Let’s get nerdy talking about insect as an agent for circular economy
1. INTRODUCTION
Animal feed has historically always been reliant on fishmeal to provide adequate nutrition for livestock farming, but the production of fishmeal from wild fisheries is unsustainable, and its global output has been on a decline in the last two and half decades. This causes a surge in demand for alternative protein such as insect protein. The global insect protein market is growing at CAGR of 23%, to reach USD1.4 billion by 2030. It is a nascent alternative protein industry that has lots of potential but supply and value chains are still suboptimal and immature. On my previous post ‘How to make insect meal more economically viable in agriculture?’, I explained about the barriers that we have to overcome to make insect meal commercially competitive in comparison to fishmeal. In this post, I am going to further elaborate some of the other barriers to make price of insect meal competitive and what can likely be done to address some of them.
While the nascent insect meal industry champions a lot on the recovery of food and agricultural wastes back into the food value chain (refer to Food Recovery Hierarchy), there are inadequate nuances with regards to the whole recovery process from organic wastes. Nitrogen (and by its extension, protein) and phosphorous aspects of recovery need to be better understood. These components are predominantly derived from synthetic fertiliser. Synthetic fertiliser consumes 1–2% of global energy, while contributing to 3% of global carbon emissions. In recovery of organic wastes to turn into animal feed via insect meal, the protein has more value than carbohydrates, and to a lesser extent, fats. This axiom will define the work needed to make insect meal commercially competitive relative to fishmeal.
2. EFFICIENCY OF FEED CONVERSION
2.1. Digestibility
Many food and agricultural wastes are of plant origin, high in non-digestible fibres which are lignin and cellulose. These fibres are not easily digestible even for insects. These fibres prevent a significant bulk of nutrients from being recovered and incorporated into insect biomass. Therefore, the less digestible the wastes are, the more of the wastes are actually needed to produce insect meal. For example, wastes that are only 50% digestible requires farm size that is about twice as large as wastes that are 100% digestible. This increases operating and capital costs. As such, the cumulative costs to produce one tonne of insect meal can be at least twice the market price of fish meal. For every 10–15% increase in feed digestibility, the capital cost for insect farming can go down 35–45%, while operating cost can go down 15–20%.
Investigation into hydrolytic pre-treatments of these fibres prior to being used as feedstock for insect farming is still at its infancy. Hydrolysis would make nutrients more accessible by breaking up these polymers. While some of the hydrolytic pre-treatment technologies have been applied outside of insect farming, such as renewable energy and brewery, they have typically however been optimised either for the production of biogas or alcohol. Some of the hydrolytic technologies even causes denaturation of protein due to high temperature condition in excess of 100oC, which is undesirable for good feed conversion efficiency; while others may have long pre-treatment time which requires excessively large land-area footprint.
2.2. Undesirable catabolism
Protein catabolism is when organisms start breaking down protein to obtain energy and/or water instead of using it for their own growth. Foul-smelling ammonia emission is usually a sign of protein catabolism. This phenomenon should be avoided as it translates into overall poorer protein conversion efficiency from organic waste to insect meal. The micro-habitat containing the organisms should ideally have adequate sources of non-protein energy source like carbohydrates and lipids, and water. Certain classes of lipids (fats) such as omega-3, medium chain triglycerides (MCTs), and phospholipids, have more commercial value than carbohydrates, therefore efforts should be taken to avoid loss of these lipid classes through metabolisation when insects consume organic wastes. In animal nutrition, phosphorous bounded to lipids and protein is significantly more digestible than inorganic phosphorous added to animal feed as a macro-nutrient. For the latter, the inefficient digestibility results in significant losses in excrement and water pollution. Thus, for environmental reasons too, recovery of digestible phosphorous from organic waste into insect meal would improve by avoiding the metabolisation of phosphorous-bound organic compounds.
3. Supply/value chain
There are fragmented non-vertically integrated supply/value chain stakeholders within the alternative protein value chain that is still as nascent as its use in livestock farming. Ideally, insect farms should be as closely sited to supply of organic waste. Otherwise organic waste typically has to be dried prior to transportation, for 2 reasons, ease of transport, and longer shelf life. The rehydration of organic waste upon arrival will be needed if insects are to be fed then thrive. The conversion of dry insect meal from wet live insect is again energy intensive. The constant need for dehydration and rehydration in this organic value chains increases the embedded costs in insect meal.
There are potential values that can be further refined and extracted from insect meal. By-products also have commercial value. An important component is actually frass that can be used as fertiliser. Oil profile of insects, for example, from black soldier fly larvae can be rich in C-12 type MCT oil. The BSF oil profile is similar to palm kernel oil and coconut oil. However, the phosphatide studies of insect meal is lacking. Having a better idea of phosphatide profile may be the differentiator against coconut meal and palm kernel meal.
4. Agricultural insurance
Agricultural insurance for commercial insect farms is under-developed market, but then again, insect farms for animal feeds is only a recent development in the last 5 years. To encourage more investment into insect farming, it may be time for agricultural insurance to cover insect farming too. This is currently found lacking. However, for there to be a viable insurance product that can cover insect farming to appease some of the slightly more risk-averse and/or impact investors, there needs to be historical data of intensive insect farming, which is of course lacking. Understanding of commercial risk in new markets are currently more of ‘thought’ experiments than real case studies. For example, outbreak of diseases is relatively unheard of, but that’s because this type of intensive farming is a new industry. The known unknowns are less numerous compared to more mature industries. This can be problematic for agricultural insurance. Therefore, typical product offering is parametric insurance (as I was kindly advised by Irina) which may not be adequate enough to cover for some owners or investors who are worried about catastrophic losses.
5. Closing remarks
Circular economy is never going to be easy to pull off, at least not but any one individual with one expertise. There has been a lot of brouhaha about circular economy using design thinking, systems thinking, first-principle thinking, second order thinking, Occam’s razor… Now is the time to marry mental models, with scientific technicality because circular economy is not an alchemy of turning lead to gold (unless we get a bit radioactive with the atomic nucleus). Perhaps, it’s time each professional aspires to have unorthodox cross-functional expertise, for example, (i) actuarial science with supply chain management, (ii) environmental engineer with nutrition science, (iii) entomology with veterinary. The future is interesting indeed.
