Protein Industries Canada Inc. Corporate Plan 2020/2021 Our Vision
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Protein Industries Canada Inc. Corporate Plan 2020/2021 Our Vision Canada is a world leader in plant protein. Our Mission Invest collaboratively to accelerate innovation and the competitiveness of the Canadian plant protein sector. Accomplishments from 2019 / 2020 In fiscal year 2019 / 2020, Protein Industries Canada (“PIC”) focussed significant time to operations, the development and execution of the Technology Priority program and the creation of the Ecosystem Development strategy. Protein Industries Canada staffed the core of the organization and opened membership sales early in the fiscal year. To date, Protein Industries Canada has 180 members and staff in four major western Canadian cities in all three prairie provinces. In April of 2019, we launched our first open call Protein Industries Canada First Project for Expressions of Interest (“EOI”) and received Announcement 40 applications with a total project value of $340 million. Protein Industries Canada also The first project within the protein launched a second open call in September 2019 supercluster was announced on June 26, and received another 19 proposals with total 2019 in Calgary. Protein Industries Canada project value of $134 million. The establishment has committed $4 million into the project of our project pipeline has been a major with industry partners backing it with accomplishment for the organization and clearly another $4 million. demonstrates both the willingness for companies to enter collaborative research The project, led by Calgary-based projects and the need for Innovation Botaneco —in partnership with Corteva Supercluster Initiative (“ISI”) investment. agriscience and Rowland Farms, will work to commercialize a new processing Fiscal year 2019 / 2020 also saw the completion technology that will yield a variety of new of our extensive Ecosystem Development oil and protein products. They will use Strategy that includes international and crops such as canola and hemp, to Indigenous engagement, talent and skills introduce new high-protein ingredients development, access to capital and more. The into the global food, feed, and ecosystem development strategy is backed by aquaculture markets. significant industry and member engagement 1
and the execution of the strategy involves several well-established industry partners. Overall, Protein Industries Canada made significant gains in the execution of the Innovation Supercluster Initiative. A highlight of which was our first project announcement with Botaneco along with partners Corteva agriscience and Rowland Farms. This event represented a significant milestone for the organization and was well received by industry. Objectives Protein Industries Canada will continue to build on its first full year of operations for the year ending March 31, 2020. Our priority remains the development, evaluation and co-funding of strong technology projects aimed at driving the industry forward. Building on the success of the first two calls for Expressions of Interest and the advancement of 24 projects totalling $302 million in investment, Protein Industries Canada is well positioned to deliver a suite of high impact research collaborations. Coupled with the open calls for projects, Protein Industries Canada has embarked on the development of a robust science plan across each of the four strategic pillars of Create, Grow, Make and Sell. Protein Industries Canada will evaluate the projects in the pipeline against PIC’s strategic plan and the current research capacity within sector. This will identify areas that require investment to build a strong Canadian plant protein sector. Another major focus for Protein Industries Canada in fiscal 2020 / 2021 will be the further implementation of our ecosystem development strategy. Our ecosystem development activities are described later in the Corporate Plan, but generally, these are the activities that have been identified as necessary to ensure a competitive environment and build capacity in the sector. Ecosystem development priorities include intellectual property literacy, data management, regulatory modernization, international engagement, skills, talent and access to labour, infrastructure, access to capital and Indigenous Engagement. In addition to technology priorities and ecosystem development, Protein Industries Canada will continue to refine our member value proposition and create tolls to assist our members. Examples include a searchable member database that allows members to find companies and research institutions to work with, an Intellectual Property (“IP”) registry, and a market research database. Finally, Protein Industries Canada will work to ensure the long-term sustainability plan for the organization. Critical to this is hiring of a Business Development Manager that will develop new products and services for, evaluate and potentially develop new sources of revenue, and explore complementary collaborations to further the plant protein sector in Canada. 2
