Insects, which are considered as a valuable feed ingredient to reduce the environmental footprint and make production sustainable in the livestock and feed industry, has quickly turned into an industry. IPIFF Secretary General Christophe Derrien explained in 5 questions the current situation, market size, future potential and growth prospects of this rapidly growing industry.
Secretary General
The International Platform of Insects for Food and Feed – IPIFF
WHAT IS SIZE AND MARKET VALUE OF THE GLOBAL INSECT INDUSTRY?
While the insects as feed sector is still a young industry at global level, in the past decade, several initiatives gradually transitioned from ambitious start-ups to well-established companies that are about to rapidly grow their production capacity in the near future. Since its establishment in Europe, the insects as feed operators (some of them also active in food production activities) managed to raise over one billion euros in investments – figures that may reach three billion euros by 2025 (Source: IPIFF Feed Market Factsheet). In turn, a considerable share of these financial resources is/will be invested into the construction of new facilities – leading to an exponential increase in the production capacity of the sector.
In terms of employment indicators, insect feed business operators (FBOs) presently generate about 1000 jobs. Most of the FBOs are SMEs (e.g. small enterprises, with 10 to 50 employees or medium enterprises, with 50 to 250 employees). Micro enterprises (1 to 10 employees) also represent more than 40% of the companies active in feed production. By the end of the decade, it is expected that almost 1 out of 2 FBOs will be a large enterprise – with over 250 employees. However, this proportion only reflects the status of the companies active, since it does not take into account the emergence of new actors – either companies active in insect farming activities (e.g. insect food business operators) or other agri-food activities.
WHAT IS PRODUCTION AMOUNT OF THE INSECT INDUSTRY?
In 2020, the production was estimated at about 10,000 tonnes of insect protein (according to Rabobank). Generally, these feed ingredients are incorporated into specialised products (e.g. such as compound feed), with inclusion levels that vary from 3-5% to 10-15% (e.g. depending on the target animal species and the other ingredients used). Therefore, the objective is to rely on insect protein as a complement to other protein-rich feed ingredients – improving the quality of the end-product in terms of nutritive value, amino acid profile, as well as animal health and performance parameters.
While most of this quantity was incorporated into pet food products and aquaculture feed (i.e. presently the only feed markets in the European Union for insect proteins), upcoming regulatory developments – such as the authorisation of insect processed animal proteins (PAPs) in poultry and pig feed (expected in the EU around autumn 2021) – would play an important role in increasing the demand for such feed ingredients, as the poultry and pig markets are two of the most relevant animal feed markets.
HOW MUCH OF THE DEMAND IN THE FEED INDUSTRY CAN INSECTS MEET?
The growing scientific evidence on the benefits associated with the use of insects in animal feed and pet food sparked the interest of feed manufacturers – that developed innovative insect-based products compatible with the nutritional diet of aquaculture species, for example (e.g. such fish products are already on the shelves of supermarkets in some EU countries). Following the above-mentioned authorisation of insects in poultry and pig feed, new such products are expected to be launched on the market – offering diverse opportunities to chicken and pig farmers.
We are convinced that insects will soon constitute a reliable complement or partial replacement to currently used protein sources in feed formulae for aquaculture, poultry and swine animals. The regulatory opportunities opened by the EU legislator (i.e. aqua feed authorisation as from the 1st July 2017) and the upcoming further relaxation of EU rules in the future (e.g. authorisation of insect PAPs for poultry and pig markets) have a key role in the development of the sector. IPIFF does not, however, forecast that insects will fully replace ingredients such as soy meal. Whilst insects have high potential to become a major additional source of protein for species such as pig and poultry animals, the complete substitution of vegetal components might not be desired. In nature, it is estimated insects could represent up to 70% of the diet of certain Salmonidae species, while experiments have shown that it is possible to feed up to 100% insects to fish. However, in order to provide farmed animals with a balanced diet, it is desired to incorporate insects along with other feed ingredients.
WHAT ARE THE GROWTH FORECASTS FOR THE INSECT INDUSTRY?
