By Naomi Christensen and Carlo Dade
Published in the Winnipeg Free Press, Edmonton Journal and Leader-Post

September 1, 2017

The Canadian Prairies are well-known for being global leaders in pulse production and exports, but we didn’t get here by being complacent. We are now in the midst of an opportunity to become the premier region for pulse fractionation, a relatively new processing technology that breaks pulses into protein, starch and fibre fractions for use as ingredients in food processing.

The Prairie provinces already have an encouraging start. Developing a fractionation hub next to our existing multibillion-dollar pea, lentil and bean industries will cut shipping costs and turn what was once a competitive disadvantage — distance from market — into an advantage.

Already, millions of new investment dollars in fractionation facilities have been earmarked across the Prairies. But competitors in Europe and the U.S. are also starting to realize that the opportunity is huge — and will only grow in the future.

The global market for specialty food ingredients, such as pea protein, is about US$100 billion annually and growing. The greatest annual growth in the ingredient sector is from plant proteins, including pulses. While there are more than 34,000 food and beverage product manufacturing establishments in Canada and the U.S., only a minority incorporate pulse ingredients into their production.

The opportunity for expansion in the North American market alone is enormous, with pulses processed on the Prairies ideally located close to both the inputs — pulse producers — and the customers — food product manufacturers.

In North America, the EU and even China, the health and nutrition food sectors are key markets for ingredients derived from pulses, such as protein and fibre. Pea protein, for example, is used in granola and energy bars, high-protein pasta, baby food, veggie burgers, egg alternatives and even beverages and smoothies.

Pulses have a higher concentration of protein than cereal crops and rice and can be used as ingredients to achieve gluten-free status. Pulse fractions are useful in non-niche food processing, too — fractions stabilize viscosity in sauces and dressings, add crispiness in breaded products by reducing oil absorption and retain moisture in meat products.

In addition to human food, protein fractions are used in pet and animal feed, and the global pet food industry, already valued at nearly US$50 billion, is growing more than five per cent annually.

The three Prairie provinces share characteristics that make them attractive locations for fractionation. They are the heart of Canadian pulse production; all lentil and chickpea crops seeded in Canada are in the west, as is 98 per cent of dry peas and more than 50 per cent of beans.

Transportation infrastructure to move processed pulses along the supply chain impacts investment. Manitoba and Saskatchewan’s inland ports are attractive, as are Edmonton and Calgary’s freight transportation hubs. Our rail and road links to West Coast ports and into the U.S. ensure pulse fractions can be shipped to key international markets.

Thanks to the oil downturn, the Prairies have an available supply of technically skilled workers, especially in Alberta and Saskatchewan.

Governments do not need to initiate new spending to increase fractionation; rather, some policy changes at all levels can reduce the challenges that affect investment. For example, provinces or municipalities may need to review axle weight restrictions on roads that would serve as key transportation routes to and from fractionation facilities.

Operating costs, including labour and electricity, play a large role in investment decisions. French plant-based ingredient company Roquette specifically made note of sustainable hydroelectricity availability in its announcement earlier this year of a $400-million pea-protein facility in Portage la Prairie. Portage was chosen out of 40 sites under consideration in Canada and the U.S.

As Alberta and Saskatchewan rapidly move away from the cheapest source of electricity (coal) to a greater volume of more expensive renewables, they must consider how changes in electricity policy affect future investments in other sectors such as agri-food processing. The federal government also helps by negotiating tariff reductions with key markets, as tariffs are often higher on processed products than on raw commodities.

In the past year, plans for new fractionation facilities have been announced in Bowden, Alta., Moose Jaw, Sask., and Portage la Prairie. But we should not be satisfied with this alone. Governments at all levels should make sure their policies are not impeding further investment in fractionation facilities. The opportunity for the Prairies to be a global leader in pulse production, exportation and processing is waiting to be seized.

Naomi Christensen is senior policy analyst and Carlo Dade is director of the Trade & Investment Centre at the Canada West Foundation.