Outcomes for Fiscal 2020-21 Organization Wide For fiscal year 2020 / 2021, Protein Industries Canada will continue to deliver on outcomes associated with investments made in technology and ecosystem development projects. Specifically, increased private company investment into the sector, the forging of new collaborations, the development of new products and processes, the assessment and development of new markets, improved access to venture capital funding and the creation of a more competitive environment. Growth of the Value-added Processing Sector: The growth of the sector in Western Canada requires increased private sector investments across the entire value chain, from plant breeding and production agriculture through to value added processing and market development. Investments made by Protein Industries Canada will leverage private sector contributions to increase research and development into the production of plant protein in Canada. The first two calls for EOIs saw requests from industry totalling more than $430 million. This illustrates the strength of the sector and the interest from the industry to be a part of the Supercluster. By January 31, 2020, Protein Industries Canada approved eight projects, with four signed Master Project Agreements. The value of the four projects is represent a total of investment of $61.5 million, with $30.2 million coming from Protein Industries Canada and $31.3 million coming from industry. Increased Collaboration: The increase in research and development expenditures by the private sector, has led to a accompanying increase in the amount of collaboration between firms and academic institutions. The total number of collaborative partners in current Protein Industries Canada supported research projects is 196 and the collaboration index (total number of entities participating on a per project basis including private sector partners, academic institutions and government supported research institutions) for Protein Industries Canada funded projects in the 2019 / 2020 fiscal year was 8.2 partners We expect growth in both of these metrics as more companies see value in collaboration. The Creation and Commercialization of New Products: Central to the growth of the value- added processing sector in western Canada is the creation and commercialization of new products and processes. The co-investment projects are largely focussed on commercial products and processes that either support the development of the industry (plant breeding and agronomic work) or directly increase the production and sale of new ingredients and food products. Protein Industries Canada expects to see a sharp increase in the outputs of research in fiscal 2020 / 2021. 3
Development of New Markets: As an export-driven economy, it is critical that our Members have markets to sell their ingredients and In 2019/20, Protein Industries Canada completed international products into. Protein Industries visits to the EU and India. A Canadian Plant Protein Mission to Canada, in consultation with Japan is planned for March 2020.These trips are important to industry has identified five key building relationships and creating opportunities for our growth markets (Japan, China, the members. Protein Industries Canada also hosted two EU, South Korea and the US). international Summits in Canada in the spring of 2019. These Activities aimed at these markets Summits saw more than 350 delegates from across Canada and will lead to increased demand for the globe meet and explore opportunities related to plant plant-based ingredients and food protein. products as well as increased interest in foreign direct investment into the sector. Increased Investment into the Sector: The growth of the value-added processing sector in western Canada, is highly dependant on investment and growth capital. Protein Industries Canada activities aimed at creating relationships with domestic and international venture capital firms will lead to increased venture funding to support the growth of new and expanding companies. Finally, the implementation of Protein Industries Canada’s ecosystem development strategy, aimed at making the entire sector more competitive on a global scale, will lead to increased investment, reduce time from concept to commercialization and attract a highly trained workforce to capitalize on the plant protein opportunity. Project Selection and Funding At least one additional call for EOI’s will be launched in 2020/2021. The EOI, project proposal templates, financial workbooks and the Project Application Companion document are available online and updated based on client feedback. Technology Priority projects, that have at least one Small and Medium-Sized Enterprise (“SME”) as part of the consortium, is aligned with PIC and ISI objectives, and have a value-chain approach to the create, grow, make and sell categories will be evaluated against the scoring rubric of the Project Selection Guidance Document. An updated Science Plan will identify unresolved gaps in scientific innovation and commercialization. The plan will be reviewed by the Board and key stakeholder based on crop commodity streams. Feedback will be used to guide the development of specific projects. EOI and Full Proposal rubrics will be updated to better align with program and Eligible Project Selection Committee (“EPSC”) needs. 4
