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Business models and prospects related to opportunities in the insect and pet food production sector
Insects are emerging as a sustainable and nutritious solution for the food industry, especially in the feed and pet food sectors. Discover the prospects and opportunities offered by this growing trend.
The use of insects in feed and pet food is rapidly gaining popularity due to its sustainability and the enormous nutritional benefits it offers. With an increasing focus on reducing environmental impact and promoting sustainable farming practices, insects present themselves as a promising solution.
Insects are emerging as a crucial source of protein and healthy fats. We analyse market trends and prospects for the future of animal and human nutrition.
Learn how innovative companies are capitalising on this emerging trend, providing high quality protein and nutritious ingredients for pets, while helping to reduce food waste and greenhouse gas emissions.
The use of insects in pet food and feed is rapidly gaining popularity due to its sustainability and the huge nutritional benefits it offers. With an increasing focus on reducing environmental impact and promoting sustainable farming practices, insects present themselves as a promising solution.
Which business models make the most sense for insect farming?
Kinsect has a demonstration plant in Italy to showcase its technology and produce small quantities of product, but has no plans to own and operate its own plants in the future, and says that among the possible solutions is a franchise model is the fastest way to scale up the technology, but for this to be possible, efficient hatcheries are needed that can remove the complex and more time-consuming processes involving mating activities from their plant.
Most food and beverage companies do not want to lose focus by trying to run an insect breeding business in addition to their main food business, but are willing to sign a long-term supply agreement to provide a feed source to a nearby insect breeding plant.
The market opportunity: feed and food for pets
As for the market opportunity for insect proteins, lipids and waste, it is potentially vast, if a constant supply can be provided in large volumes, says Alexandre de Caters, co-founder of Entobel.
Insect farming at scale is very challenging, but there is more and more pressure on the aquaculture industry to reduce what we call 'fish in, fish out', and I think over time we will become more and more competitive as we see the trend of fishmeal prices going up.
According to Aspire Food Group's Ashour, 'the global pet food category is over $100 billion and the US alone accounts for almost a third of that. It is a market that is growing substantially, with a trend towards higher quality, human grade ingredients.
One of the really interesting aspects of crickets is that we have shown, both in studies and in the literature, some hypoallergenic effects and improvements related to gut health in canines and felines, so there is an interesting differentiation that goes a step beyond protein.
The second aspect of insect breeding is reliability, he adds. Some high quality pet food protein sources, such as venison, fail to pass a certain level. Thirdly, crickets meet all sustainability criteria, as buyers are looking for ingredients that can help them reduce carbon emissions.
According to InnovaFeed's Walraven, 'the development of the US market will be crucial, especially as there are segments here that do not exist in Europe, for example the premium pet food segment and the backyard poultry segment'.
Regarding feed, he adds: 'We have always seen aquaculture as a very strategic market because it is facing a medium-term protein shortage and the price of fishmeal has doubled in the last 18 months, so buyers are very aware of the need to secure new sources of protein.
In segments such as shrimp or poultry, on the other hand, 'it's more about targeting the health benefits and performance aspects that ingredients can unlock'.
InnovaFeed has 'several long-term offtake contracts' with Cargill, ADM and others, says Walraven. "I would say 75-80% of our volume over the next few years is locked in by these contracts."
What happened when a single boat got stuck in the Suez Canal?
According to Entocycle's Whitaker, recent supply chain shocks have further strengthened the case for insect protein: 'We saw what happened when a single ship got stuck in the Suez Canal, then we saw the impact of CODID-19 on global supply chains, the war in Ukraine, and then the events in the Red Sea, the floods in Brazil, El Nino in South America, all of which cause volatility in terms of protein supply.
Looking at long-term trends, soybean growing regions in Brazil and Argentina will suffer from a severe drought. Meanwhile, fishmeal is slowly declining. All this has prompted many countries to develop food protein strategies as part of their food security efforts, and we will see a strong relocation.
For US-based Chapul Farms, founder Pat Crowley adds: 'One market I am very interested in is backyard chickens, which grew a lot during the pandemic. The benefits of black soldier fly larvae as chicken feed are huge: healthier eggs, healthier feathers and we are seeing a lot of work on immunological benefits.
Another interesting market is trout production in the US, where they have been unable to eliminate fishmeal (herring, anchovies and so on) from the diet,' explains Crowley, who introduced many Americans to the concept of eating insects with the launch of cricket-fed Chapul bars in 2012, but has since shifted his focus to designing, building and operating commercial-scale BSFL plants.
Insects and the circular economy
Ultimately, according to Chapul Farms' Crowley, what makes insects so exciting is that "they have this incredible capacity for circularity: they harness millions of years of microbiological evolution to transform organic material into healthy proteins and fats, they add microbial life to the soil, they eliminate food waste, they reduce agriculture's greenhouse gas emissions and our dependence on fossil fuels and unsustainable inputs in agriculture.
"The US, for example, says to halve the organic material that ends up in landfills, but there is no definitive plan on how to do this. Insects can play this role right now."
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