What a buzz - insect stockfeed ventures no longer crawling

Insect livestock feeds come of age as investors jump into $4b market

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Insect larvae eating through green food waste before being rendered into food themselves.

Insect larvae eating through green food waste before being rendered into food themselves.

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Demand for high protein insects as stockfeed and pet foods is set to grow 5000 per cent within nine years says Rabobank.

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Insects are often touted as the next big thing in food trendiness, but our pets, poultry and seafood industries are more likely to be making a meal of mealworms or munching on maggots in the near future than customers crunching on crickets at hip city eateries.

Demand for high protein insects in stockfeed and pet foods is expected to leap almost 5000 per cent in the next nine years.

Currently it is a relatively modest 10,000 tonne global industry, but insect protein "farms" are forecast to produce about 500,000t of dry ingredients for livestock, pets and aquaculture feeds by 2030.

Annual capital investment in the sector is soaring, too - up from just $US10 million in 2015 to about $US420m last year.

Insect farming has emerged from being almost non-existent a decade ago to now be worth $4 billion worldwide according to the Insect Protein Association of Australia chairman Olympia Yarger.

By 2030 it is forecast to be at least a $10b industry.

"Asia and Europe are probably the leading players, with a lot of production focused on aquaculture, although it's evolving very quickly," Ms Yarger said.

Her own business, Goterra, began converting food waste into farmed insect larvae in Canberra in 2014.

Rabobank tips fast uptake

Agribusiness banker Rabobank has tipped that once global insect production reached the 500,000t mark, it would rapidly rise beyond 1m tonnes.

In fact, Rabobank has just become a shareholder in the company behind the world's largest insect factory, Protix.

The Netherlands-based Protix, which recently spent about $55m building its newest factory, will use the bank's financial injection to scale up black soldier fly larvae (maggot) production and accelerate the business' international roll-out.

"Protix offers a solution to two major challenges," said Rabo Corporate Investments investment manager Joost Vogels.

"That is, how to sustainably produce enough food for a fast growing global population and how to reduce food waste throughout the supply chain."

The Dutch company uses compostable food industry leftovers to produce dried feeds for aquaculture, poultry and other livestock.

Insects quickly gain body mass on diets of food waste, and once reduced to dry matter, provide a 50pc to 80pc protein diet for others to eat.

Protix's undisclosed funding amount follows one of the big French insect market players Ynsect last year also scoring about $28m from investors to develop a fully automated plant growing mealworms on an industrial scale for stockfeed and fertiliser.

Other prominent players include InnovaFeed in France, and South African-born, UK-based company AgriProtein.

In our view, insects have a larger potential as feed ingredients than as a direct consumer food in the next decade - Beyhan de Jong, Rabobank

Although opportunities for considerable human consumption of insect protein have hogged the headlines, Rabobank analyst Beyhan de Jong believed the animal feed market was a bigger prospect.

The nutritional, functional and environmental benefits of insect-based nutrition, and the value-adding potential offered by bugs, flies and other critters meant the animal feed market was gaining faster momentum, with demand currently exceeding supply.

Humans resisting

"Edible insects also tick the nutrition, health and sustainability boxes for human consumption, but consumer acceptance of whole insects and processed insect-based foods is still low in developed countries, " Ms de Jong said.

"In our view, insects have a larger potential as feed ingredients than as a direct consumer food in the next decade."

Insects were increasingly valued for their low environmental footprint and potential to upcycle low value agri-food material, including crop residues, into high value proteins and oils.

Growing them for stockfeed also shortened the supply chain, required less water, land and production time compared with other feed staples such as soybeans and fishmeal, and reduced pressure on the marine environment.

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Currently the biggest global market was in cat and dog foods, followed by aquafeeds, with potential in the poultry feed market also promising.

By 2030 the aquaculture sector was likely to be eating 200,000t of insect protein a year; pets 150,000t and poultry 120,000t.

Ms de Jong said a lack of scale currently meant production costs were high, establishment costs were also high and legislation allowing insect farming varied widely around the globe.

However, in a report "No longer crawling: Insect protein to come of age in the 2020s", she noted "scaling up is happening in the six-legged livestock sector", helped by significant investment attention since 2018.

Technology, genetics help

New technology, automation and improvements in genetics would cut production costs, and government regulations would become more cohesive as markets grew.

Ms de Jong tipped "the growing premiumisation and humanisation trend in the pet food market" would also see pet owners increasingly choosing more natural and high protein meals and treats.

Australian industry pioneer Ms Yarger's own business turns soldier fly larvae into kibbled pet food and fish feed having sourced waste food to feed her farm from the likes of supermarket chain Woolworths, hotels and hospitals.

Goterra chief executive Olympia Yarger at her company's Canberra production site.

Goterra chief executive Olympia Yarger at her company's Canberra production site.

"We're trialling different end use options and rendering processes as we build up production," she said.

In fact, the 14 active producer members of the insect protein association were in similar varying stages of market development with varying levels of capital backing.

"The earliest businesses in Australia only established in 2012, others are less than a year old," she said.

"Building up an insect colony takes at least six or 12 months, depending on conditions and what insects you are breeding."

Once established, producing a tonne of dried soldier fly larvae, for example, required 25t of green waste.

Cricket energy bars

Activity in the human food market in Australia also jumped significantly in 2018 and 2019 with producers from Perth to Tasmania and Queensland now selling everything from spiced roasted crickets in pepper grinders to energy bars available in supermarkets.

Rabobank Australia's innovation, knowledge and networks head, Nathalie Gibson spent four years in the US charting rising consumer demand for alternative proteins such as insects.

She said Australia was following a similar trend with mainstream food and snack lines including pasta, corn chips and cakes now containing high protein "flour" milled from dried mealworms, crickets silkworms and other insects.

Entrepreneurs were emerging and seeking capital backing via programs such as Rabobank's FoodBytes startup innovation platform, which had identified the fledgling Goterra's food waste recycling and stockfeed production ambitions four years ago.

"We expect to see more local companies using insect protein to help mitigate waste and contribute to this progressive industry."

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