Project Management Steering Committees will be formed for each funded project to enable timely review of project milestones, address change management needs and ensure reporting obligations and reimbursements are met. Ecosystem Development projects will be evaluated for their alignment to the five Innovation Supercluster Initiative strategic pillars as well as their overall contribution to sector competitiveness, SME growth and the ability to connect firms across the ecosystem. Projects will be evaluated by the EPSC. PIC’s goal is to commit $1 million to project co- investment by the end of the 20/21 fiscal year through completed Master Project Agreements. Program Streams & Summary of Project Funding Protein Industries Canada’s value chain-based approach to innovation continues to be focussed the four technology pillars: Create, Grow, Make and Sell. Examples of potential innovations that complement these pillars are provided below. These pillars will continue to frame co- investment decisions in 2020/2021. Program Area Areas of Potential Innovation Focus Create • Improvements in genetics for seed protein and nutrient Creation of high- content, nutritional quality and processing attributes quality protein through genomic and proteomic technologies and germplasm from modern gene editing and plant breeding techniques Canadian crops • Near term improvements in canola and pulse protein quantity and quality. Grow • Productivity improvements via farm production data collection, Smart Production analysis, and producer decision making and knowledge to improve yield, management systems, through advancements in the use of quality, value and production-related information technology for sustainable integration within agriculture practices and land regeneration technologies the supply chain • Development and application of plant phenotyping and imaging technologies for improved root systems, enhanced photosynthetic efficiency, and greater carbon sequestration • Advanced data networks, artificial intelligence (“AI”), machine- learning systems, robotics and autonomous farm vehicle technologies for enhanced productivity, sustainability and profitability through improved agronomic practices and AI- enabled decision support tools for growers • Impact assessments and mitigation strategies to cope with climate change 5
Make • Process and applications research for enhancing existing Novel Process methods and platforms and acceleration of new processing Technology and technologies for extraction and fractionation of protein and co- Product products Development for • Protein functionality and bio-activity for the development of further processing novel ingredient and food product formulation strategies of crops • Novel separation technologies such as ionic liquids, sub- and supercritical fluids, Ohmic heating, pulsed electric field and other processes with significant IP opportunities • Processing solutions for pea, lentil and fababean starch-based sustainable and renewable industrial polymers for paper, paperboard, packaging, building and other composite materials Sell • Company led initiatives and partnerships with Government Marketing and Organizations and Non-Government Organizations (“NGOs”) for Commercialization the testing of product prototypes, branding and sale of plant for branding, sales protein and co-products, trade missions, and other sales and and export marketing activities • Human resource development, enabling technologies related to marketing and commercialization efforts • Support for business to business global supply chain development initiatives, expansion and attraction and fostering of industrial competitiveness • Conference presentations to raise brand awareness of Canadian strengths in plant proteins and related co-products technologies and production • Market research and market intelligence studies Investments will be balanced across the pillars using the approximate ratios outlined below. This reviewed during the 2020/2021 fiscal year. 6
Anticipated Project Funding 2019/2020 2019/2020 % ISED Contribution $ 10,000,000 45% Industry Contribution $ 12,282,553 55% Total $ 22,282,553 Technology Create $ 4,111,131 18% Grow $ 2,466,679 11% Make $ 10,889,484 49% Sell $ 2,587,004 12% Ecosystem Development $ 2,228,255 10% Total $ 22,282,553 Anticipated Results of Projects It is anticipated that up to 20 projects will be underway during 2020/2021. Due to time horizons to execute research activities, only early milestone of funded projected are likely to be realized this fiscal year. We do not anticipate commercialization of funded product development to occur during this window. Depending on timing of initiation of certain projects, commercialization could begin as early as Q2 of fiscal year 2021/2022. A summary of focus areas of anticipated projects based on either approval by the EPSC during fiscal year 2019/2020 or invited to complete the Full Proposal process, that are expected to be operating or initiated in 2020/2021 is provided below. Anticipated outcomes have been aggregated to protect project confidentiality. Note: Not all projects anticipated may be approved or initiated. Pillar Projected Outcomes Create • High yielding, high protein hybrid canola resulting in meal with higher protein, lower fibre, more energy that will add value to both traditional and novel approaches to canola crushing and other downstream processing • Pea varieties with higher protein content, higher yields and improved agronomic and disease resistance characteristics that increase value for protein extraction processing • Advanced breeding tools and data sharing protocols to enable faster breeding outcomes and accelerated quality improvement across multiple crops Grow • Real time nutrient monitoring 7
