SA maggot mogul aims to fly high with global expansion

The company behind the world’s first industrial-scale maggot farm based on organic waste plans to launch its international expansion with a plant in California in 2020, taking advantage of two global problems: a shortage of protein and an abundance of trash.

The plant in Jurupa Valley will be followed by operations in the Netherlands and Belgium, and is part of a drive by AgriProtein and a handful of competitors worldwide to tap into demand for high-grade protein for fish and poultry feed and offer a solution for the unwanted organic waste that cities and farms produce.

“The world is long on waste and short on protein,” AgriProtein CEO Jason Drew said.

The California operation will be modelled on the facility in Cape Town, which rears black soldier flies on about 250 metric tons of organic waste daily. The flies’ larvae are then harvested to produce 4,000 metric tons of protein meal a year. At any one time, including eggs, there are 8.4-billion flies in the factory.

The plant also produces 3,500 tons of fatty acid oil and 16,500 tons of frass, or maggot droppings, which is used as fertiliser. Each facility costs about $42m to build and can generate $13m- $15m in annual revenue.

AgriProtein is competing with the Netherlands’s Protix, France’s Ynsect SAS and Innova Feed, Canada’s Enterra Feed and US company EnviroFlight. All use the black soldier fly, except Ynsect, which breeds mealworms.

‘Compelling story’

Practically nonexistent a decade ago, maggot farming is increasingly fashionable because it’s environmentally friendly and has the potential to grow exponentially.

AgriProtein, which Drew said is mainly owned by the private investment offices of wealthy individuals and falls under the Insect Technology Group holding company, raised $105m in 2018. Ynsect announced a $125m capital raise in 2019.

“Insects come with a really compelling story. They can turn low-value waste into high-value protein,” said Beyhan de Jong, an animal-protein analyst at Rabobank Group in the Netherlands. The companies are all bringing factories into commercial production, but AgriProtein is “going for more international expansion than its peers”, she said.

While meal and dried maggots can be fed to fish, poultry and pigs as well as pets, the primary market is seen as aquaculture. Insect feed could eventually displace fishmeal, which is made from wild-caught fish and fed to salmon and other commercially farmed species. Annually, 20-million tons of fishmeal is produced.

Demand for protein feeds made from insects in Europe alone could be 1.2-million tons by 2025, said De Jong. However, regulations in Europe — over the types of waste that can be used and in which forms the insect products can be fed to animals — make expansion more difficult than in SA and California.

EU regulations only allow the use of so-called pre-consumer waste, or waste from manufacturing processes. SA, in contrast, allows catering waste.

Tractor shed

Still, companies such as Protix are now running commercial-scale operations and considering expansion. In May, Protix opened its second factory, a €40m ($36m) plant that can process 70,000 to 100,000 tons of waste a year, according to Kees Aarts, the company’s CEO.

Protix is marketing its products to consumers through innovative methods such as OERei, eggs produced by chickens fed only on maggots, and is looking at Southeast Asia, he said. In addition to meal and oil, it sells live maggots that are fed to chickens. It has received hundreds of approaches about setting up plants, Aarts said.

“The planet is in quite a hurry,” he said.

Most of the companies have come from humble beginnings. The idea to create AgriProtein started with experiments in a tractor shed at Drew’s farm in Tulbagh in the Western Cape in 2008. Since the plant in Cape Town opened in 2016, the company has focused on coming up with the correct design and products rather than output, but is now ready to expand, he said.

“We will need more capital at some stage, in 2020,” Drew said.

Dung beetles

AgriProtein has an experimental plant in Durban where the flies are being fed on manure and sewage. It’s also worked with African dung beetles and wax moths, which could potentially eat plastic, he said.

While consumers will take some convincing, there is potential, said De Jong.

“Consumers also look for a story,” she said. “They are marketing their products as being more sustainable. It’s a growing concept.”

Bloomberg