Can Black Soldier Fly Larvae (BSFL) producers displace fishmeal (Rethink Priorities)
Key points
- Over $1 billion has been invested into Black Soldier Fly Larvae (BSFL) farming since 2014.
- BSFL producers have ambitions to displace fishmeal as a feed ingredient. If successful, this could unlock growth in aquaculture.
- We investigated costs of production at four of the largest BSFL producers to better understand the prospects of them making major inroads into aquaculture feed.
- We found production costs at these firms will most likely be too high to displace fishmeal.
- We anticipate a smaller BSFL sector focused on high-value market segments rather than bulk feed commodities.
- Our analysis has lots of caveats, including generalizability across different business models and geographies. Read the long summary or full report for more detail.
Executive summary
- Significant investment has flowed into black soldier fly larvae (BSFL) farming, where producers have ambitions to create feed ingredients for aquaculture (aquafeed).
- Since 2014, over $1 billion has been invested into black soldier fly larvae (BSFL) farming.
- At present, BSFL producers mainly sell ingredients to the premium pet food market.
- But they have ambitions to position BSFL ingredients as a more sustainable alternative to fishmeal, an important feed commodity for farmed fish and shrimp.
- If these ambitions are realized, it could unlock growth in the aquaculture sector.
- But the prospects of BSFL producers displacing fishmeal in aquafeed remain uncertain.
- Recent high-profile failures have raised questions about the future of the ‘insect as feed’ industry and the viability of BSFL producers making major inroads into aquafeed.
- To shed light on this issue, we estimated production costs across four of the largest BSFL producers (by funds raised).
- We estimate that production costs for these BSFL producers will be too high to meaningfully displace fishmeal.
- Our research suggests BSFL producers would need to keep production costs below $1,600 per tonne of dried insects in order to displace fishmeal at a meaningful scale.
- For a hypothetical ‘average producer’, we estimated median production costs to be double this: around $3.7K per metric tonne of dried insects (see Chart 1).
- We also estimated production costs at six current and planned production facilities, where median costs ranged from $2.3K to $6.1K per tonne.
- Notably, none of the evaluated facilities demonstrated a 90% subjective confidence interval for production costs that undercut the $1,600 per tonne threshold.
- It’s also unclear whether BSFL producers will be able to get production costs as low as our estimates.
- Our cost estimates above are conditional on facilities operating at full capacity.
- But given deteriorating investor sentiment and a constrained funding outlook, it remains an open question whether existing facilities will ever reach full capacity.
- It is also uncertain whether firms will be able to raise sufficient capital to complete construction at sites that have been announced but are not yet in operation.
- We anticipate a smaller, less sustainable BSFL sector focused on high-value market segments.
- The results of this analysis have led us to believe that the BSFL sector will:
- end up much smaller by 2030 than many previous industry forecasts;
- focus on high-value applications rather than compete with feed commodities on price;
- struggle to live up to sustainability claims predicated on displacing fishmeal.
- The results of this analysis have led us to believe that the BSFL sector will:
- Our analysis has lots of caveats and uncertainties
- Our cost estimates are based on centralized, mass-production business models in Europe and North America, which rely heavily on grain-based substrates.
- Findings may not be universally generalizable across different business models or geographic contexts.
- Further details are available in the full report.
- The full report contains detailed information on the calculation methodology and facility-specific cost estimates.
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