Plant-based product makers look to lure US farmers

Companies that make plant-based meat, egg and dairy alternatives have been heavily relying on imported crops for the ingredients they need and hope to convince more U.S. farmers to start growing peas, beans and other commodities. 

“In the relatively near future, the plant-based foods market will be a significant opportunity for farmers," said Carl Jorgensen, agriculture consultant with the Plant-Based Foods Association. 

In the meantime, the volume of crops, excluding soybeans, currently grown in the United States and used in the plant-based foods industry is a minuscule portion of total U.S. crop output.

In 2020, U.S. retail sales of plant-based foods hit $7 billion, up 27% from 2019, according to PBFA. Retail sales of milk alternative products alone reached $2.5 billion, a 20.4% increase from 2019, while sales of meat alternatives, at $1.4 billion, climbed 45.3%. According to the multinational investment firm UBS, global growth of the plant-based meat alternative market is projected to grow to $85 billion by 2030, up from $4.6 billion in 2018. UBS also noted that the global plant-based dairy alternative market could reach $37.5 billion in sales by 2025.

PBFA partnered with researchers at the University of Illinois to determine the number of U.S. acres that would be needed to grow pulses for the U.S. retail meat alternative market. Their research showed that 188 million pounds of pulses requiring an estimated 263,775 acres would have been needed to fill 2020 demand. If pulses used in milk and dairy alternatives sold at retail and demand at foodservice for all protein alternatives were added to that, one could reasonably assume that the cropland needed would swell to more than 1 million acres— still just a fraction of nearly 900 million acres farmed in the United States.

The proteins are mostly being sourced from other countries because it is cheaper to import the processed protein than it is to grow the crops domestically. In some cases, more research is needed to develop seeds that can be grown on U.S. soils or with higher yields.

That can make it challenging for startup companies looking for protein sources other than soybeans, wheat, and brown rice, three of the more established crops in the United States that are extracted for protein used in plant-based alternatives.

Eat Just, based in San Francisco, introduced its first egg alternative product in the Midwest in 2018. Since the firm launched its Just Eggs products nationally in 2019, it has sold the equivalent of 100 million table eggs through 20,000 retail stores and 1,000 food-service outlets throughout the United States, Canada, China, Hong Kong, and Singapore, and soon plans to sell its products in South Korea. This past spring, Eat Just secured $200 million in a fundraising round led by the sovereign wealth fund of Qatar.

Just Eggs products are made from mung beans, a crop that was grown in the United States and sprouted for the bean sprout market more than a decade ago. Today, however, only a few U.S. farmers in California, Texas, and Oklahoma are growing mung beans due to the high risk of sprouts carrying harmful bacteria. In fact, Jorgensen said, mung beans are “barely on the radar” for companies looking for sources of plant-based protein.

While mung beans are used across the United States, particularly in Asian cuisine, most are imported from Asia. It’s not cost-effective now to grow them in the United States, said Udi Lazimy, global plant sourcing director at Eat Just. Worldwide, depending on climate and growing practices, an acre of mung beans can yield one-half to 1.75 metric tons. 

To make the crop attractive to U.S. growers, the yield would have to be closer to about two metric tons per acre.

“The yield doesn't have to be too much higher than it is now — 2 tons per acre would make a lot more sense. We are going to see what we can do to build a local supply,” Lazimy said. “If 75,000 to 100,000 acres were producing mung beans in the United States in the next couple of years, it would be a good starting point.”

For that to happen, universities would need to conduct research into ways to increase yields and protein content, and mung beans would need to be included in government programs, including crop insurance.

The North American plant protein market is segmented into several categories: protein beverages, dairy alternatives, meat alternatives and extenders, protein bars, bakery, and other applications. Based on application, some plant proteins are more attractive than others. For example, soy protein, long the industry standard, has been growing much more slowly than other plant proteins as consumer interest in other proteins increases.

“The first generation of plant-based meat alternatives were all soy-based, and the first generation of nondairy milks were also soy-based,” Jorgensen said. “Soy has now been eclipsed by almonds and oats.”

According to PBFA data, U.S. retail sales of soy-based milk alternatives fell 0.9% in 2000 to $201 million from 2019, while retail sales of almond-based milks grew 17% to $1.6 billion, and sales of oat-based milks surged 219% to $264 million. Retail sales of coconut, pea, and rice milks grew between 26% and 4%, but each accounted for less than $150 million in retail sales.

The almonds used in nondairy milks are both grown in the United States and imported from Spain, but due to the large amount of water needed to grow almonds, the plant-based protein has lost some of its luster.

“In a few years, oat milk will move into the number-one position. Oats are a more sustainable crop than almonds,” Jorgensen said. “We will see a big opportunity for American farmers to grow oats.”

The majority of oats used in plant-based dairy alternatives are imported from Canada and Scandinavia. While many northern U.S. farmers grow oats, they use them mostly for forage or as a cover crop. “As new seed varieties become available, we will see higher test weights in the Midwest, and those oats will be directed to the plant-based market,” Jorgensen said.

Like oats, demand for dried peas, which have primarily been used in plant-based meat alternatives, has also been soaring. Beyond Meat’s principal source of protein, for example, is from yellow peas, but dried peas are also increasingly being incorporated into beverages. Nestlé recently announced the launch of its new yellow pea-based milk alternative Wunda in France, the Netherlands and Portugal. According to the Financial Times, Wunda is “a belated play by the world’s largest food company for a share of the growing $17 billion plant-based dairy market.”

In 2019, a little more than 1 million acres of yellow peas were grown in the United States, and of that, only an estimated 56,000 acres were used for plant-based protein products sold at retail, Jorgensen said.

At least half of the yellow peas used by the U.S. plant-based foods industry are grown in Montana, North Dakota, Minnesota, and other northern states, but plenty are still imported from Canada. And due to a lack of processing capacity, homegrown dried peas are still being shipped to China for protein extraction. To meet the U.S. demand for pea protein, Ingredion last fall opened a new manufacturing plant in South Sioux City, Neb.

But growing yellow peas is not for everyone. Roric Paulman, who farms 8,000 acres in southwest Nebraska, had yellow peas in his dryland rotation from 2009 through 2018, planting between 60 and 1,000 acres a year. “We are always looking for rotations that make sense,” Paulman said. “But we could not get the yields out of them.”

His yields maxed out at about 40 bushels per acre, and for $7.50 to $4 per bushel, the crop was bringing in $300 per acre, while dryland corn was fetching $500 to $640, and soybeans earned nearly twice what peas were paying.

Even with irrigation, he said the pea yields capped out at 40 bushels per acre. “It was also difficult in dryland to keep the weeds out,” he said.

Other less widely used proteins include wheat gluten and rice. Older, more established brands still use wheat gluten as an ingredient, but it continues to be imported from Australia more cost-effectively than it can be manufactured here.

“It doesn’t pay processors to make wheat gluten,” Jorgensen said. “For every pound you make, you have four pounds of wheat starch, and there is no secondary market in the United States for wheat starch.”

Brown rice protein is found in rice milk, a small subcategory of nondairy milk alternatives, and used as an ingredient in plant-based meats, protein bars, protein powders, and other products. “By volume, brown rice protein is not anything like soy or peas, but it is fairly common because it is very digestible, and consumers like it,” Jorgensen said.

Brown rice is grown in Arkansas, California, Florida, Louisiana, Mississippi, Missouri, and Texas, but a lot is also imported for use by the industry.

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