China’s new protein sector hopes to get its own green financing system

There has been a lot of hype in recent months after Chinese President Xi Jinping made specific mention of alternative proteins in relation to food security and the diet of the country’s population of 1.4 billion and growing.

This in itself is good news for local consumers knowing that solutions for food insecurity are being developed – but for the New Protein sector it means so much more not just because of this recognition, but because new opportunities that have opened up from development. , marketing and financing prospects.

“Previously, there was a lot of talk about how protein safety was becoming more important, but President Xi had yet to specifically mention plant-based or cultured products, just that we should use ‘all resources’ to make new proteins – so people just weren’t clear on what “all the resources” meant, as well as what we were supposed to do and what we were supposed to do”,Secretary General of the China Plant Based Foods Alliance (CBPFA) and leader of China’s AgFood Future movement, Ryan Xue, said FoodNavigator-Asia​.

“So over the last 2 years since food safety first emerged as an issue, everyone was confused and it was even harder to convince others outside of the industry of the new protein , because these weren’t specifically mentioned and no specific directives were given – in China, top-down directives are very important to get things done – so even though progress was there, things weren’t right as quickly as they could have been.

“That was particularly evident in terms of funding and investment – ​​so far a lot of the progress that has been made has been with private funding, not public. So the highlighting of the sector by the president Xi will signify a specific directive for the government to speed things up and for public sectors to invest more in this area – which would be a huge game-changer for the whole industry.

CPBFA has led the national movement to bring together alternative protein and traditional protein players, as well as government agencies, nutritionists and other stakeholders; one of its major achievements being the release of highly industry-friendly National Plant-based Product Standards in December 2020.

“We initiated and coordinated five dialogues between the Ministry of Agriculture and Rural Affairs (MARA), the National Health Commission (NHC) and the State Administration for Market Regulation (SAMR) on the protein innovation from last March – this led to the inclusion of cultured meat, plant-based eggs and other future foods in the governmentthe new five-year plan [mentioned] by President Xi,”he added.

“It’s also important to note that a lot of investment in China is currently geared towards low carbon emissions due to China’s 2060 carbon neutral targets – the fact is that this goes a lot to the manufacturing sector, but a lot less. agri-food production, which is obviously the basis of the country’s socio-economic growth.

“China is working towards carbon neutrality through what we call green transformation – and we are already seeing sectors such as the energy sector receiving a lot of support, such as strong green finance systems already in place. So, energy start-ups can get green financing and investors get excellent green credits, so more loans can be obtained from big banks, effectively helping the sector grow.

“And that’s what we’re looking forward to also for the alternative protein and agribusiness sector here in China, because without that so far it’s been a bit obvious that the big banks are just neglecting agribusiness. and protein for funding.”

AgriFood Future has researched and developed different models to quantify the green efforts and the potential credits to be obtained from the entire agri-food chain, from producers to manufacturing to consumers.

“We see there is a system there, and now with the recognition of the sector by President Xi, it seems like a good opportunity to build on that so that the companies involved in New Protein can have a solid financing system based on sustainability,”he said.

“We really want this to work so that there is more public funding for this sector – not just to send it all to energy or transport, because these sectors already have far too much money to work with. [compared] ours.”

Change is ‘inevitable’

While President Xi’s statement was good news for the sector, it was also unsurprising given current protein needs and the nation’s ambition for carbon neutrality, according to CellX, China’s leading cultured meat company.

“New Protein’s recognition was inevitable, given the government’s sustainability ambition to be carbon neutral, as well as the need to ensure food safety for the Chinese public,” CellX founder and CEO Ziliang Yang told us.

“Carbon emissions from the agri-food sector represent 15% to 27% of all emissions, and New Protein is certainly the way forward to reduce them.

“In terms of food security, China imports a lot of our beef, pork, chicken and even soy for animal feed – China doesn’t produce much soy and 90% of imports come from United States.

“On top of that, China has to take into account potential issues in international relations with countries such as the United States and others, which makes it even more crucial for us to have our own stable supply chain. in protein.”

Yang agreed with Xue that the president’s statement could give the sector the crucial boost it needs, given the way systemic change is working in the country.

“China is a political country, so President Xi’s contribution is certainly crucial as it represents a strong signal from the top of the government for the authorities to come up with strategies to develop this sector,” he added.he said.

“So policy is a major area that will see improvement, and apart from that we also expect to see a lot more investment in terms of public funding and venture capital.

“Most importantly, we also believe it will bring a lot more talent that would traditionally gravitate towards the biotech industry into this sector, as well as bringing more companies into this space, which will help grow the market. industry and building the necessary supply chain infrastructure. .

“It will also serve as a cue to consumers, especially when it comes to having state media present a government perspective on these products – it’s still early days for that, but later down the road that aspect will be very important in shaping consumer perspective and mindsets.

CellX hopes to gain regulatory approval for its cultured meat products within the next two to three years.

“China will generally look at what other countries are doing with regards to new sectors like this, so if multiple markets like Singapore, the United States and the European Union have approvals in place, the government will be more attuned to comfortable passing approvals as well.”,Yang said.

“Singapore could be the first market [to approve a cultivated meat product for food use]but China will likely eventually overtake Singapore in terms of approvals and the number of crops grown on the market – however, this will take time as there is a gradual process that must be completed first.

“Having said that, it’s the start of more support for the sector in terms of policy and other aspects, and we expect things to go faster now – when the Chinese government says something and puts it on. in his sights, things will go very quickly.” .”

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