Why is Algae Protein so Expensive?


Well, it’s often $20+ per pound, where as, say, whey protein can be found at $5-$10 per pound. Algae protein supposedly requires less energy to produce (because algae is at the bottom of the food chain). So, getting energy from it is more efficient… Not to mention algae farming seems a lot easier than running a giant ranch. So, why isn’t algae a common food, but rather a pricy alternative?


Lots of cheese producers not many algae producers. Simple supply and demand.


I imagine it has to do with economies of scale. How much algae worldwide is even being produced for food purposes right now? Probably not very much. As demand rises, companies will build larger and more cost efficient algae farms, and cost per unit will fall.


It gets cheaper at the industrial level. We hope to use more and more algae. Long term this might cause more companies to look at it as an ingredient source which would cause a price decrease across the board.


You just increased the demand


Usually expense is mediated by the cost of scaling.

Let’s say you can make 10 pounds of the stuff, but the start-up and tail-off are expensive. That is: you put a lot of effort into setting up equipment, and then into closing down equipment. Small batches have a lot of overhead. Expensive.

Economy of scale kicks in. You get a lot of demand, so you set up a large, continuous process. Your equipment is running continuously instead of start-stop, and is producing higher output, thus it’s more-efficient: per energy expenditure, it produces more; and per maintenance-accruing operation, it produces more. Less energy and less maintenance, diffused start-up costs, and lower overhead overall.

Eventually, the conditions required to produce more fall thin. That is: something in supply runs low. Think about if you increase the population by 10% and farm more food–with 10% more labor. One day, you run out of highly-fertile farm land, and now you have to use more fertilizer and more irrigation, and the same less-fertile land area produces half the food. More labor per land area, times twice the land area? Now you’re using 27% more labor to produce food for 10% more people.

That’s scarcity.

If you invent a way to increase food yields (GMOs, better fertilization, better pesticides and herbicides, etc.), you suddenly can produce enough food for everybody on less than all fertile land. Now you can expand more without hitting scarcity (without the cost per unit produced increasing). You may even find a way to utilize the less-fertile land more-efficiently, so you can expand into that resource even further.

Same goes with things like algae protein. Processing may cost more, thus it’s expensive. Fixing that, the process may only scale to a certain point (say, a hundred million pounds per year), after which it becomes very expensive to produce more per year. Once you fix that, you raise the bounds. Technical progress continues to raise the upper production bounds and lower the (total labor) cost.