Israel must nourish its food tech industry or risk falling behind, report warns

Israel will need a national strategy to support its growing food tech industry if it hopes to maintain a key role in the sector over the coming years, according to a new report that offers details on a proposed plan.

Israel is currently a leading player in the global food tech industry, specifically in the cultivated meat sector which drew some 40 percent of investments worldwide in 2021, said the October report, put together by The Good Food Institute (GFI) Israel, a nonprofit organization that seeks to promote research and innovation in the field, and consulting multinational EY. It was presented, in part, last week at a food tech event at Reichman University (formerly IDC) in Herzliya hosted by the students’ Entrepreneurship Club with the Zvi Meitar Institute for Legal Implications and Emerging Technologies.

The document delves into the growing demand for animal-derived food and the environmental harms associated with modern meat production — an industry that is responsible for about 23 percent of all global warming gases — as well as an emerging global race to secure food supplies and develop more sustainable, lasting food sources. A strong local food tech industry can establish food security and become a strategic national asset for Israel, the report said.

According to the Barclays Group’s forecast, by 2030 the global market value of meat substitutes alone is expected to reach $140 billion and make up 10% of the total meat market.

“Essentially, the way humans have been producing meat is unsustainable, and emerging technologies like cultivated meat, plant-based proteins, and fermentation processes are trying to address this,” said Nir Goldstein, managing director of GFI Israel, who spoke at the event.

Israel is currently home to over 400 companies in food tech, a broad field that includes nutrition, packaging, food safety, processing systems, novel ingredients, and alternative proteins. The latter comprises plant-based substitutes for meat, dairy, and egg; cultured dairy, meat and seafood; insect proteins; and fermentation products and processes.

Remilk’s cow-free cream cheese served at the company’s offices in Rehovot, November 2021. (Times of Israel staff)

Goldstein told The Times of Israel in a phone interview last week that food tech was the fastest-growing technology field in Israel, a research “pioneer” with a strong academic foundation to build such companies. There are presently about 35 active university labs in which researchers are working on related technologies, he added.

The technologies behind two leading Israeli cultivated meat companies, Aleph Farms and Future Meat, are based on bioengineering research developed by their respective co-founders, Prof. Shulamit Levenberg of the Technion – Israel Institute of Technology and Prof. Yaakov Nahmias of the Hebrew University of Jerusalem. Both are prominent academics in the tissue engineering field.

Aleph Farm, founded in 2017, served up the first steak made of cow cells grown in a lab in 2018 and a cultivated ribeye cut in 2021. The company has raised more than $118 million to date with investors such as L Catterton, an American-French private equity firm, DisruptAD, the venture capital arm of the Abu Dhabi holding company ADQ, as well as a consortium of global food and meat companies including Thai Union, BRF, and CJ CheilJedang.

A rib-eye steak produced from meat cells cultivated in a laboratory by Israeli start-up Aleph Farms. (Courtesy: Aleph Farms/Technion Institute of Technology)

Last month, Israeli cultured chicken, beef, and lamb company Future Meat nabbed the largest single investment in a cultured meat company to date with a $347 million funding round co-led by ADM Ventures, the investment arm of Chicago-based food multinational Archer-Daniels-Midland. US meat company Tyson Foods, the second-largest processor and marketer of meat products, also participated in the round.

GFI estimated that about $800 million will have been invested in Israeli alternative protein companies in 2021 (up from $114 million in 2020 and $45 million in 2019) and projected that investments in the sector may reach up to $1.5 billion in 2022.

“Israel is in a global position worldwide for food tech,” said Goldstein. But countries such as Canada, India, the UK, the US, Denmark, and Singapore — the first country in the world to approve the sale of cultured chicken to consumers in December 2020 — are already rolling out massive funding for national food technology programs. If Israel wants to stay ahead, “it will need a national strategy,” he said.

Chicken nuggets made by Israeli cultured meat developer Future Meat. (Future Meat)

The GFI-EY report suggested that about NIS 1.4 billion ($450 million) will be required over the next 10 years to build the infrastructure to support the local industry in the form of multidisciplinary research centers, technology transfer programs (from university labs to industry), research grants and training, and an additional NIS 230 million ($74 million) should go toward building specific innovation hubs for cultivated meat, plant-based proteins, and fermentation tech startups.

The Israeli government should supply 56% of this funding, or almost NIS 900 million ($291 million), and the rest should be drawn from private investments in Israel and abroad, according to the report. The researchers estimated that, through the establishment of more food tech companies, the creation of thousands of jobs, possible future acquisitions, and food tech exports, the government could stand to gain NIS 26 billion ($8.4 billion) in tax revenue.

“The government has a strong incentive to make Israel a global leader in this industry. Otherwise, Israel will have initiated [some of the technologies in] the field, but will not enjoy the formation of the industry,” said Goldstein.

A recent announcement by the Israel Innovation Authority, a government agency, that it was earmarking NIS 220 million ($69 million) for four new consortiums to lead development and acceleration in new fields, among them cultivated meat, was a good place to start, said Goldstein, but “we need a long-term strategy.”

“We need more researchers. This is super important because the field is built around academic research, which needs government funding,” he said.

Goldstein said strong government backing will also help secure local food sourcing. “Israel’s food is mostly exported and this leads to high costs. With alternative proteins, you can have production for local consumption plus the ability to export to other countries,” he said.

“The question for Israel is what it sees as the future of food,” Goldstein noted. “And if startups will have to leave the country to succeed.”