top of page
  • kinsectsrl

From novelty to necessity: Insect breeding faces the future of sustainable agriculture. Part 2#


Scaling up insect breeding: The financial and operational challenges of a growing industry.

 

Investors face financial challenges as the insect breeding industry expands. We analyse the risks, opportunities and strategies for the future.

Scaling insect farming presents unique challenges, both financial and operational. Learn how companies are navigating through these obstacles as they seek to expand in a rapidly growing industry.

The insect breeding industry is experiencing explosive growth, but behind this growth are significant financial and operational challenges. From the need for adequate funding to build large-scale facilities to the complexity of biological engineering and scale operations, companies are facing a number of obstacles as they try to realise the full potential of this emerging industry.





Climbing the insect farm: The Hare and the Tortoise


One lesson the industry has learned to its cost is that things "work differently at scale, even if you've done a lot of work to validate your system," says Emery.

"It could be as simple as the water content of the raw material is different depending on whether it's a truckload or a trainload, so it's smart to take it slow."

Meanwhile, what works in one place may not necessarily translate perfectly in another.

Worms, for example, produce metabolic heat as they digest food, and if you don't dissipate it, you create a feedback loop that slows them down, so the design of climate systems can have a real impact on crops.


"We intentionally chose our location in Cashmere, Washington because of the dry climate, so we were able to use evaporative cooling, which is much more energy efficient and also has the benefit of adding some moisture to the controlled environment, which is beneficial for mealworm growth."

But he adds: 'The way we designed our air handling systems, our HVAC, was not the kind of thing that would result in a different climate with more humidity.



The volume race in this sector has put companies under pressure.


Taking a step back, 'the race to scale in this industry has put a lot of pressure on companies,' says Maye Walraven, US General Manager of the French insecticide company InnovaFeed, which has partnered with ADM to build a 60,000 tonne per year plant in conjunction with a corn milling facility in Decatur, Illinois.

"But we have to strike a balance between scaling up as quickly as possible and making sure that the technology choices we are making are the right ones. We have chosen plants that are quite ambitious in size, but we are reducing the risks by building them in phases."


For example, although InnovaFeed has already built a large-scale plant in Nesle, France, this does not mean that it will simply take that model and replicate it exactly for the new site in the US.

"In different locations, even the insect emissions may be different, so a different HVAC design may be needed. Similarly, if the raw materials are denser, you may need a different pumping system. You don't want to spend millions on pumps and then have to replace them all'.

Specifically, InnovaFeed's French plant will use wheat by-products from a starch processing plant in Tereos as feedstock, while the US plant will use corn by-products, explains Walraven, who has spent months building a pilot plant in Decatur that will help reduce the risks of the larger plant.


"What we learn here will determine the size of the plant we have to build. If the yield is better, you can build a smaller plant and reduce the CapEx for the same production. If the yield is significantly lower [as a result of using different raw materials], more space is needed to produce the same amount of protein. So, the pilot plant in Decatur is key to defining the footprint of the larger plant'.

In France, he says, 'we started with a pilot plant in 2017, then in 2020 we launched the first phase of our large-scale factory, followed by the second phase in early 2023 and we will launch the last phase in the summer of this year. We expect that by the end of 2025 we will be at our full capacity of 15,000 tonnes of protein flour per year."


"Some operators have made decisions for larger scale plants based on assumptions that were correct on a smaller scale and have burnt their fingers. If it is a container scale, changing a pump is not a big problem. If it is a huge scale, it could cost hundreds of thousands, if not millions". Miha Pipan, co-founder of Better Origin.






Does insect breeding only make commercial sense on a significant scale?


Although economies are always related to scale, most of the operators we spoke to predict that a number of profitable models will emerge in different geographic areas and with different partners.

According to Emery, 'if you produce insects from a shipping container, you don't partner with ADM, but you could be part of a small integrated farm that tries to recycle some waste into something that can be used in another part of its business'.

A few years ago in the industry there was a bit of a 'ours is bigger than yours' posture, which didn't help'.

Better Origin is working with vertically integrated British food retailer Morrisons to turn food waste from its operations into protein meal for its free-range chickens, using black soldier flies reared in transport crates, says co-founder Miha Pipan. "We are not particularly attached to the idea that you need massive scale to make things work. Also, the way we do things in the UK doesn't necessarily apply to South-East Asia, for example."


