Growing Plant-Based Foods Industry Expands Markets for Sustainable Crops
The fast-growing plant-based foods industry provides additional cash market opportunities for sustainable crops. Many American-grown crops, including peas and oats, are important ingredients in plant-based foods. Crops grown using sustainable farming practices such as diversified crop rotations often don’t find cash markets and are instead used for animal forage or cover crops. Nevertheless, the pressures of climate change, soil degradation and shrinking farm profit margins are driving adoption of more resilient, sustainable farming methods.
Retail sales data commissioned by the Plant Based Foods Association (PBFA) shows U.S. retail sales of plant-based foods have grown 11 percent in the past year, bringing the total plant-based market value to $4.5 billion. The total U.S. retail food market has grown just 2 percent in dollar sales during this same period. “Plant-based foods are a growth engine, significantly outpacing overall grocery sales,” says PBFA Senior Director of Retail Partnerships Julie Emmett.
This growth is driven by changing consumer behaviors. Twenty-three percent of consumers surveyed in a September 2019 Gallup poll reported eating less meat in the past year, primarily because of health concerns, followed by environmental concerns and animal welfare.
Crop rotation and cover crops a tool for building soil health
The Rodale Institute defines crop rotation as the practice of planting different crops sequentially on the same plot of land to improve soil health, optimize nutrients in the soil, and combat pest and weeds. Continuous planting of the same crop on the same land (monocropping) degrades soil health and promotes the proliferation of crop-specific insect pests by providing consistent supplies of the same food attractive to those insects season after season. This reduces farm income in two ways: reduced yield and more pesticide costs.
The most common crop rotation in the Midwest is the corn/soybean rotation. Following the corn harvest, a farmer might plant soybeans as the next crop, since corn consumes a lot of nitrogen and beans return nitrogen to the soil. Nitrogen is an important plant nutrient that is crucial for grains like corn and wheat. A simple rotation involves two or three crops, and complex rotations can incorporate a dozen or more. More diverse rotations provide more soil nutrients and reduce pest pressure. Research at Iowa State University has demonstrated that a simple corn/soybean/oat rotation reduces the need for synthetic fertilizers and pesticides, which improves farm profits while reducing negative impacts on the environment. Matt Liebman, the lead project researcher, reported that “... the more diverse 3-year and 4-year [rotation] systems have been managed with lower rates of agrichemicals.” Agrichemicals represent one of the biggest cost items for farmers.
Cover crops such as rye grass, peas, oats and clover are different from cash crops that a farmer grows to sell for profit, such as corn or soybeans. Peas and oats have a dual function, as they can be grown both as cash crops and cover crops. The primary purpose of cover crops is soil improvement. They get planted in fields that would otherwise be bare between growing seasons, to protect the soil from erosion and nutrient runoff. Cover crops also help reduce weeds, pests and plant diseases. Fields with cover crops absorb and retain water more efficiently, and increase biodiversity on the farm, a key component of balanced pest control. A wide variety of plants attracts a variety of insect species which can feed on each other rather than the crops. Cover crops function as a living mulch, the soil cover that suppresses weeds. Cover crops are a key component of no-till farming, which greatly reduces or eliminates ploughing that degrades the soil ecosystem. Ploughing disrupts the upper layer of the soil, exposing it to the air, releasing carbon into the atmosphere, killing beneficial soil insects and disrupting the intricate webs of microorganisms that nourish plants.
Key plant-based ingredients are sustainable crops
Peas
The plant-based foods industry uses dry yellow peas in a wide variety of products, especially plant-based milks, meat alternatives and protein powders. As legumes, peas work with soil microorganisms to fix nitrogen, an essential plant nutrient, in the soil.
