Reports we’ve heard indicate that extrusion capacity is currently the limiting factor driving up costs for plant-based alternatives in the United States. As a result, we’d only want to pursue this path if we have strong reason to believe that our plant-based alternative was not displacing a better plant-based alternative in the market.
What’s the connection between extrusion capacity and not displacing better alternatives?
Most plant-based meats get their form and texture through high-moisture extrusion, in which textured vegetable protein is forced through a die like Play-Doh through a spaghetti maker (see Wikipedia for a more technical overview).
Extruders are big, expensive, and sensitive machines. Most startups can’t buy their own, so they normally contract with a manufacturer. However, there is a limited number of manufacturers that currently do high-moisture extrusion of textured vegetable protein.
I believe the authors’ concern is that because demand for extruders currently exceeds supply, their project wouldn’t necessarily add to the total amount of plant-based meat produced. Instead, it might take up space that another plant-based meat startup would otherwise use. (Scott et al., please correct me if I’m misrepresenting your view.)
I like this way of thinking. It’s important to consider whether our direct impact is actually different than the counterfactual.
But fortunately for prospective plant-based meat entrepreneurs, there are several reasons why my colleagues at The Good Food Institute think displacement may not be as big of an issue here (and I agree):
1. A new plant-based meat company creates new demand for extrusion capacity. Consistently increasing demand for extrusion capacity signals to manufacturers that they should invest in capital expenditure.
2. Alternative manufacturing processes are being developed that do not require high-moisture extrusion (e.g., sheer cell technology). A new plant-based meat company could either directly contribute to developing these technologies or indirectly contribute by demonstrating demand for the technology.
3. Extrusion capacity tends to go to the producer with the highest willingness to pay. In general, this will favor companies that are more mature, have higher sales, or have more investment. Although imperfect, these factors correlate with product quality, decreasing the likelihood that a worse product will displace a better one.
What’s the connection between extrusion capacity and not displacing better alternatives?
Most plant-based meats get their form and texture through high-moisture extrusion, in which textured vegetable protein is forced through a die like Play-Doh through a spaghetti maker (see Wikipedia for a more technical overview).
Extruders are big, expensive, and sensitive machines. Most startups can’t buy their own, so they normally contract with a manufacturer. However, there is a limited number of manufacturers that currently do high-moisture extrusion of textured vegetable protein.
I believe the authors’ concern is that because demand for extruders currently exceeds supply, their project wouldn’t necessarily add to the total amount of plant-based meat produced. Instead, it might take up space that another plant-based meat startup would otherwise use. (Scott et al., please correct me if I’m misrepresenting your view.)
I like this way of thinking. It’s important to consider whether our direct impact is actually different than the counterfactual.
But fortunately for prospective plant-based meat entrepreneurs, there are several reasons why my colleagues at The Good Food Institute think displacement may not be as big of an issue here (and I agree):
1. A new plant-based meat company creates new demand for extrusion capacity. Consistently increasing demand for extrusion capacity signals to manufacturers that they should invest in capital expenditure.
2. Alternative manufacturing processes are being developed that do not require high-moisture extrusion (e.g., sheer cell technology). A new plant-based meat company could either directly contribute to developing these technologies or indirectly contribute by demonstrating demand for the technology.
3. Extrusion capacity tends to go to the producer with the highest willingness to pay. In general, this will favor companies that are more mature, have higher sales, or have more investment. Although imperfect, these factors correlate with product quality, decreasing the likelihood that a worse product will displace a better one.