Merit firms up financing

Hey there, time traveller!
This article was published 23/06/2020 (1007 days ago), so information in it may no longer be current.

With all of its financing now in place, Merit Functional Foods is poised to enter a burgeoning market for plant-based protein additives with the only canola protein offering on the market.

Its $150-million, 94,000-square-foot plant joins Roquette’s $400-million plus Portage la Prairie plant — both of which are scheduled to be completed by the end of this year — in making Manitoba one of North America’s plant-based protein production centres.

Merit’s plant will produce both pea and canola protein and is already creating demand from packaged food and beverage companies, where it can be included as an ingredient in everything from meat and dairy alternatives to beverages and snack food.

The company has benefited from about $100 million worth of financing from a host of federal government programs, including loans totalling $55 million from Export Development Canada and $25 million from Farm Credit Canada, $9.2 million from the Protein Industries Supercluster that was announced in January, and most recently a $10-million interest-free repayable loan from Agriculture and Agri-Food Canada’s AgriInnovate Program.

“When you are a startup business it is very difficult to access senior term loans from the big banks,” said Merit CEO Ryan Bracken.

“AgriInnovate is a great program because it allows you to leverage that capital to go after additional capital from the banks.”

Merit is a 60-40 partnership between an investor group made up of Bracken, Shaun Crew and Barry Tomiski — all veteran senior management and founders of Hemp Oil Canada Inc./Manitoba Harvest — and Burcon NutraScience Corp., a publicly traded Vancouver company with strong links to Winnipeg where it has had a research lab for 20 years.

“In our case, being entrepreneurs and having a track record with significant capital of our own at stake, these programs through EDC and FCC were vital to allow us to get started,” he said.

Once they are up and running, Merit and Roquette’s production plants will make Manitoba North America’s plant protein hub.

Marie-Claude Bibeau, federal minister of agriculture and agri-food, said Merit’s project will help put Canada in a leading position in the field and provide an important underpinning to agricultural production in the Prairies.

“When we speak to the pea and canola producers we are always looking at diversifying our markets,” she told the Free Press. “Another goal we are achieving through this project… is adding value and not exporting only raw agricultural production.”

An international “virtual” conference on plant-based protein kicked off in Toronto on Monday and even Prime Minister Justin Trudeau weighed in on the Merit development.

“This facility will be a world leader in plant-based proteins and will create good jobs in a fast-growing field,” Trudeau said Monday. “And by using 100 per cent Canadian inputs, it will also support farmers who produce the canola and yellow peas used in Merit’s products.”

Bracken said the plant is designed to be able to double in size in every respect. He said by the time all the expansions are complete it will be about the same size as Roquette’s plant in Portage la Prairie and will create about 175 jobs over the next three years.

(Last week it was announced that Roquette received a similar level of funding from Protein Industries Canada.)

Jean-Philippe Nolet, director of the renewables and sustainable technologies group at Export Development Canada, said the Merit loan is typical of the kind of loans EDC provides.

“What really differentiates this one is the impact this company can have,” he said. “We see that plant-based protein is a large, growing sector with a huge addressable market in the U.S. and Europe for the food and beverage industry.”

Merit signed a development agreement with Nestle in January to use Merit’s pea and canola protein products in Nestle’s food offerings and the company has already signed about 100 non-disclosure agreements with some of the world’s largest food companies.

Outside of a US$100-million investment Cargill has made in a company called Puris, which has pea protein production plants in Minnesota, Wisconsin and Iowa, the new Manitoba production from Merit and Roquette is the most significant addition to the market outside of soybean protein.

“There is a significant amount of growth and demand — for all things non-soy in plant proteins, so your choice right now is either buy from Europe or China,” Bracken said. “There is a very finite North American supply and North Americans would prefer to have their food supply chain coming from North America.”

martin.cash@freepress.mb.ca