• Improved sub-field and whole farm management support through advanced digital tools for producers through integration of multiple data sources, IoT devices, remote sensing and human input. • Increased value for emerging crops including hemp, peas, favabean and other through improved production practices to support higher quality harvests. • Targeted crop protection application technology reducing input costs and benefiting market access through advanced data and analytics capabilities and a unique delivery platform • Traceability from field to fork through integrated data streams enabling handoff of data across value chain • Improved crop nutrition through novel nutrient delivery platforms • New high value crop options for western Canadian producers Make • New processing technologies for dry processing of multiple crops • New food processing technologies for production of fortified beverages, meat analogues, pastas, snack foods, • Value added processing of by-product and bio-mass streams for novel nutrition, industrial and consumer products • Novel wet processing technologies creating high value protein, starch and fat based products from multiple crops Sell • Unique value position of novel protein products for aquaculture from multiple crop types including canola, hemp, pea, favabean and wild rice • Enhanced feed value for unique processing of meal and by products • Multiple new high protein food products • Multiple new ingredients across feedstocks with a wide range of functional attributes • Unique combinations of ingredients designed to meet consumer demands and enable superior labelling opportunities Summary of Risk Assessments and Mitigation Strategies Process The diagram below depicts Protein Industries Canada’s risk management process. 8
Strategic Plan Articulate Evaluate & Risk Correct Appetite Annually Statement Communicate Monitor & Categorize Report & Evaluate Quarterly Risks Obtain Committee & Board Approval Protein Industries Canada’s strategic plan is the foundation for its risk management program. The risk management process will be updated as necessary to achieve the objectives outlined in the strategic plan. Risk Categories Management has identified five categories of risk. They are: • Operational and Security; • Compliance; • Financial; • Strategic; and • Political Operational and Security Risks are those associated with the day- to- day operations of the organization as well as risks related to security of sensitive information of Protein Industries Canada and its stakeholders. Risks in this category include protecting confidential business and employee information and attracting and retaining high quality talent. 9
Mitigation strategies include ensuring our IT Service Provider offers a high- level of security and proactive monitoring, and the development of a performance management system and offering flexibility around working hours and options. Compliance Risks are those associated with operating pursuant to our Articles of Incorporation, Bylaws, the Canada Not-For Profit Corporations Act and all other regulatory or legal requirements. Risks include ensuring consortium project members provide adequate project reporting to Protein Industries Canada and ensuring in return, that Protein Industries Canada provides adequate reporting to ISED. Strategies to mitigate these risks include supporting project partners in meeting reporting requirements and using tools to ease the capture and transfer of data between all the parties. Financial Risks are those associated with the fiducial responsibility of the organization. Some of these risks include expanding the full allocation of funding within the program mandate, obtaining the required 25 per cent of operating funds from industry and other sources and securing $153 million in industry matching funds by March 31, 2023. Protein Industries Canada will manage these risks by creating a robust project pipeline and financial workbook, developing focussed milestones and creating significant project reporting processes. Strategic Risks are those associated with ensuring our investments are aligned with our strategic plan and supporting the projects with the best chance of driving the industry forward. These risks can be mitigated by generating and selecting projects that align with Protein Industries Canada's strategic, ecosystem and science plans and gaining support from industry, academia and government. Client Risks are those associated with the execution and ultimate commercialization of new products and processes for consortia members engaged in co-funded project execution. Clients face risks related to scientific uncertainty, regulatory uncertainty, securing IP, Data protection, and commercialization/business outcomes. Client risks are mitigated through multiple approaches, including: • An iterative process of full proposal development where key risks are identified in the development of the project and methods or strategies for resolving or minimize risks are identified – for implementation where and when appropriate. • Scientific uncertainty is mitigated for clients through co-investment, engagement of consortia members and collaborators with complementary and relevant expertise, milestone creation and go-no go decisions suitable to project plans. 10
