Why is plant-based protein still more expensive than meat?

Study finds prices for plant-based products remain sky high as advocates blame meat industry subsidies for lack of price parity

plant-based meat

Food prices are surging across much of North America, as pandemic-related supply chain issues persist; floods, droughts and storms hit farmland; and the war in Ukraine snarls global food systems. In May 2022, Canadians paid 9.7% more for food than they did the same month in 2021, according to Statistics Canada, while food prices in the United States were 10.1% higher in the same comparison. Meat prices have been of particular concern, going up 10.1% in Canada and 14.2 % in the U.S. for meats, poultry, fish and eggs. 

Advocates of plant-based proteins hope that these higher meat prices may eventually convince consumers to switch to meat alternatives if environmental benefits haven’t already done so. But that won’t happen immediately, as prices for plant-based alternatives have remained stubbornly high, according to a recent study from Dalhousie University’s Agri-Food Analytics Lab (AAL). The study found that plant-based versions of specific meat products are more expensive in Canada, costing on average 38% more than meat. Researchers found that chicken nugget alternatives cost 104% more than animal-based versions at the highest end. 

Plant-based food advocates say government subsidies that go to the meat industry are largely to blame, as they keep meat prices artificially lower and make it hard for alternatives to reach competitive pricing. 

“Without taxpayer-funded subsidies, the price of animal-derived products would more closely reflect their true production costs,” says Jenny Henry, co-founder of Nation Rising, a Canadian advocacy group lobbying the federal government to shift subsidies from animal agriculture to plant-based foods. “These massive subsidies serve to drive down the cost of meat.” 

Henry says meat prices in Canada are comparatively lower than plant-based alternatives because governments and taxpayers are helping foot the bill. Based on government reports, the group calculated that federal and provincial governments committed to well over $1.7 billion in subsidies to animal agriculture in 2021. 

Sabina Vyas, senior director of impact strategies at the U.S.-based Plant Based Foods Association, says that while price parity is a goal for many plant-based food companies, “it is important to consider the full system they are working within.” In the United States, she says, “animal-based foods are artificially low-cost thanks in part to the US$38.4 billion annual subsidies the industry receives” from the federal government, in addition to various state subsidies. 

One study from University of California Berkeley estimated that one pound of hamburger meat would actually cost US$30 without any government subsidies. And that was in 2015.

These massive subsidies serve to drive down the cost of meat.

-Jenny Henry, co-founder of Nation Rising

A report by CNBC last year, on efforts being made by plant-based giants Beyond Meat and Impossible Foods to reach price parity with meat, explains that some of the economic obstacles for alternatives brands include small-scale production, supply chain issues (only a few countries produce pea protein, including Canada) and a continuous need for product development to reach that authentic meat experience. The report claims that reaching price parity could take anywhere from five to 20 years. 

Some believe price parity might not be that far off. Non-profit Good Food Institute believes that plant-based alternatives could reach price parity with meat as soon as 2023 and that cultured meat (produced in a lab) could be competitive with conventional meat by 2030. 

In the meantime, high prices may be eating into demand for plant-based foods. A recent CBC report claims that demand for plant-based meat alternatives is on the decline in Canada, after the market saw rapid growth of 40% in 2019 and 2020. While the report includes a couple of industry experts claiming taste to be the reason behind the drop, it appears price is the true culprit.

In recent years, major meat companies, including JBS, Tyson and Cargill, have invested heavily in plant-based proteins and cellular meats while also buying out many existing plant-based brands. Maple Leaf Foods has invested close to a billion dollars in building out its plant-based protein investments. 

Still, AAL’s senior director, Sylvain Charlebois, says that with so many meat-alternatives brands being bought up by large meat companies with efficiencies of scale, he had expected plant-based products to come down in price by now. He adds that meat companies and retailers may be using plant-based products as a new benchmark to support higher prices at the meat counter. 

Dror Balshine, founder and president of plant-based brand Sol Cuisine, which retails in both Canada and the U.S., agrees that government propping up of animal agriculture plays a role in the current protein marketplace. But, he also says that plant-based meat pricing should be viewed in a different light, more on par with higher-value meat items.

“Comparing premium meat items to value-added plant-based items should be the benchmark,” he says. “The plant items are usually non-GMO, kosher [and] organic. So they should be compared to those levels of meat with those benefits as well.” Sol Cuisine was purchased by major Brazilian meat producer Marfrig Global Foods in 2021.

Ultimately, Charlebois says, the addition of plant-based alternatives to the grocery market only helps to “democratize proteins in general,” and “making protein more affordable for everyone is really the best outcome possible.” However, he concludes, “consumers today deserve a real economic choice between two sources of protein, and that’s not what they are getting.”

 

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