Dry peas are grown as a primary cash crop and as part of crop rotations with wheat in North Dakota, South Dakota, Montana, northwestern Minnesota and western Nebraska. Of the 900,000 acres of dry peas planted in the U.S. in 2018, Montana farmers accounted for 390,000 acres and North Dakota harvested 360,000 acres. These regions and states have a unique economic opportunity to connect farmers to the plant-based foods industry. As pea protein processing in the U.S. has been caching up with demand, peas have been shipped to China for processing and the protein isolates have then been shipped back to the U.S. Igor Playner, Vice President, Plant Based Proteins at Ingredion, Incorporated, observes, “We see pea protein as a major feature of the market going forward, and are investing in three new processing plants. We have joint ventures with Verdient in Canada, and a plant in South Sioux City, Nebraska. The Verdient facility is up and running, and our isolate plant is slated to begin commercial operations at the end of the second quarter of 2020. Our facility for functionalized proteins will be completed towards the end of 2020.”
Oats
With over a dozen major brands entering the market in just the last two years, oat milk has become a category leader in non-dairy milk. According to Nielsen, U.S. retail sales of oat milk grew 662% in 2019 to $59.8 million.
Oats have a role in sustainable farming as both a rotation and cover crop. They are widely grown in the U.S., primarily in North Dakota, South Dakota, Minnesota and Iowa. Other prominent oat growing regions are found in Montana, Nebraska, Wisconsin, northern Illinois, Michigan, northern Ohio, Pennsylvania, western New York, and Kansas. With such a wide growing area, this crop has the potential to assume a more prominent role in farmers’ rotations as the plant-based industry continues to grow. Will Walter, assistant director of farm ranch management at North Dakota’s Mitchell Technical Institute says, "Oats take a lot lower input cost and it does not require as much fertilizer and the seed cost is basically nil compared to the corn."
Oat rotation and cover crop field trials at Rodale Institute and Iowa State University have demonstrated that growers can increase on-farm profits with oat rotations and cover crops, through reduced purchases of herbicides and synthetic fertilizers. Oats have many powerful advantages in sustainable agriculture: Incorporating oats into the corn/soybean rotation nearly eliminates the corn rootworm, the most prevalent pest in the U.S.’ largest crop, decreasing the need for chemical insecticides. When planted early, oats develop a dense cover that suppresses weeds. Oats extract less nitrogen and other nutrients from the soil compared to some other crops, allowing reductions in synthetic fertilizer applications. An oat crop requires much less water than most other crops. Oats provide excellent soil erosion control. Oat stubble is an ideal medium for planting in a no-till or minimum-till program. In no-till farming, the new crop is planted directly over the previous crop, which has been harvested if it is a cash or forage crop, or rolled down if it is purely a cover crop. Speaking recently to The Guardian, Liz Specht, associate director of science and technology at the Good Food Institute said, “I’m excited about the surge in oat milk popularity,” says "Oat milk performs very well on all sustainability metrics. I highly doubt there will be unintended environmental consequences that might emerge when the scale of oat milk use gets larger.”
Oats need a minimum test weight of 38 lbs. per bushel to meet food grade specifications. Despite being a more valuable crop, only a tiny fraction of oats are grown to this standard in the U.S. The majority are grown for animal forage or as cover crops that will be planted over. Generally cool conditions are required to achieve this test weight, giving Canada the advantage. Oat varieties have been developed that can reliably produce food grade crops in the Midwest region, but they are not widely available. According to Sara Carlson of Practical Farmers of Iowa, roughly 50% of Minnesota and Iowa oat crops meet food-grade test weight.
Hemp
Hempseeds are used in protein powders, energy bars, plant-based burgers, hemp butter and hemp milk, to name just a few of the wide range of plant-based foods that use this versatile ingredient.
Hemp is an up-and-coming crop that shows promise for its role in sustainable farming systems and as an ingredient in plant-based foods. Growing industrial hemp, defined as having 0.3 percent or less THC, the psychoactive component of hemp, was given the green light in 2018 Farm Bill. Chad Rosen, founder of Victory Hemp Foods, says, “Hemp has the potential to be the most profitable part of the crop rotation. There are markets for the seeds, stalks and flowers.”