The market of insects as feed is dynamic and depends on a series of factors. Among these, the regulatory context played an important role in the European Union. Notably, following the authorisation of insect PAPs in aquaculture (i.e. July 2017), the aquafeed market became the main target for feed business operators (FBOs) – i.e. until then, PAPs could have only been used in pet food. According to IPIFF members, the authorisation of insect PAPs in poultry and pig feed will offer new opportunities – starting with the incorporation of such ingredients into the diet of such animals, the subsequent use of insects in organically farmed chicken and pigs, implicitly strengthening partnerships between insect and animal farms. Such trends will also be stimulated by consumer choice (e.g. growing consumption of lower footprint animal-derived products, such as eggs, fish, chicken or pig) and the growth of certain niche markets (e.g. free-range poultry, organic production value chains, etc.).
In the context of the market factsheet developed by our association, we consulted IPIFF insect feed producers regarding the possible market distribution by quantities of insect meal sold. By the middle of the decade, most of the demand for insect meal would lie in the pet food sector (circa 40-50% of the insect meal produced). Subsequently, the trend noticed after the authorisation of insect PAPs in aquaculture feed would continue – leading to a steady increase (reaching 25-35% in terms of share), stimulated by a growing demand for aquaculture products, such as carnivorous fish (e.g. trout, salmon). According to forecasts, the next relevant market for insects as feed operators in terms of quantities of insect meal sold will be the poultry (20-30%) and pig markets (5-15%) – that will see a rapid increase following the entry into force of the approval of insect PAPs in 2021.
By the end of the decade, possible new regulatory developments (e.g. authorisation of new substrates in the EU – such as former foodstuffs with meat and fish as feedstock for insects) are expected to play a key role in upscaling the production of insects and their derived ingredients – implicitly leading to a decrease in prices. By 2030, the share of insect meal used in aquaculture is likely to surpass the pet food market (reaching 30-40% – in contrast to a slower increase of the pet food market, which will represent 30-35%). According to IPIFF members, the use of insect meal used in poultry and pig feed will increase gradually by 2030 – representing a similar market share to the one from 2025. While the poultry and pig markets are well established in the European Union, the quantities of insect-derived ingredients used in aquaculture also depend on how quickly EU fish farming will be upscaled. This sector is expected to continue its rapid growth across the globe and the EU Commission indicated that its success may contribute to lowering the footprint of EU’s food systems: ‘Aquatic production should double and the use of feed from insects and algae should increase’.
In terms of animal-based products derived from animals fed with insect-based feed, IPIFF members anticipate that, by the end of the decade:
• more than 10% of the fish consumed in the EU (the equivalent of circa 30 servings for each European) will be derived from fish farms that use insect protein in their aqua feed formulations;
• 1 in 40 eggs consumed in the EU will be derived from insect-fed laying hens;
• 1 in 50 chicken meat servings consumed in the EU will be derived from insect-fed broilers;
• 1 in 100 pig meat servings consumed in the EU will be derived from insect-fed pigs.
WHAT ARE THE OPPORTUNITIES IN THE FEED SECTOR FOR THE INSECT INDUSTRY?
As the majority of the insects as feed operators focus on four main markets (notably pet food, aquaculture, poultry and pig feed), the opportunities for these actors are diverse. In the European Union alone, we speak about a market of more than 100 million tonnes of compound feed for poultry and pigs (according to FEFAC), while globally the demand of these markets is circa 240 million tonnes (according to the IFIF). In parallel, the use of insects as feed may contribute to respond to the increasing demand for feedstocks – as by 2050, the FAO forecasts that the demand for poultry and pig feed will exceed 350 million tonnes.
AND EPILOGUE
From a quantitative point of view, the growth of insect farming and its production capacity primarily depends on the inputs/feedstocks available to be used. Therefore, the diversification of the inputs authorised as insect substrates is seen as a catalyst in upscaling insect farming. Notably, up to a third of the food waste generated presently in the EU may be used as insect substrate – before it is classified as ‘waste’ (i.e. ‘waste’ cannot be used as feedstock for farmed animals). Specific examples of such products are former foodstuffs containing meat and fish or catering waste (e.g. pre-consumer waste such unconsumed meals from catering establishments), that could be safely bioconverted by insects into protein and lipids – as well as insect frass. The approval of such substrates in insect farming establishments producing insects for the feed markets – before the mid-2020s – would play a key role in accelerating the growth of the sector. More specifically such developments could materialise through a fast-track process – that would include the diversification of new substrates for the insects intended as feed for non-food producing animals or technical applications. Following the upcoming EU authorisations (e.g. first EU novel food authorisation, approval of insect PAPs in poultry and pig feed, authorisation of insect frass as fertiliser), the next policy priority of IPIFF and the European insect sector is the authorisation of such ‘new’ substrates.
