Southeast Asia becoming a hub of insect-based feed sector

The founders of Entobel and Protenga, two of the world’s leaders in developing insect-based aquafeed, are often asked why they decided to base their companies in Southeast Asia.

Insect protein companies have clustered in the region because local governments, focused on food security, jobs, and innovation, are keen to welcome them, Gaetan Crielaard, the co-founder of Entobel – which set up in Vietnam in 2013 – told SeafoodSource.

Companies also locate there for climatic reasons and because the region is home to the bulk of the world’s aquaculture sector, which is “the market with the most potential” for insect-based feed ingredients, Crielaard said. The proximity of the firm’s facilities to major feedmills in Vietnam’s Mekong Delta is a major advantage, he said.

High energy prices make locating in a tropical part of Asia a smart choice, said Leon Wein, the founder and CEO of Singapore-based Protenga, which has picked up USD 4 million (EUR 4 million) in funding since 2020. Protenga operates research and production facilities in Singapore and Malaysia.

“Especially in colder climates, the fuel and gas crisis bears significant risks, as maintaining a tropical climate within the production is paramount – and expensive when it's minus-10 degrees outside,” Wein said.

A warm climate, cheaper land, labor, and utilities give Southeast Asia an edge as a location for insect-based businesses, and for Protenga, the availability of agricultural byproducts to use as insect feed is another benefit, Wein said. Singapore, a regional business and banking hub, has set goals to increase the amount of food it produces at home through innovative production techniques, giving insect meal producers critical support.

Crielaard said he thinks insect production at scale has arrived. He said the “inflection point of proving scalability and competitiveness” has been reached by Entobel, which raised USD 30 million (EUR 28.8 million at the time) in funding in May 2022 that will help it open a new plant in Vietnam. The firm is already looking at “expansion and duplicating the model globally,” Crielaard said.

“Insect-based feed is not the protein of tomorrow, but the protein of today,” he said.

While insect-based proteins are still costlier than traditional fishmeal and other alternative feed ingredients, current global macroeconomic conditions are closing the cost gap, according to Crielaars.

“We see it as an opportunity, as fishmeal from Peru, for instance, has also increased in price [in] Vietnam, thus making our insect meal a competitive source of sustainable and high-quality animal proteins for the aquaculture industry in Vietnam,” he said.

Wein agreed insect protein remains more expensive than most fishmeal, “and is definitely much more expensive than standard soybean meal,” but said the products shouldn’t really be compared head-to-head.

“This is somewhat comparing apples with pears. Yes, one can compare the price per kilo, but they are different products, have different value and are mostly consumed in different ways,” he said. “And in those more specific application-focused questions, there are already many interesting use cases where insect ingredients can provide cost-competitiveness or better overall value versus their alternatives.”

Volatility in agricultural and energy commodities markets has helped focus interest on alternatives, according to Wein, who said he has seen an acceleration in “sustainability-driven interest” in insect products and alternatives to conventional ingredients from most major markets in recent months.

“Volatility in the raw material markets increases the demand for alternatives and emphasizes the benefits of insect ingredients,” he said. “There's also been more research published demonstrating functional benefits of the insect ingredients that are helping.”

While Southeast Asia is a great host location for insect-meal production facilities, Crielaard said the region’s governments could benefit from studying how the European Union has handled regulating the sector.

“The E.U. is the most advanced, with a very clear regulation framework that regulates from inputs – feedstocks for the insects – to end-product applications,” Crielaard said. “Entobel, even though based in Vietnam, complies with this regulation, which we believe is the golden standard the industry should follow at this stage.”

Conversely, China, the world’s key consumer of aquaculture feed, still has not created clear rules for the production of insect meal within its borders, Crielaard said.

“It’s not forbidden and thus accepted. There are less constraints on the production standards and thus certain opportunities feeding insects on waste, for example, while E.U. advises or obliges the use of pre-consumer plant-based byproducts, mostly,” he said.

As the key market for global animal and fish feed, the development of the Chinese market will likely have a major impact on the production of insect protein for feed in other parts of Asia, according to Ling Cao, an associate professor in the Institute of Oceanography at Shanghai Jiao Tung University.

“Insect meal is not yet produced in large quantities in China now,” she told SeafoodSource. “Right now, the price of insect meal is not significantly lower than fishmeal. More importantly, the supply is unstable. That’s why many feed companies only dare to use it for trials.”

Crielaard said he’s observed increased urgency in the past two years from governments to clarify regulations for the sector due to the “global context in which countries try to depend less on global supply chains.”

“The insect circular economy model is thus even more supported,” he said.

With the rush of start-ups into the insect feed space, it’s not clear that all will prosper. The industry, as Leo Wein said he sees it, is “very dynamic and evolving quickly.”

“There's a variety of business models and new and more specific solutions coming to market that collectively accelerate the coming-of-age process of the whole industry,” he said. “As with any market, not all models and companies will succeed.”

Pointing to the absence of a dominant model of production, as there is for salmon or poultry, Wein said even the most well-funded companies in the insect industry still need to deliver on their promises.

“That provides a lot of opportunity for innovation in biology, products, process, engineering, and business models,” he said.  

Crielaard and Wein will both be addressing the Asia-Pacific Agri-Food Innovation Summit in Singapore from 26 to 28 October, 2022.

Photo courtesy of Entobel