proteins to create nutritionally unparalleled plant protein combinations, while preserving the highly desirable functional properties the proteins naturally possess, will give us a true competitive advantage.  We look forward to offering our pea and canola protein products to customers and consumers in Canada, North America and worldwide.”

Lynda Kiernan is Editor with GAI Media and daily contributor to GAI News. If you would like to submit a contribution for consideration, please contact Ms. Kiernan at lkiernan@globalaginvesting.com.