Investors see bucks in bugs

Fly farm | European firm believes insects are a future source of protein in livestock feed

SYDNEY, Australia (Reuters) — A new breed of farmers and their financial backers are thinking small as they attempt to resolve a big global food problem.

Work on the world’s largest fly farm has begun in South Africa after the European firm behind the project won much-needed funding from investors, propelling the use of insects as livestock feed beyond academic theory to a commercial venture.

The project near Cape Town was conceived by a group of scientists and environmentalists racing to find protein alternatives as rising production of livestock feed such as soybeans gobbles up more and more valuable agricultural land.

The farm, being built by Gibraltar-based AgriProtein, will house 8.5 billion flies that will produce tons of protein-rich larvae as they feed on organic waste. The tallest barrier to such startups has been the availability of capital, with potential investors deterred by legislative hurdles.

However, political objections are starting to dissipate, given the prospect of getting hundreds of times more protein feedstock from a single acre of land compared to traditional sources.

AgriProtein’s success in securing $11 million in funds, while small, is a sign investors are warming to the idea that insects could be big business in the years ahead.

“The world has an issue with waste management and also sourcing protein,” said Johnny Kahlbetzer, director of Twynam, an Australian agricultural company and one of several global investors in the fly farm.

“If farming insects can solve the two problems, then that is a great outcome, and that is what has motivated our investment,” he said.

Human consumption of meat is expected to soar, and the impact that livestock production has on the environment is increasing. As a result, governments are now considering the use of processed insects as animal feed.

The European Commission is relaxing rules to allow the inclusion of insects in poultry and pig feed next year, while the U.S. Food and Drug Administration is considering an application from EnviroFlight to sell livestock feed made from insects.

Livestock production, which accounts for 70 percent of all agricultural land, is seen by the United Nations as a leading cause of environmental problems, including global warming, land degradation, air and water pollution and loss of biodiversity.

“It is clear to everybody that we need urgently protein alternatives that are less demanding,” said Arnold van Huis, a tropical entomologist from Wageningen University

The South Africa farm will house billions of flies that feed on more than 110 tonnes of rotting food and waste every day.

It will be capable of producing 20 tonnes of larvae a day, 3.5 tonnes of larvae high in fatty acids and 50 tonnes of organic fertilizer.

AgriProtein will use a combination of the black soldier fly, blowfly and common housefly, which will be kept in cages and fed a mix of spoiled or leftover food, manure and abattoir waste.

They will then be left to breed, and their larvae will be dried and processed into an animal feed.

AgriProtein co-founder Jason Drew said his company’s feed is likely to be 15 percent cheaper than fishmeal.

The World Bank said fishmeal was being sold for $1,658 a tonne at the end of May, just shy of the all-time high of $1,919 a tonne hit in January this year.

PROteINSECT, the EU-funded project investigating the efficacy and safety of using insect protein as a source of animal feed, said insect feed will likely never fully substitute for traditional protein sources. Instead, they will alleviate environmental pressures, as demonstrated by trials last year.

Elaine Fitches of the British government-run Food and Environment Research Agency said trials have shown that it would be possible to produce an average of 60 tonnes of protein from an acre of land per year, significantly higher than .36 tonnes of soybeans per acre.

Drew said AgriProtein plans to expand beyond the first site, with work on a second farm set to begin next year in South Africa and a further 38 projects planned around the world. The company is not without competition in North America and Europe.

EnviroFlight and Canada’s Enterra Feed Corp. plan on expansion in North America, while Ynsect and Protix Biosystems have also committed to commercial fly production over the next year in the EU.

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