Editor’s Note: Traders highlights the business of global trading by showcasing extraordinary individuals worldwide who are trading goods and services across borders.
Pan-roasted red ant is a delicacy in Mexico, and a dish of sautéed mopane worms would not raise an eyebrow across Southern Africa. Over two billion people eat insects routinely but converting Western consumers to the joys of entomophagy remains a hard sell.
North America’s first edible insect farm has taken up the challenge and a booming production line is reaching new markets across the continent and Europe.
In January 2014, Jarrod Goldin along with his brothers Ryan and Darren, launched Next Millennium Farms (NMF), inspired by a landmark U.N. report which recommended insects for human consumption, and the success of cricket flour entrepreneur Pat Crowley on U.S. TV show Shark Tank.
NMF began 2014 with 5,000 square feet for mealworms and finished with $65,000 in sales. Goldin says another 60,000 square feet has since been added to farm crickets, with sales of both exceeding $100,000 a month in 2015.
Most revenue comes from wholesaling insect flour to established brands and emerging start-ups in the United States.
NMF also ships to private consumers across North America, Australia and Europe and actively engages with its customers online through social media and community forums.
“It’s a massive range,” says Goldin. “Grandmothers, culinary groups, teenagers, hippies, people into health and the environment, people who want to play tricks on their friends.”
Betting on ethical consumers
The brothers’ marketing strategy stresses the superior nutritional value of insects over livestock; Cricket protein is as concentrated as that of beef but with less fat and fewer calories, and is rich in calcium, zinc and vitamin B12.
“The sugar in soft drinks is killing us. The hormones and antibiotics fed to (livestock) animals. There is great hypocrisy…Americans drink coke, eat Big Macs and say our food is gross”, says Goldin.
The South African is betting on the “LOHAS” (Lifestyles of Health and Sustainability) market, among the fastest growing consumer groups in the United States and estimated to be worth almost $300 billion, according to the Natural Marketing Institute.
Traditional livestock farming has been deemed a major environmental threat with a larger carbon footprint than the global transport industry. By contrast, insects can be fed on compost and require little space.
The Goldin brothers work closely with competitors on improving public perception of the industry and collaborate with research institutions to develop best practices in engineering, processing and nutrition to grow the industry and facilitate regulations to guide it.
Institutional wheels turn slowly
In the United States, there are laws governing the maximum volume of insect parts in food, but not for governing insects as food. Currently, insects are sold as novelty food with general hygiene standards, while the handful of European businesses operate on an ad hoc basis. The EU is set to issue a ruling on insects as food later this year.
The uncertainty surrounding standards and guidelines also affects business in one of the global hubs of the insect trade. Thailand has over 20,000 registered insect farms producing around 7,000 tons of food each year, according to the FAO, with crickets and grasshoppers among the most popular varieties.
Thailand Unique is a leading exporter, with a menu ranging from bamboo worm vodka to honey roasted hornet larvae, but has struggled to access European markets.
“A majority of packages I have sent to Germany and Italy have been refused entry by customs,” says founder Graeme Lee Rose.
Elsewhere in Europe, France and the United Kingdom allow imports of insects but the procedures can be lengthy and expensive. Belgium has approved 10 species for human consumption, including crickets and mealworms, while Switzerland and the Netherlands are pursuing more liberal policies.
In an effort to reassure customers, Rose sets his own standards through a transparent supply chain and guide to the process. “We oversee everything from what they are fed through to materials used in the construction of the farms”, says Rose.
Gaining a foothold
Farming insects as livestock feed presents a commercial opportunity as existing practices are expensive and environmentally damaging but there is a high bar to prove that insects are free of antibiotics and other pathogens.
“Most businesses are fully aware of it,” says Paul Vantomme co-author of the 2013 U.N. report. “But also of the legal barriers, which are blocking big scale investment.”
Vantomme is confident that progress is also being made with insects for human consumption, and hopes that a broad advocacy campaign including industry lobbyists and sustainability activists can make further gains by influencing policy makers and improving public awareness.
This would also allow the industry to scale up and bring down costs. In its current niche, cricket flour costs more than $20 a pound – five times the price of traditional competitors.
Finnish marketing firm Ivenire is conducting a global study of the industry and has classified three key parts of the consumer base.
“People looking for an experience …Trendsetters who want to be leaders, and sustainability supporters who want to change their consumption habits”, says Ivenire analyst Johanna Tanhuanpaa.
She also noted the growth in consumption for nutrition and fitness. “These consumers are more interested in the effect than the insect”, says Tanhuanpaa.
“For commercial success you should put the insect message in the background and the great product in the foreground”, she says
Momentum is growing as the United States and EU scale up funding and research to bring bugs into the food chain.
As pressure grows on traditional meat sources and the global population is set to surpass 9 billion by 2050, could the current choice to eat insects be replaced by necessity?