What does the future hold for the insect protein industry?
As the insect farming industry matures, companies face increasing pressures to scale sustainably, attract capital, and deliver on their promises. Success in this industry requires well-developed business models, strategic partnerships, and the ability to navigate economic challenges.
The journey to profitability in insect farming is fraught with risks, evident from the financial struggles faced by several leading producers. For instance, French mealworm producer, Ÿnsect, has encountered significant financial challenges, entering a safeguarding procedure to avoid insolvency. This process aims to give the company time to restructure and negotiate additional funding. Similarly, a year ago, US-based mealworm producer, Beta Hatch, closed its doors, illustrating the unpredictability in mealworm production compared to Black Soldier Fly (BSF) farming. These challenges lead to questions about the stability of other insect companies.
We reached out to industry leaders to gain insights into the state of the market.
Keiran Whitaker, founder of UK-based Entocycle, notes the insect industry is expanding, yet experiencing steady growth rather than explosive acceleration. “Forecasts consistently estimate a 30% CAGR for the insect sector until 2030, and we see no reason to dispute this,” he says. A switch to more sustainable protein sources is becoming more accepted, leading to the rapid growth of alternative proteins, with insects playing a pivotal role in this transition.
Liz Koutsos, president of US-based EnviroFlight, emphasizes the sustainable benefits of BSF larvae production while acknowledging the industry’s ongoing challenges: “The path to full commercialization has not been easy, nor is the journey over.”
Gaetan Crielaard, cofounder of Vietnam-based Entobel, highlights the industry’s long-term nature, which requires resilience through strategic partnerships and piloting.
Lars-Henrik Lau Heckmann from Denmark’s Better Insect Solutions (BIS) stresses the diverse skill set necessary for succeeding in insect farming, emphasizing a focus on a few key areas during the initial years.
Cédric Provost, president of Canada’s Entosystem, indicates a recognized protein industry has arrived and that companies must aim for profitability and higher production volumes. Dean Smorenburg, CEO of Maltento, a South African company, remains optimistic about the industry’s growth, driven by the integration of insect proteins into mainstream feed, pet food, and aquaculture markets.
Financially, the insect producers’ landscape has changed, with investors seeking solid business cases and strategic partnerships due to rising interest rates. Provost notes that the ‘era of easy money’ has ended, and companies must demonstrate scalability and sustainability to attract interest. Whitaker underscores the importance of educating investors on the complexities and potential of insect farming, stressing transparency and alignment on project risks.
In aquaculture, the demand for high-quality animal proteins is rising as global seafood consumption increases. Factors like fishmeal quotas, microplastic contamination, and biodiversity pressures make insect-based proteins a promising solution. It’s a similar case in the pet food market, with owners seeking sustainable, high-quality protein sources for their animals. As these markets grow, the role of insect-based proteins is likely to become more prominent, offering a sustainable alternative to traditional protein sources.
In Europe, there has been a more favorable regulatory stance towards insect proteins, while the US follows closely. Asia presents a fragmented regulatory landscape but shows enormous potential for insect meal in aquafeed markets.
Achieving cost efficiency remains a primary challenge in scaling insect farming, especially concerning feed and energy, as noted by Marc Bolard of Nasekomo. Innovations aim to enhance feed conversion efficiency and energy management, with technological advancements playing a crucial role in striking a balance between manual processes and automation.
Whitaker also suggests that overcoming legislative hurdles and expanding waste streams are critical to unlocking sector growth, especially in the UK.
Heckmann stresses the importance of securing investor backing and implementing legislation to enable broader applications of frass. Crielaard notes the operational complexities of scaling up and emphasizes the need for continuous feedstock streams for larvae production.
The right business model in insect farming depends on geographic and economic factors. Three core models exist: full-liners, growers, and breeders. Crielaard advocates for a circular economy model, while Provost emphasizes breeding as key to ensuring a steady supply of neonates.
Breeding challenges are compounded by the need to improve yield and develop strains to meet specific market needs. The future of the insect protein sector will rely heavily on research and development in genetics and production efficiencies, exploring insect oil and frass’s potential as organic fertilizers.
Collaborations among insect companies, feed manufacturers, and seafood brands will enhance product value and consumer understanding, facilitating market growth. The potential for insect proteins and derivatives offers a promising pathway to replacing traditional ingredients with sustainable alternatives without incurring additional costs.
Governments and organizations can support the standardization of insect-based products by establishing consistent regulations and standards. Group efforts, such as those by the IPIFF, should focus on enhancing market opportunities for insect-based products, encouraging the growth of this emerging industry. The sector’s potential to bolster sustainable agriculture and food security is immense, and it aligns closely with government sustainability goals.
In summary, the future of the insect protein industry lies in overcoming challenges related to cost efficiency, scalability, and legislative support. With increasing awareness and demand for sustainable protein sources, combined with continued research and development, insect-based proteins are poised to make a significant impact on the global protein market. By navigating economic challenges and capitalizing on technological advancements, the industry can carve a sustainable path forward and contribute meaningfully to global food security and environmental preservation.
