Insects are often touted as the next big thing in the food industry, but our pet, poultry, and seafood industries are more likely to be making mealworms or eating maggots than customers nibbling on crickets in trendy restaurants in the near future.
The demand for protein-rich insects in forage and pet food is expected to increase by nearly 5,000 percent over the next nine years.
It’s currently a relatively modest 10,000-ton global industry, but insect protein “farms” are projected to produce around 500,000 tons of dry ingredients for livestock, pet and aquaculture feed by 2030.
Annual capital investment in this sector is also increasing – from just $ 10 million in 2015 to around $ 420 million last year.
According to the chair of the Insect Protein Association of Australia, Olympia Yarger, insect farming proved almost non-existent a decade ago and is now worth $ 4 billion worldwide.
An industry of at least $ 10 billion is projected by 2030.
“Asia and Europe are probably the leading players. Much of the production is concentrated in aquaculture, although it is developing very quickly,” said Ms. Yarger.
Her own company, Goterra, started converting food waste into farmed insect larvae in Canberra in 2014.
Rabobank tips quick admission
Agribusiness banker Rabobank has indicated that once global insect production hits the 500,000-ton mark, it would quickly spike over 1 million tons.
In fact, Rabobank has just become a shareholder in the company behind the world’s largest insect factory, Protix.
Dutch company Protix, which recently spent around $ 55 million to build its newest factory, will use the bank’s cash injection to increase pinfly larvae (maggot) production for black soldiers and roll out the company internationally to accelerate.
“Protix offers a solution to two major challenges,” said Joost Vogels, investment manager at Rabo Corporate Investments.
“That means how to sustainably produce enough food for a rapidly growing world population and how to reduce food waste in the entire supply chain.”
The Dutch company uses compost residues from the food industry to produce dry feed for aquaculture, poultry and other farm animals.
Insects gain body mass quickly on food waste diets and once reduced to dry matter provide a 50 to 80 percent protein diet that others can eat.
Protix’s undisclosed funding follows one of France’s major insect market players, Ynsect, who also received approximately $ 28 million from investors last year for the development of an industrial-scale, fully automated plantworm mealworm for cattle feed and fertilizer.
Other prominent players are InnovaFeed in France and the British company AgriProtein, which was born in South Africa.
In our view, insects have greater potential as feed ingredients than as direct consumer food over the next ten years
Although the opportunities for significant human consumption of insect protein have hit the headlines, Rabobank analyst Beyhan de Jong believed that the animal feed market is a wider perspective.
The nutritional, functional, and environmental benefits of insect-based nutrition and the added value of insects, flies, and other living things meant that the pet food market was gaining momentum faster and demand was currently outstripping supply.
“Edible insects are also the criteria for nutrition, health and sustainability for human consumption, but consumer acceptance of whole insects and processed insect-based foods is still low in developed countries,” said Ms. de Jong.
“In our view, insects have greater potential as feed ingredients than as direct consumption foods over the next ten years.”
Insects have been increasingly valued for their small ecological footprint and their potential to convert low-quality agricultural and food material, including plant residues, into high-quality proteins and oils.
Growing for fodder also shortened the supply chain, required less water, land and production time compared to other staple foods like soybeans and fishmeal, and reduced pressures on the marine environment.
Currently, the largest global market was for cat and dog food, followed by Aquafeeds, with potential in the poultry food market also showing great promise.
By 2030, the aquaculture sector is expected to be eating 200,000 tons of insect protein per year. Domestic animals 150,000 t and poultry 120,000 t.
Ms. de Jong said a lack of scaling currently means that production costs are high, start-up costs are also high, and the legislation that allows insect breeding varies widely around the world.
However, in a report entitled “No More Crawl: Insect Protein Comes Of Growing Up in the 2020s,” she noted that “there is an increase in the six-legged cattle sector,” backed by significant investment attention since 2018.
Technology, genetics help
New technology, automation, and improvements in genetics would lower production costs, and government regulations would become more coherent as markets grow.
Ms. de Jong pointed out that “the increasing premiumization and humanization trend in the pet food market” would also lead pet owners to increasingly choose more natural and higher protein meals and treats.
Australian industrial pioneer Yarger’s pioneering business turns soldier fly larvae into shredded animal feed and fish feed after sourcing waste feed for her farm from supermarket chains like Woolworths, hotels and hospitals.
“We test various end-use options and rendering processes as we build production,” she said.
In fact, the 14 active producers of the Insect Protein Association were at similarly different stages of market development with different capital levels.
“The earliest companies in Australia were not founded until 2012, with others less than a year old,” she said.
“It takes at least six or twelve months to build an insect colony, depending on the conditions and the insects you are breeding.”
Once produced, for example, one tonne of dried soldier fly larvae required 25 tons of green waste.
Cricket energy bar
Activity in the Australian human food market also increased significantly in 2018 and 2019. Producers from Perth to Tasmania and Queensland were now selling everything from flavored roasted crickets in pepper mills to energy bars available in supermarkets.
Nathalie Gibson, Rabobank Australia’s head of innovation, knowledge and networks, spent four years in the United States investigating increasing consumer demand for alternative proteins such as insects.
She said Australia is following a similar trend with popular food and snack lines like noodles, corn chips and cakes that now contain high-protein “flour” ground from dried mealworms, cricket silkworms and other insects.
Entrepreneurs emerged seeking capital through programs such as Rabobank’s startup innovation platform FoodBytes, which four years ago identified young Goterra’s ambitions for recycling food waste and producing forage.
“We expect more local businesses to use insect protein to reduce waste and contribute to this advanced industry.”
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The Story What a Buzz – Insect Food Companies That No More Crawl first appeared on Farm Online.