Insect-based ingredients have been on most feed industry radars for a few years now, as manufacturers look for new ways to provide novel animal-based protein to diets in an effort to reduce the reliance on fishmeal. Recent successes with consumer-facing products bearing ‘insect-fed’ and similar labels have emboldened farms and supermarkets to invest marketing into targeting higher-end, environmentally conscious shoppers, and the potential for making positive environmental impacts is drawing in investment around the world. But how ready is the industry to support this demand, and what needs to happen before insect-based ingredients (insect meal and oil) become a staple ingredient for feed formulators around the world?
Taking a look at where & when the insect industry started, and bench-marking it against historical developments in farming, such as the emergence of aquaculture in the late 20th century, the industry is still in its infancy. There is clearly huge potential for growth, but not without its challenges. Industrial-scale production of any live animal involves an ever increasing risk of diseases, changes in animal behaviour, and uncertainty. But unlike previous food revolutions, this one is taking place in parallel with a vast array of technologies which were previously unavailable, such as artificial intelligence and the Internet of Things (IoT). Coupled with a growing body of evidence on the efficacy of insect-based applications in a wide range of animal feeds, the industry is at an inflection point, and is set to boom over the next 10 years, with analysts predicting 500,000 tons of annual insect meal production by 2030.
THE INSECT FARM ORIGIN STORY
The mass-production of insects has been going on around the world as part of Integrated Pest Management programmes since the 1970s to control agricultural pests, however since 2009 a new wave of insect production has swept the globe. Rather than farming & releasing sterile insects, these new operations have developed business models that rely on the large scale propagation of highly fertile, fast growing species, grown under strict bio-safety conditions, and selected for their ability to convert low-grade organic matter into high quality feed ingredients.
This new development in insect farming represents a critical turning point in the history of food production. These newly domesticated insects are in a whole new class of farmed animals, and by farming them, pioneering companies are introducing an entirely new ingredient to the livestock sector. Not only that, but they are also helping to return feed to a more natural formula. Where recently diets have relied on heavily farmed crops and synthetic amino acids to balance the diets of the animals, the RE-introduction of insects to poultry, fish and swine diets is a return to what their wild ancestors would have consumed. This return to a natural diet also brings with it significant positive environmental impacts. Insect-manufacturing facilities tend to be co-located with either RawMat or energy suppliers, reducing the CO2 emissions and energy consumption required for production. And, because of the vertical farming system that most facilities employ, where pallets of 10-20 insect growing trays can be harvested every 7 days, they require a fraction of the footprint required for traditional protein production methods. Some estimates put insect protein production at 4,000x more efficient (in terms of kg of protein per m2 of footprint) than a typical American soybean farm.
BREADTH & DEPTH OF THE INDUSTRY
Given that there are over 1 million different insects on the planet, only a few are farmed in any meaningful number, and of those, only Black Soldier Fly (BSF) (Hermetia illucens) and yellow mealworms (Tenebrio molitor) have made it to industrial scale. The natural range and feedstock of mealworms make it a strong candidate for production in temperate regions like Europe and North America, whereas BSF are found year-round in tropical and subtropical regions. Despite this, the majority of BSF producers are based in Europe alongside the mealworm manufacturers, where EU regulations have allowed the use of certain insects in pet- and aquafeeds since 2017. The FDA in America has approved insects for use in salmonids, and earlier this year (2021) announced the intention to approve their use in adult dog foods.
Many other countries around the world are following suit, or taking a more pragmatic approach and basing approvals on the same quality and safety aspects that apply to other animal-based feed ingredients such as fishmeal, krill meal or MBM. This approach to regulating new feed material means that insect-based ingredients are not subject to the ‘yuck factor’, rather, they are judged on the intrinsic properties of the material itself.
MORE THAN A FISHMEAL REPLACEMENT
The aqua feed and pet food markets have both shown strong interest, with the majority of the estimated 10,000MT of insect meal on the market going into either aqua or pet food products. The US agribusiness giant Cargill has long supported insect production, restating their interest in the sector in 2020, and highlighting insects as ‘the most promising novel ingredient currently on the market’.
In the last three years, BSF in particular has raised a lot of attention from academia. We can easily see in the graph that in 2018 alone, more papers were published than the sum of the previous 70 years (1947 – 2017) of scientific research.
