Why have so many players turned their attention to the animal nutrition market?

Insect protein, black soldier fly larvae

Crops used for animal feed account for approximately 6% of total carbon emissions generated by food production. In some industries, lowering carbon emissions and making the supply chain more environmentally friendly is simple. However, reducing carbon footprints in agriculture is quite taxing. Although the animal feed or nutrition industry is a minor component of the food and nutrition industry, there are numerous developments taking place in the sector. In the industry, insect protein has been a major focus and highlight for a while.

The animal feed industry is divided into three categories: feed, pet food, and aquaculture, with the pet food category experiencing rapid growth. Traditionally, fish meal and soybean meal were used as animal feed. The use of these traditional sources has a significant carbon footprint and is not sustainable in the long run. For example, soybean cultivation causes deforestation and habitat loss, and there is an excessive use of pesticides and water. On the other hand, fishmeal production contributes to issues such as overfishing and disruption of marine ecosystems. Considering how brands are moving towards a more sustainable future, the increasing trend is in line with the global push toward finding alternatives.

Insect protein’s production uses fewer resources, with limited or negligible emissions. Furthermore, insect protein excreta can be used as fertilizer, completing the sustainability cycle with zero waste. Black Soldier Fly Larvae (BSFL) are primarily used to produce high-quality, sustainable insect proteins and lipids. It requires less land, water, and feed for production, as well as lower GHG emissions. Insect farming residues, or frass, can be used as fertilizer, helping to achieve a zero-waste approach. 

Players like Tyson Foods are diversifying their operations and entering the animal feed market. The company recently invested in Protix, a Dutch producer of insect ingredients, for a minority stake. They are forming a joint venture to open a factory in the United States. Another company, Volare (Finland), received an acquisition deal from Skretting (Norway), who will purchase products from their pilot batch from a new factory being built in Finland. Enorm (Denmark) also announced the completion of their facility, which will begin production soon this year. Similarly, Entobel (Singapore) established a new BSF production plant in Vietnam after raising funds in 2022. 

Recently, many companies have secured funding to increase their protein production. Last month, Protix received loan approval from the European Investment Bank for approximately 37 million euros to expand their manufacturing facility. Other companies that received funding to expand their offerings include Nasekomo (Bulgaria), FarmInsect (Germany), Goldbloom Enterprises Inc. (Canada), and others. Buhler (Switzerland) and Entocycle (UK) made an interesting offering to the industry. They are working to provide simple solutions, assisting companies that want to establish BSF facilities with their breeding and industrial-scale technologies. Buhler was very active in the insect protein segment last year, as they also formed a partnership with AI-powered genetic firm NRGene Technologies, which offers solutions and services in black soldier fly genetics.

Companies are also collaborating to develop new products that will reduce their carbon footprint. Globe Buddy (Denmark), for example, has launched a premium dog food based on insect protein. The insect protein is derived from BSF larvae supplied by Enorm. 

The global commercial feed manufacturing industry generates an estimated $400 billion in revenue each year. In the next five years, the animal nutrition market is expected to grow at a CAGR of 5–10%. The industry is currently facing a number of challenges, including how to reduce production costs, increase production volumes, and address the issue of low adoption rates in the human nutrition segment. It is clear that companies are focusing on new developments, the introduction of AI, and collaborations to address some of the challenges of the coming years.

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