: Potential for insects not just as food for the table but also in supplements and feed
THE buzz in insect farming is loudest around alternative proteins, but some regional startups are finding better opportunities in the production of insect-derived ingredients for health supplements and animal feed.
Increasing uses for what the industry calls insect biomaterials are pushing players to shift focus or explore other markets, especially as some have been frustrated by the lack of development in the insects-for-food space here.
One of the early movers in the insect space is Insectta. The company started out in 2018 as a black soldier fly farm in Singapore, making animal feed and fertiliser.
It faced two pain points then, co-founder and chief marketing officer Chua Kai-Ning told The Business Times.
First, farm operations did not play into Singapore’s strengths in research and development (R&D).
Second, the industry for feed and fertiliser is limited in its potential. Cow and sheep farmers can produce high-value products, such as leather and wool, but black soldier flies do not have similar yields.
These pain points led the company to pivot away from farming and into the production of biomaterials – materials derived from biological organisms – in 2019.
The company produces chitosan and melanin from black soldier fly cocoon shells – sourced from fly farms across South-east Asia. It raised an undisclosed amount in a seed round in 2020, and opened its pilot facility in November 2023.
Chitosan is used in a wide range of products, including disinfectants, cholesterol supplements and antifungal creams. Melanin could potentially be used in bone regeneration scaffolds to help cells proliferate, and in energy storage devices to power electronics.
While Insectta is not yet generating revenue, Chua said the company is trying to build its customer base in the fields of healthcare, electronics and cosmetics.
It also hopes to scale up operations by next year to process up to 600 kg of cocoon shells. Its current capacity stands at 5 kg of cocoon shells, from which it can extract 300 to 500 g of chitosan and 50 g of melanin.
Another insect company is Malaysia-based Nutrition Technologies, which produces animal feed and fertiliser from black soldier fly larvae and faeces in its production facility in Johor.
Black soldier flies have very active immune systems as they produce a lot of antimicrobial peptides, said the company’s chief technology officer Martin Zorrilla. Products derived from these flies are therefore beneficial to animal and plant health.
Nutrition Technologies exports its insect protein and oil products globally, with Asia and Europe as its largest markets. Demand from Asia’s aquaculture industry is high, while demand in Europe comes largely from the pet food industry, said Zorrilla.
The company has an office in Singapore for R&D; it is looking to build larger facilities in Malaysia, and to expand into other South-east Asian countries such as Thailand, Indonesia and the Philippines. It raised US$20 million in its latest funding round in 2022.
Avoiding a bind
By producing biomaterials instead of food, Insectta and Nutrition Technologies have avoided a bind that has hurt a number of insect-related startups here.
Several years ago, the industry was swept up by the possibility that cricket flours and stir-fried silkworms would offer a solution to global food shortage fears.
Enterprise Singapore estimates that from 2019 to 2022, roughly US$40 million was invested in insect companies here. There were at least 11 insect-related companies with operations in Singapore in 2022, the latest year for which the agency has data.
The Singapore Food Agency (SFA) said last April that 16 species of insects, including crickets and silkworms, would be approved for consumption in the second half of 2023.
That deadline was missed. Two companies in the sector told BT they are venturing into other markets while they await approval.
Asia Insect Farm Solutions (AIFS), which produces cricket snacks, is looking to do market tests in South Korea, said its co-founder, Yuvanesh TS. AIFS is currently bootstrapped.
“Truth be told, I already have plans of closing down AIFS,” he said. “It’s been a long time since we started (in 2017), but there hasn’t been much activity around the sector.”
He said his decision will depend on approval in Singapore, as well as how well the South Korean market test goes.
Altimate Nutrition, a company making cricket protein bars and powder, has obtained on-paper approval to sell its products in the UK, said co-founder Gavriel Tan. He expects to roll out the products by March or April.
In Singapore, the company earns revenue from conducting insect-focused workshops. It has also reached out to restaurants to explore future partnerships.
Altimate Nutrition is also bootstrapped, but is looking to raise funds in the UK.
Tan said the number of companies making insect food products for human consumption here has gradually decreased over the years.
“There are not many players because we are operating with such uncertainty,” he said. “Another risk is that we are not sure whether there’s a product market fit, or whether people in Singapore will be open to eating insects.”
Tan Han Kiat, senior director of licensing at SFA, said in a statement on Jan 29 that the agency needed more time to establish regulations for the safety of insects as food, and that it aims to introduce the regulatory framework in the first half of this year.
Investors have not given up hope on the sector, but they are picking their battles.
Tan Kaixin, general manager at Seeds Capital, said: “The insect sector is relatively small in scale and niche; but it has opportunities given the need for alternatives that are not only sustainable, but are ideal for land and resource-scarce Singapore.”
Keith Loo, deal flow manager of venture capital firm Trendlines, said the low value of insect feed and food products does not match the high operating costs in Singapore. “A lot of times, companies are unable to hit profitability because the final product is cheap.”
Trendlines has invested in Insectta as its products can be used in healthcare and biomedical devices, thus increasing their value.
Hian Goh, co-founder and general partner of Openspace Ventures, said he expects adoption of alternative protein for human consumption to be slow.
Openspace is invested in Nutrition Technologies, which Goh believes has the potential to “generate very large amounts of business and export globally”.
Amid the challenges of making insect-derived food for human consumption, Altimate Nutrition’s Tan still sees many opportunities in the sector.
“We don’t plan to sell just food; we plan to expand to other areas (in the future), like insects for its medicinal properties.”
Source: The Business Times © Singapore Press Holdings Limited. Reproduced with permission.
