Brussels: The once-promising insect protein industry in the European Union is facing a stark reality, with several major producers teetering on the brink of collapse. Just a few years after the first insect-based food products received EU authorization in 2021, the sector is grappling with financial turmoil, highlighting the challenges of scaling up a nascent industry.
What was initially hailed as a sustainable solution to global protein demands has faltered, with high production costs, fluctuating consumer demand, and regulatory hurdles contributing to the industry’s woes. Ynsect, which opened what was touted as “the world’s largest factory for insect proteins and fertilisers” in France, recently filed for safeguard proceedings, a move indicative of severe financial strain.
Similarly, Agronutris, another major French producer, has been placed under safeguard proceedings, while Hexafly, the Irish market leader, was acquired after facing financial difficulties. A spokesperson for the International Platform of Insects for Food and Feed (IPIFF) attributed the slowdown to “high production costs, the broader economic climate, and evolving European regulations.”
The energy-intensive nature of insect farming, requiring precise temperature and lighting controls, coupled with the high cost of feed, has resulted in exorbitant production expenses, accounting for up to 90% of total costs. While European consumers have embraced insect-based pet food, acceptance of insect proteins in human food has been sluggish, creating a significant demand challenge.
Ynsect, for example, had to pivot from human consumption to pet food production, despite which it reported a substantial net loss. Industry leaders believe that “regulatory tweaks” could revitalize the sector. Allowing insect frass to be marketed as fertiliser or biogas, and permitting farmed insects to feed on supermarket food waste containing meat and fish, are seen as potential avenues for growth.
Despite the current challenges, investment in the sector continues. Tebrio, a biotech company, is establishing a massive insect farm in Spain, aiming to produce over 100,000 tonnes of protein products and lipids annually.
To navigate these turbulent times, IPIFF is urging companies to “decentralise” their production chains, focus on niche markets, and forge local partnerships. This includes upcycling co-products from the agri-food industry and outsourcing insect breeding to local farmers. The industry’s future hinges on its ability to adapt, innovate, and overcome the current financial hurdles.