And although the majority of these papers focused on aquafeed applications, there is growing evidence that the application of insect meal and insect oil in other livestock has significant advantages too.
In broilers it has been reported that the insect meal can boost the immune system (Lee et al., 2018), improve the animal performance (Moula et al., 2018) and the gut health (Biasato et al., 2018); as well as being a sustainable source of highly digestible protein to replace the soybean meal (Schiavione et al., 2019). Last year, Star et al. (2000) published an interesting paper where they fed live larvae to laying hens, and observed an improvement in the well-being of the treated flock. Even with relatively modest inclusion levels, it was also reported that insect meal can improve the feed intake of piglets (Biasato et al., 2019) likely due to an improvement on the attractiveness of their feed.
RECENT TRENDS / FUNDING / DEVELOPMENTS WITHIN THE SECTOR
Large scale insect production is new technology for human society, and as such requires (and creates) technological breakthroughs. Research and development in the insect industry has so far largely focused on life history traits and bioconversion parameters such as nutritional requirements, as these are poorly understood relative to other species. However, as the sector matures research activities are increasingly including a broad range of disciplines and technologies. One clear trend is an emphasis on selective breeding and genomics. In November of 2019 two separate scientific teams, one of researchers based in China and one private company in South Africa, announced they had sequenced the Black Soldier Fly genome. The researchers from China went further by using a CRISPR/Cas9-based genome editing technique to produce genetically engineered insects. However, most companies in the sector are pursuing more traditional means of optimising their genetics via selective breeding programmes, often through partnerships with animal breeding companies such as Hendrix Genetics. The approach is particularly appealing because the short life-cycles of insects make them well suited to selective breeding. When starting with wild species selective breeding can remarkable effective, in aquaculture for example a weight gain increase of 30% per generation has been observed.
INVESTMENT IN THE INDUSTRY
In a recent webinar hosted by F3 Meeting the major players in the insect industry discussed recent developments, plans and challenges to the sector. It’s clear from the number of recent funding rounds that investor interest has not slowed down, with nearly $1Bn flowing into the sector in the last five years. This has been largely channeled into the European players, however as the sector develops it’s likely that more funding will become available, particularly in Asia, where the appetite for AgTech investments is being led by nation states keen to develop domestic food security. This trend is further reinforced by the enormous growth in ESG Funds which is forecast to continue, with some analysts predicting that ESG funds will outnumber conventional funds as early as 2025. With this explosion in funds there will be a race to find suitable opportunities which demonstrate both traction plus huge growth potential, of which insect meal has both.
EXPECTATIONS FOR THE INDUSTRY’S FUTURE
The overwhelming expectation across both the insect- and the feed-industry, is that the price of insect meal must come down to parity with the price of fishmeal to genuinely have a chance of playing a major role in the feed system. Whilst this may be some time for insect meal produced in Europe, where pricing is around EUR 3,500 – 5,500 per ton, Asian manufacturers have predicted meeting the fishmeal price within 3 years – a milestone that will change the way we feed our livestock. This price-drop is likely to come about due in part to increasing production scale, but also to potentially massive steps forward in technology development. For an industry that is – at most – 10 years old, the potential for rapid progress is significant. Increasing understanding of insect behaviour, IoT technologies and AI data applications will all play their part, as will the increased focus on genetics programmes being implemented around the world.
About Nick Piggott
Nutrition Technologies is Asia’s leading insect-manufacturer, operating an industrial-scale facility in southern Malaysia. Producing Black Soldier Fly-based feed and agriculture ingredients for the aqua, pet- and livestock industries, the company’s mission is to support the sustainable growth of the global food system.
Previous to setting-up Nutrition Technologies Nick worked in international development, and during his role at the UN in West Africa he became acutely aware of the looming protein gap facing the livestock industry, and thus future food security. Identifying insects as a sustainable solution to the challenge, he co-founded the company with his UN colleague Tom Berry in 2015. Developing the company’s technology in Vietnam, they moved the business to Malaysia in 2018 and raised a round of Series A investment in 2019.
Nick has a BSc in Life Sciences, and has always had a strong interest in entrepreneurship and innovation. He moved to Vietnam in 2015 to form Nutrition Technologies, winning the Asia stream of the Fish2.0 competition in San Francisco in 2017 and the Tech 4 Farmers competition in Bangkok in 2018.