An in-depth expert analysis of the benefits of insect protein as a sustainable alternative to animal feed.
We recently talked to Martin Zorrilla, the Chief Technology Officer at Nutrition Technologies, a company specializing in the manufacturing and supply of sustainable animal feed ingredients and biofertilizers. With a focus on large-scale insect farming, Nutrition Technologies produces animal feed products, proteins, and oils that are sustainable alternatives to current feed proteins like fish meal and soy meal. In the following post, we break down the potential for insect protein in sustainable food systems and why there’s a great opportunity for sustainable investments within the sector.
What’s your first thought when the word ‘insect farming’ is mentioned? For many, the concept evokes a negative reaction. The fact of the matter is, people tend to consider the idea of growing maggots or larvae gross, and it’s this immediate aversion that often prevents any further exploration into the world of insect farming. But what if you could get over this stigma? The truth is, there are folks out there who love insects. They consider them cool and beautiful and awesome in all kinds of ways, and once that love is coupled with knowledge of insect farming and areas within it like insect protein, it’s possible to really see how much-untapped potential lies within this natural solution to many of society’s problems.
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At Nutrition Technologies, the unsung hero that makes everything possible is the black soldier fly larvae. Growing it in a very particular rearing system that relies on fermentation, Nutrition Technologies takes carefully formulated feeds composed of organic waste products and add it to the trays where larvae are kept. The company grows the larvae, and then processes them into a range of products such as insect protein meal for pet food and aquaculture. On the other hand, products like their biofertilizer range come from the frass (poop) of the larvae. Once again, the phrase ‘insect poop’ may cause shudders, with a bit of information you too will understand why it makes a worthy choice for sustainable investments. In an effort to outline this information, the following sections will expand on the business & sustainability aspects of how the insect protein industry works and reasons why these new & strange “sustainable industries” are ripe for investment.
1. Sustainable Food Systems
As mentioned, a bulk of the operations at Nutrition Technologies are centered around large-scale insect farming. This is done to produce sustainable alternatives to current feed proteins like fish meal and soy meal. You may not be aware of it but farmed fish are fed wild fish. Essentially, fish is caught to the tune of several million metric tons a year, mostly off the coast of South America, and then processed into a powder called fish meal. That goes on to be fed to carnivorous farmed fish like salmon.
On a very basic, intuitive level, this is wholly unsustainable because fish, and in turn, fish meal, are limited resources. There’s only so much fish that can be taken out of the ocean. That’s why from a sustainability and business model perspective, using the black soldier fly larvae as insect meal provides an opportunity for aquaculture to rely on a food source that isn’t limited. Judging by the current trajectory, Zorrilla believes that over the next 10 years, insect meal volumes will be so great that they will influence the rest of the feed market and commodity pricing in ways that disincentivise fish meal altogether.
2. Sustainable Investments In a Growing Market
Once you get into the insect farming sector, one thing you realize is that it’s not like there’s been any technological breakthroughs that have made harnessing the power of something like insect protein possible. The fact is, people could’ve been doing this in the 1950’s, 60’s, and 70’s, but what prevented any progress in the field is that sense of ‘gross’ many have to the idea of growing maggots or larvae.
Thankfully, nowadays people are beginning to come around to the idea of insect farming. There’s a huge interest in the sector and it’s why hundreds of millions of dollars have been put into its expansion. This all makes sense once you become aware of the numerous businesses that have started around insects. For example, some people are using Waxworms (a type of caterpillar) to break down plastic. Others have used silk proteins to coat vegetables to keep them from rotting. As for Nutrition Technologies, they’re looking to expand their number of large facilities in Southeast Asia, all the while launching new products like their Diptia bioactive organic fertilizer which is designed to prevent fungal plant diseases and build soil health. Currently, they’re very much in a growth phase with $30 millions dollars already raised in sustainable investments. Zorrilla believes many other businesses in the sector are experiencing similar fruits for their labor.
3. The Potential Of Insect Protein
Aside from using black soldier fly larvae to produce insect protein for a sustainable alternative to fish meal, pet food is another huge market waiting to be tapped into. The fact is, people want more sustainable protein sources for dogs and cats and insects are a natural food for those animals. What this means is that insect protein not only has the potential for growth in one market but across multiple, proving that aside from being a great sustainable food system, the investment opportunities are also far-ranging. So far, Nutrition Technologies is the only Southeast Asian company approved for sales of their product into pet food in Europe.
4. The Basic Concept Of Sustainability
For many, the reason it seems plausible that society could become sustainable in the first place is because it constantly happens in nature. You look at a forest and say hey, this forest has been here for a million years and it doesn’t run out of wood or phosphorus or nitrogen—It just keeps going forever and ever and ever. But why does it keep going?
To put it bluntly, it’s because of decomposition. Decomposition is the primary mechanism that allows natural systems to be sustainable, and if it’s the primary mechanism for natural systems, it only seems right that it should be the same for human systems.
The thing is, while many believe decomposition to be the process of breaking things down, Zorrilla considers that a misconception. He says it’s actually the process of rebuilding things. Decomposition is the reason that forests, lakes, and grasslands persist over time without running out of resources. From Zorrilla’s perspective, the basic concept of sustainability then is the ability to persist without running out of resources. That makes decomposition the engine of sustainability. That makes that slimy, mucky, gross stuff with maggots and flies actually the secret sauce—After all, if that’s how nature does it then that’s how people should be doing it, too.
5. The Role of “bugs” in Sustainable Investments
There are still many discoveries to be made and businesses to be built on the basis of insect protein and similar systems. If you’re after opportunity and value, looking into areas people tend to have aversions to would be an intelligent choice, as you never know how you might discover a solution to one of society’s problems by doing so.
Considering now everything in this post, from the perspective of an investor or entrepreneur, you should want to be tapping into sustainable food systems like insect protein and the decomposition market, irrespective of the decades-long avoidance people have towards the subject. To be a successful investor or entrepreneur, following the domineering societal idea about humans not liking smelly stuff won’t get you anywhere. Instead, consider the powerful biochemistry behind these natural systems and note that solutions are more accessible because they have lacked all the attention that other fields like material science or robotics have seen, to see whether there’s potential for innovation. The aversion to these areas is exactly what makes them so promising from an investment perspective: “Zig Where Others Zag” as Warren Buffet says.