Kees Aarts of Protix adds: "We are doing a high intensity controlled environment rearing, but we have also designed a CapEx solution that can be implemented in a pig farmer's barn, where we will supply the eggs and take the larvae for processing. The models will be different in different markets."


With regard to unit economics, says InnovaFeed's Walraven, 'we have the potential to integrate different streams for our insect feed that are currently considered waste, which would significantly improve our costs, but there are still some regulatory challenges that we have to overcome first.

"We also think we can increase our turnover by better demonstrating certain properties of our ingredients. For example, after feeding our ingredients to shrimp, we have seen incredible results in terms of performance, improved feed conversion rate by 30 per cent and decreased mortality by 40 per cent. But these things take a long time to be turned into claims and proven again and again".


Large-scale insect farming: 'Must be automated and data-driven'


In many ways, says Mohammed Ashour, co-founder of Aspire Food Group, insect farming 'represents the most ideal case of vertical farming'. It is a series of boxes with enough food and water to sustain a certain population. You put the box of crickets on a shelf and don't touch it for 30 days. We then use an automatic storage and retrieval system like an Amazon warehouse. Only 13 to 15 operators per shift are needed in the whole [12,000-tonne] plant".

Insect breeding at scale 'needs to be automated and data-driven', adds Marc Bolard, co-founder and CEO of Nasekomo, a Bulgarian start-up working with technology giant Siemens to create a standardised insect bioconversion system. "It is a biological process with millions of correlations, interactions and dependencies between animals and their environment. So we are talking about data collection, data transport, data storage, data security and the ability to analyse and learn from this data."

At Protix, says Aarts, "as soon as we think a job is repetitive or that we can control it better, reduce the failure rate, identify outliers, improve the basic process and reduce variability, we automate it. In this way we have been able to increase production, quality and reduce costs. But we are constantly debating what is the right level of automation and what is the right level of automation.


Kinsect: 'It all starts with efficient breeding.


Today there are probably about 1,000 companies in this sector, from start-ups to corporations, that have raised significant funds to scale up. Of course, not all of them will survive, but one can at least imagine that each country needs one or 100 insect farms, depending on local market demands, and we will serve them."

Whether it is chickens or black soldier flies, he says, 'you cannot breed them without ensuring constant egg production.

We are seeing large traditional companies entering this sector, whether it is a supermarket chain trying to meet its waste management requirements, a waste management company wanting an alternative solution for food waste treatment, or a food company wanting to find a solution for its by-products and a new source of protein'. Giacomo Benassi, co-founder of Kinsect.



Biology is a bottleneck in this industry


Although vertical integration (combining breeding, reproduction and processing at one site) may seem efficient, insect breeding and reproduction require very different skills, explains FreezeM, who developed technology to induce BSFL neonates into a state of 'suspended animation' by placing them on an undisclosed substrate.

They are then shipped at room temperature to the insect breeders, who 'activate' them by feeding them, and have found that the 'paused' babies provide consistently higher yields than their normal counterparts once they start feeding.


We will see a gradual shift and it is not certain that the vertically integrated approach will win.


If you look at other established agricultural sectors, they are all segmented, because as the industry matures you need specialisation in every part of the supply chain. Insect farming requires knowledge of entomology, biology and biotechnology, adds Giacomo Benassi. The same applies to other forms of agriculture, where there are companies that specialise in breeding, genetics and seeds, and then companies that focus on farming.

"But in insect agriculture, almost everyone is vertically integrated and faces the same challenges when they want to grow. So we decided to focus on biology, which we see as the main bottleneck in this sector, and allow others to do farming efficiently."


He adds: 'There is already a big push from the market and I think we will see a gradual shift away from the vertically integrated approach that the first companies in the market took. The trend to build the biggest new insect plant is coming to an end and everyone is focusing on demonstrating revenue and profitability. We can save the insect companies all the hassle, risk and investment costs of setting up their own breeding centres.

Although first-generation insect breeding sites have integrated breeding operations, this is set to change. "When they are looking to open new sites, we can help them scale faster and more efficiently. They can also run a hybrid model where they have their own colony, but they can buffer their production by working with us."





Fonte:



Join the conversation on insect farming and its fight against hunger, poverty, and malnutrition. Use hashtags #InsectFarming #FoodSecurity #PovertyEradication #GlobalNutrition #SustainableDevelopment to make your voice heard in this mission for positive change.

1 view0 comments

Comments


bottom of page