Sustainability/Analysis/

Entocycle’s insect farm is proof that flies can be bug business

As Europe allows insects to be used for animal feed, insect farms are buzzing with excitement. With Britain expected to follow suit soon, one startup is hoping to beat the crowd

By Katja Staple

Entocycle's founder Keiran Whitaker with his insect-farming tents. Credit: Katja Staple

Insect farming startups were flying high last month as the EU gave the regulatory go-ahead for insects to be used as food for pigs and poultry, unlocking a huge potential market in animal feed. Many expect UK regulators, which permit insects only as pet and fish feed, to follow suit.

The timing is good for Entocycle, Britain’s biggest startup in the sector. It recently converted its London research lab into its first commercial site to start producing grub for the pet industry. It is raising a £22m Series A, of which £5.2m is already secured. And early next year, it will start building a large-scale farm in Scotland to sell insects to industrial animal feed producers in large quantities.

The rest of Europe has caught the bug as well: French mealworm farmer Ÿnsect has already raked in $400m in funding and called the recent EU rule change a “huge step forward for the sector”. Entrepreneurs think that insect protein is not only good business: they see it as a tool to fight climate change and feed a growing population.

To understand how bugs will save the planet and to find out what really goes on inside an insect farm, Sifted visited Entocycle’s London site and talked to CEO Keiran Whitaker.

How to build a bug factory

You can smell the Entocycle site before entering the railway arch where it’s based. Inside, black soldier fly larvae feed on wheat products, cloaking the site in a yeasty scent reminiscent of a brewery. 

The heart of the operation is the insectary, a living room-sized space where insects are breeding future fly generations. A cupboard labelled “nursery” is flanked by a large shelving unit containing 30 drawers.

Entocycle's ground insect protein
Each fly can lay up to 1,000 eggs, which are kept in trays for two days before they hatch. Credit: Katja Staple

A lab technician works at a small work station. Behind a sliding door sits the tight, hot and humid fly room where mesh tents keep thousands of flies under blue lights.

The lifecycle of the black soldier flies is 36 days when used for breeding. The eggs sit in the nursery for two days until the larvae hatch. Over the following 12-18 days they grow until they pupate. 

Whitaker shows larvae of different sizes by pulling out several drawers from what would be an insectophobe’s chest of horrors.

After 14 days in the pre-pupa and pupa stages, flies hatch for a six-day mating and egg-laying bonanza in the mesh tents. A fly lays over a thousand eggs before the cycle begins again.

A larger adjacent room contains a much bigger shelving unit housing Entocycle’s larvae farmed for protein. Once those larvae grow to the desired size, they are killed by intense heat and then dried or frozen. 

The black soldier fly is, according to Whitaker, a next generation farm insect. While the mealworms favoured by Ÿnsect take six-eight weeks to grow, black soldier fly larvae are supercharged eaters that only take 9-12 days, meaning quicker protein production at a lower cost.  They also feed on waste alone, which means lower cost for feed and additional benefits for the environment.

Inside the insectary

Working at an insect farm might not be for the squeamish, but the atmosphere is relaxed. On a second floor, two employees type away at their laptops with an opened doughnut box on the desk. They seem perfectly at ease in the proximity of hundreds of thousands of insects. 

Myles Townsend, who holds a zoology degree from the University of Sussex, runs the insectary. “My tasks include breeding, egg collection, growing larvae, and setting up the batches,” he explains. He constantly monitors the process and documents results.

Entocycle technician
Myles Townsend runs the insectary

It can be an odd conversation starter at a party. “Many people look at you weirdly,” he says, pulling a face. “But it’s just new in this country. It is not in many other countries.” 

The bug business model

Entocycle has two revenue streams. The first is the sale of the insects to the pet and animal feed industry — its research facility-cum-commercial site in London produces 0.5 tonnes of larvae a month which Entocycle sells for £2.5k per ton. Its new commercial site will produce 2,200 tonnes a year which should generate £5.5m of revenue at today’s prices. Entocycle already has commitments of sales of 150% of that future production capacity.

The challenge is that insect protein still costs roughly four times as much as soy and 50% more than fishmeal — although Whitaker anticipates that prices will drop as farms get larger and the technology improves. According to Whitaker, insects are already price-competitive for young salmon where farmers often use £4k-a-ton krill-meal.

Barclays estimates that the insect protein market could be worth $8bn by 2030, up from less than $1bn today

Regulations in places like California and South Korea already makes companies pay for food waste removal, in effect pricing the environmental cost of waste. If the UK imposes similar rules Entocycle’s economics would change significantly. 

The second, and more important, revenue stream is the sale of hardware, licences to the proprietary software and a service management fee to traditional farmers and other businesses keen to build insect farms. Zero Waste Scotland, an environmental organisation funded by the Scottish government, is one of the bodies already actively encouraging people to “become an insect farmer and save the planet”.  Whitaker won’t say how much this revenue stream generates, but believes it will become the bulk of his business. 

Saving the planet

Animal farming accounts for 17% of the EU’s total emissions, more than cars and vans combined, according to a recent report by Greenpeace. Of that feed production represents roughly 40%, according to the UN Food and Agriculture Organisation.

Soy and fishmeal are the go-to ingredients for animal feed, but both carry significant environmental costs. Soy is often farmed on deforested land and travels long distances to Europe, while 90% of fish used in fishmeal would be suitable for human consumption. For Whitaker, insects are an environmentally friendly alternative, because they are local, toxin-free and use little land and water.

The black soldier fly larvae also feed on food waste — a huge environmental issue in itself — and convert it to soil enhancer in the process. According to the UN Environmental Programme, a third of the food produced every year is wasted and the majority of it ends in landfill.

“The timing [for insects] is perfect,” says Whitaker. “The pet food market is accelerating, the aquaculture market is maturing, pig and poultry are now opening, human consumption is on the horizon.” Analysts, for one, seem to agree: UK bank Barclays estimates that the insect protein market could be worth $8bn by 2030, up from less than $1bn today

Katja Staple writes about the business of startups for Sifted.

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