As a cover crop, hemp enhances soil health by shading out weeds (a natural weed control tactic), reducing the need for synthetic herbicides, and adds diversity to crop rotations, improving soil health and helping to control insects. Hemp requires less space and less water to grow. Varieties of hemp are suitable for growing in every U.S. region. The hemp opportunity for farmers is in its early stages, and more needs to be learned about growing and marketing this promising crop.
Policymakers can assist farmers in monetizing these new opportunities
Policymakers can close the competitive policy gap between commodities and so-called conservation crops (cover crops) by creating state-level protections and incentives.
At present, state-level programs are few and far between. However, there is momentum for change. For example, the Illinois Department of Agriculture announced in December, 2019 that farmers could sign up for its new crop insurance savings program. The program will pay Illinois farmers who planted cover crops in the fall $5 per acre to go toward paying their crop insurance bills this year. This is significant because cover crops are considered conservation crops rather than commodity crops, and are therefore not eligible for crop insurance under Federal rules.
The current competitive disadvantage that U.S. oat growers currently face can be turned around by 1) promoting research in oat breeding to develop varieties suited to growing food-grade oats in the Midwest, 2) educating ag extension service agents about oat growing, as food-grade cash crops, cover crops, and to understand the role of oats in rotations, 3) promoting development of infrastructure such as dedicated oat storage at elevators to support development of the food-grade oat market, 4) Payments through the state for small grains, similar to the Illinois cover crop payment program, and 5) better crop insurance models.
Farmers traditionally look to their state university agricultural extension agents for advice, but there has been a gap in ag extension agents’ knowledge of sustainable farming practices like cover cropping and complex rotations. That is starting to change. For example, the North Dakota Department of Agriculture’s Agricultural Research Service lab in Mandan, ND found that crop rotations consistently offer a yield advantage over continuous monocropping. Advice on selecting crop rotations is now being made available to farmers via the North Dakota State University agricultural extension service and the University of Minnesota extension websites. Funding is needed for increased rotation and cover crop training of state agricultural extension agents who can share this knowledge in person with farmers.
While we have focused on the exciting new opportunities for peas, oats and hempseeds in this discussion, the rapid growth of the plant-based foods industry is also creating fresh demand for food-grade soybeans, which as legumes can play the same role as peas in sustainable crop rotations. U.S. farmers are already applying their deep soybean growing expertise to supplying the plant-based foods industry, but more can be done. The state Soybean Boards in the leading soybean-growing states of Illinois, Iowa and Minnesota can provide their farmers with information on food-grade soybean varieties, and facilitate development of specialty and identity-preserved soybean handling infrastructure.
There is robust support from voters for policymakers to take steps like these. In a recent survey by Iowa-based RABA Research for the Union of Concerned Scientists, large majorities of voters, from 78 percent in Michigan to 90 percent in Minnesota, said they support government programs that help farmers understand and implement sustainable practices like crop rotations and cover crops.
American pea and oat farmers are losing opportunities to foreign growers
The main reasons why a U.S. buyer would choose foreign suppliers of ingredients over domestic ones are price, availability and specifications. From an American farmer’s perspective, every dollar spent on imported crops is one less dollar for him. The two important plant-based ingredient crops discussed here are imported, primarily from Canada, on a surprisingly large scale. U.S. Imports of yellow peas, the most widely used type in plant-based food products, totaled $24.3 million for the 2018/2019 market year, according to the USDA. U.S. imports of oats totaled $301.11 million through November of 2019, and $315.93 million for all of 2018, the latest annual trade data available.
It is the responsibility of policymakers to provide as many opportunities for American farmers as possible. There is no legitimate reason for American farmers to be losing sales to large imported quantities of dried peas and food-grade oats when growing conditions at home should be able to meet all of their needs. Domestically-grown crops should be competitive with imported crops by every measure. It is time to design policies to support these and other sustainable crops to supply the fast-growing plant-based foods industry.
Conclusion
The rapid growth of the plant-based foods industry is creating demand for crops that play key roles in sustainable farming methods. Forward-looking state agriculture policies can help U.S. farmers capitalize on these new opportunities and reduce the plant-based foods’ industry reliance on overseas suppliers.