• Regulatory risks identified are mitigated through foresight, consortia membership, marketplace alternatives and are also used to inform PIC’s Regulatory Barriers Strategy. • Intellectual property and data protection/sharing risks are addressed through collaboration within consortia, identification of best practices, IP literacy training and co-funding of activities. • Commercial risks are mitigated through thorough business case development, co- funding in projects, up and down stream consortia membership and support through ecosystem activities such are market knowledge, international market access, and skills and talent development. Political Risks are those associated with Protein Industries Canada’s relationships with all levels of government and ensuring industry support for the vision of a strong Canadian plant protein sector. An example is ensuring that the Government of Canada continues to view agriculture and plant protein as an economic growth sector and alignment with provincial ministries. To accomplish this, Protein Industries Canada will continue to have regular communication with Federal Leaders and stakeholders to keep them apprised of our plans and progress, and developments in the agriculture industry. Risk Analysis and Risk Framework Management identifies and analyzes risks as green, yellow, amber or red. Mitigation strategies are reported to the Audit and Finance Committee and Board for all risks rated amber or red. Risks rated green and yellow are monitored by management. Risks and mitigation strategies are reported annually to the Audit and Finance Committee of the Protein Industries Canada Board of Directors. Summary of Ongoing Performance Monitoring Strategies Ongoing performance management is critical to measuring the success of Protein Industries Canada and the investments made across both the technology platform and ecosystem development. In response, Protein Industries Canada tracks a series of short term and ongoing operational metrics including; • Number and value of projects received (annual Key Performance Indicators (“KPI”)); • Number of projects funded (quarterly KPI); • Value of PIC investments in technology priority projects (quarterly KPI); • Value of industry contributions in technology priority projects (quarterly KPI); • Value of PIC investments in ecosystem development projects (quarterly KPI); 11
• Value of industry contributions in ecosystem development projects (quarterly KPI); • Project milestone tracking against statement of work / project plan (quarterly KPI); • Budget to actual expenditures (quarterly KPI); • Cash flow projections (monthly KPI) and • Protein Industries Canada membership by class and geography. In addition to the operational metrics, PIC has developed an extensive set of outcomes to be tracked including; • Number of services, products or processes developed or improved by participants; • Number of services, products or processes developed or improved that are commercialized by participants; • The Collaboration Index by project (number of Ecosystem partners involved on a per project basis); • Increase in GDP contribution from participating small, medium and large firms to Canada’s economy; and • Number of professionals, including science and technology professionals, participating in ISI activities. Protein Industries Canada has begun the work to develop baseline measure for these KPIs and will work with existing agencies that may have some of these measures including Western Economic Diversification, provincial government departments and industry associations including producer commodity groups and food processing associations. Anticipated Amount of Industry Matching Funds Protein Industries Canada is expected to secure Eligible Industry Matching Funds of $12,282,553 in Fiscal 2020. Ineligible industry matching funds of $1,000,000 will be secured in Fiscal 2020. Ecosystem Development Ecosystem Development will focus its investment in priority areas as identified by industry. These areas represent significant opportunities for lasting growth with the potential to impact the long-term success of the sector. Protein Industries Canada will work to mobilize the larger industry to focus work in the following areas. Protein Industries Canada will continue to engage with SMEs, NGOs, post-secondary institutions, contract research facilities and more to ensure that the objectives and tactics are aligned with their needs and contribute to the goals of the Supercluster and the ISI. Intellectual Property Literacy activities will aim to improve members knowledge on valuation, protection and commercialization of IP. Protein Industries Canada will continue previous work, including developing templates and tools, and hosting workshops. New work to be undertaken in 2020/2021 will include exploring 12
opportunities to identify and commercialize latent IP in Canada related to value-added processing and the creation of PIC’s IP registry. Information Technology and Data Utilization projects will assist companies in better utilizing data as a strategic asset to drive better business decisions, improve efficiency and better meet end use customer demands. Building on the gap analysis completed in the previous year, Protein Industries Canada will create a roundtable of industry influencers to scope out and partner on small projects to test possibilities around enhanced data collection, analysis improved data interoperability, and application. Once small projects have been tested and if the results are positive, the next step will be to expand the scope of the projects within the industry. Indigenous Engagement activities will focus on Indigenous economic development and employment creation across the value chain from ingredient production to food and feed processing. Work will continue to engage Indigenous Communities across Western Canada, building on specific priorities identified through consultations, including the hosting of a pan-provincial summit. International Engagement priority activities as identified in the International Engagement Strategy, will