Plenty of commentators—and jaundiced investors—may query the economics of insect agriculture given the struggles of some high-profile players. But what about the touted environmental benefits? Is it a given that it is more sustainable to feed animals insect protein than, say, corn or soybean meal?
“Although the concept of converting food waste into valuable insect protein is appealing, the reality of insect farms is more complex,” claims a recent report from Belgian animal welfare nonprofit Eurogroup for Animals. “Logistical challenges, food safety regulations, and economic considerations often compel producers to rely on conventional crops and byproducts [with which to feed their insects] instead of true food waste.”
Put another way, adds a recent paper in the journal Sustainable Production and Consumption, the environmental benefits of insect farming are less compelling if producers feed bugs with ingredients that could be used to feed farm animals or people directly: “While the idea of turning trash into treasure may be appealing in theory, the reality appears to be more challenging.”
‘It doesn’t really make sense to buy chicken feed to feed insects to feed to chicken’
We shouldn’t generalize as every company in this space is different, says Cédric Provost, cofounder and president at Canadian insect farmer Entosystem, “But it doesn’t really make sense to me to buy chicken feed to feed insects to feed to chicken.”
Entosystem, which has just raised CAD58 million ($42 million) to expand its black soldier fly larvae facility in Drummondville, Quebec and construct a second commercial-scale facility in North America, is feeding its larvae food waste from grocery stores and other locations collected by partner and investor Sanimax.
But ensuring the plant can handle this kind of variable waste material is a challenge, says Provost. “Sometimes at night, I dream about buying some [animal feed instead of food waste as feedstock], but the whole purpose of our company is based on diverting organic waste from landfill.”
The Drummondville plant, which is currently ramping up production, but should reach capacity (5,000 tons of protein meal and 15,000 tons of frass for fertilizer a year) in the next 12 months or so, has to pre-treat the food waste arriving on trucks from grocery stores and other outlets, says Provost.
“We’ve had to develop technology to remove all the physical contaminants, so we make sure there is zero plastic, zero metal, glass, and so on, so we have nine different machines from de-packers to optical sorters, x-ray machines, magnets, sieves, and de-stoners, and that’s part of our difference in the market.”
“As a society, we need innovation and circular strategies that divert residual materials that still have potential from landfills.” Claire Bisson, VP and head of investment, Fondaction
Scaling up challenges
When it comes to scaling up, meanwhile, Entosystem (founded in 2016) spent several years de-risking its processes at a small-scale facility in Sherbrooke, which included testing more than 200 different feedstocks, before opening its larger facility in Drummondville.
But given the nature of insect farming, there’s still a good chance you’re going to get “punched in the face every day with something that you didn’t see coming,” says Provost.
“Every day is different, because at the start at least, you don’t have any experts to turn to [that have already nailed large-scale insect farming], so there’s not a lot of people that you can call to get help.”
And even when you think you have optimized everything, “you can’t just copy and paste” that model and assume it’s going to work perfectly somewhere else with a different climate and feedstocks, he says.
Vertical integration?
While many commentators believe that specialists will develop in each part of the supply chain, meanwhile, it feels risky right now to outsource any part of the operation, such as breeding, he says.
“Down the road there will be specialization. There is in anu industry. The real question is, are we there yet? The challenge right now is, can you rely on a supplier on another continent to supply you neonates [young black soldier fly larvae] for example, and what is the cost?
“There’s also this argument that you don’t need to be an expert [in black soldier flies or other insects] to farm them, but I don’t think it’s that easy, you need people with experience raising insects because your feedstock might be different, the temperature or humidity might be different. It sounds great to say buy your eggs from here, buy your equipment from here, and anyone can get farming, but I think it’s going to take a few years before we get to that stage.”
End markets: Backyard chickens, petfood, aquaculture
Currently, Entosystem is “selling a lot in the backyard chicken industry [in North America], which is bigger than we expected, but we are also working with companies in pet food and aquaculture,” says Provost.
While insect protein is still more expensive than fishmeal, a widely used ingredient in aquaculture, many aquafeed companies want to end the ‘fish in, fish out’ cycle, and are looking for alternatives, he says. But they are also concerned by pricing volatility and long-term availability of fishmeal given demand for farmed fish continues to grow as fishmeal stocks deplete, and insect protein offers an alternative that makes more sense in the long term.
That said, “You can’t just tell a [feed] company, ‘It’s sustainable, pay more,’” says Provost. “For sure, they care about that, but they also want to know how is it going to affect my animals? Will I get a lower mortality rate or a better feed conversion ratio? So that’s the thing that we need to focus on.”
As for soy in animal feed formulations, he said, “We can replace it, for sure, with some benefits, but right now, the price of soy is really low.”
“With the Drummondville plant, Entosystem has demonstrated at scale its process for the economic reclamation of organic matter through the production of proteins for animal feed and organic fertilizers.” Steeve Robitaille, co-managing partner, Idealist Capital
Investment in insect farming
Asked how investors view the insect ag sector, the fact Entosystem has just raised CAD58 million ($42 million) in the current environment shows money is still available for companies that have validated their tech and been careful with their capital, says Provost.
But it doesn’t help that investors have seen a lot of capital not achieving very much in this space, admits Provost, citing the demise of high-profile startups in the category such as Enterra and Agriprotein and ongoing issues at Ÿnsect, which has just filed a safeguard plan with a commercial court in France in a bid to stay afloat as it raises funds to expand production at its mealworm facility in Amiens.
“It’s always tough to be a pioneer,” says Provost. “It’s common in many industries that the first ones don’t make it, but they do so much for the rest of the industry, to open doors, to develop expertise. And then people from those companies then move to other companies in the space and share that expertise.”
Further reading:
Read the orginal article: https://agfundernews.com/entosystem-ceo-the-whole-purpose-of-our-company-is-based-on-diverting-organic-waste-from-landfill