be implemented, focusing on increasing and expanding trading opportunities, improving access to foreign direct investment, technology collaborations and building the global talent pipeline. Activities in key markets of the EU, Japan, South Korea, China and the United States will focus on building relationships through missions, relationships with in-market posts, and the hosting of events, such as the Plant Protein Ingredient and Food Summit. Market Knowledge projects to increase the sectors understanding of key domestic and international markets by assessing market potential, market size and brand attributes will be completed and rolled-out to membership Activities include a dashboard profiling the opportunities in 50 countries, a report on health attributes, and claims to support the Canadian food brand. Skills and Talent Development will create and foster key collaborations with post- secondary institutions including universities, colleges and polytechnic institutions to ensure that we are training enough people with the right skills to meet future employment demands. Activities to support members will include the implementation of a talent concierge and a listing of programs. Regulatory Reform working with federal and industry colleagues, work will continue to modernize regulations with the largest constraints to industry growth and innovation. Protein Industries Canada will prioritize the top risks as identified in project proposals and will lead work to modernize those, while supporting industry efforts on other regulatory work. Infrastructure Enhancement projects will address common needs for research and development infrastructure in the agriculture, food and feed ingredient processing 13
sectors. Priorities will be identified through project evaluations and discussions with members. Protein Industries Canada will bring together stakeholders from across the sector, including provincial governments, research institutions, NGOs, and industry to agree upon priority investment areas and work toward funding solutions. Data Strategy During fiscal year 2019 / 2020, Protein Industries Canada implemented the current data strategy highlights of which included; • Implementation of a plan to enhance file and email security, • Completion of the requirements for an internal Customer Relationship Management (“CRM”) system for client interaction tracking, this system is currently being implemented, • Completion of the analysis and requirements for enhancements to the member database to allow for improved member matching services and the incorporation of the IP registry, this system is currently being implemented and • Completion of a member needs assessment to define Protein Industries Canada’s role in better utilizing data as a strategic asset for the sector. Major findings of the member needs assessment included; o Confirmation of the sectoral challenges in data management including ownership and governance issues and a reluctance for companies to enter into bilateral or multi party data sharing agreements for fear of losing control of data and uncertainly about the value of partnership and o Direction for Protein Industries Canada to further develop a robust member database that allows for enhanced member matching services and includes information related to domestic and international market opportunities for plant-based products and co-products • Project clients are required to develop a data rationale similar to the IP rationale that details what data each consortia member brings to a project, what data will be created in the course of the project, how data sets may be combined to improve project outcomes and how data generated may support solutions in the broader sector Protein Industries Canada engaged additional resources to help refine the data strategy for the organization including: • The development of additional policies on how data generated via Protein Industries Canada supported research projects will be managed, and • The evaluation of the results of our members needs assessment related to data sharing agreements and how Protein Industries Canada can help foster increased data collaboration between members. 14
These updated polices and roles for Protein Industries Canada related to data and information technology management will be reflected in the revised data strategy which is due to ISED by the end of fiscal 2020-21. Intellectual Property Strategy Building on the successes of IP literacy workshops and development of IP rationales with clients in project proposals, work in fiscal year 2020/2021 will focus on: • Making available appropriate resources to SMEs, such as the IP Manager; • Hosting two IP literacy workshops similar to those executed in 2019/2020 and development and delivery of a curriculum on more advance IP strategies and international considerations; • Continuing to assist project consortia in the development of their IP rationales; • Evaluation of novel approaches to IP support including a prior art database and IP stacking; • The creation and population of an IP Registry. Statement of Revenues & Expenditures Sources of Revenue FY 2020/2021 ISED Contributions $2,990,045 Memberships & Program Management Fees $3,562,402 Total $6,552,447 FY 2020/2021 Planned Salary & Benefits Operating & Marketing & Conferences & Expenditures Administration Materials Travel 2020/2021 $ 2,507,266 $ 644,460 $ 385,000 $ 450,000 % of Eligible 62.89% 16.17% 9.66% 11.28% Expenditures 15
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