The International Finance Corporation (IFC) has stepped in to help Vietnam-based insect feed producer Entobel to reach scale in what could be a decisive boost of confidence in a sector facing worries over costs and scale of production.
A World Bank entity focused on supporting the private sector, the IFC is helping Entobel build what will be the region’s largest insect meal plant to date in the Vung Tau province of Vietnam. Neither Entobel nor the IFC confirmed the exact cash figure involved in the deal, which involves an equity stake for IFC.
The plant, which aims to produce 10,000 metric tons (MT) of insect-based meal annually for aquafeed and pet food makers, is part of “a significant drive by the aquafeed sector to reduce the use of wild-caught fishmeal in aquafeed diets and to seek more sustainable sources of protein,” explained Thomas Jacobs, IFC’s Hanoi-based manager for Southeast Asia.
“There has been uncertainty in the sector regarding its ability to scale up and produce in quantities and at price points that make insect meal price-competitive with fishmeal and soy,” Jacobs told SeafoodSource. “The IFC can play an important role in supporting producers of aquafeed and of alternative ingredients in their expansion plan, sustainability practices and in their search for enhanced feedstock formulations.”
Historically, the appetite of investors in the aquaculture space has been confined to a handful of integrated players and salmon companies, with many in the sector looking for government support to de-risk new projects for private investors. But Jacobs said there has been increase in institutional and private-sector investments in the alternative aquafeed sector globally
“As the sector’s production scales up globally and technologies improve, insect feed will become competitive with fishmeal and potentially with soy in some regions,” he said.
One of those regions is Southeast Asia, he said. Southeast Asian countries have been eager to attract the alternative aquafeed sector both for its economic promise and for its potential to address the region’s food security concerns. Demand for alternative aquafeeds is growing fast as non-plant aquaculture production is expected to pass 100 million MT in 2027, growing to 106 million MT in 2027, according to the Food and Agriculture Organization (FAO) of the UN.
Besides Entobel, other insect-focused companies operating in Southeast Asia include Protenga, which uses waste from palm oil processors in Malaysia as its feedstock; Insectta, Ento Industries, and Insect Feed Technologies, all based in Singapore; Nutrition Technologies, Ento, and Unique Biotech in Malaysia; The Cricket Lab, Global Bugs, and Bugsolutely in Thailand; Magalarva and Hermetia Bioscience in Indonesia; and Eat Criche in Cambodia, according to Yahoo News.
Established in 2013 by European entrepreneurs, Entobel won the first-ever Aquaculture Innovation Challenge in 2017 for developing the concept of using food industry waste as feed for the production of black soldier flies – a native insect throughout Vietnam – which are then used to produce aquafeed and fertilizer. Vietnam’s top pangasius company, Vinh Hoan, announced a strategic partnership with Entobel in October 2021. And in 2022, Entobel formed a partnership with Adisseo to research and develop aquafeed additives.
Entobel is located strategically near several feedmills supplying Vietnam’s large aquaculture bases in the Mekong Delta. Entobel and other firms in the sector have stressed the geographical advantages of locating in Southeast Asia, which boasts lower energy costs and a tropical climate offering a more suitable growing environment for the insects being raised. Yet, even in Southeast Asia, energy costs remain high enough that insect meal is still coming in at a higher price-point than fishmeal, Jacobs said.
“Despite lower energy costs than in Europe, the insect-feed production process is relatively energy-intensive, [and this has] some impact on the current pricing of the insect feed as compared to fishmeal and soy,” Jacobs said.
An Entobel spokesperson told SeafoodSource that the recent spike in energy prices impacted all firms in the industry, but that it was affected less than others.
“Entobel has the advantage of being in a tropical climate, which allows us to keep our energy costs low, and thus, the impact [of higher energy costs] was only moderate,” the spokesperson said.
Entobel said its product cannot yet be compared to traditional fishmeal on price.
“While we are working towards the goal of being price-competitive with high-quality fishmeal, we have been putting our efforts into discovering specific functionalities of our H-Meal, which allow us to be positioned as a premium functional ingredient and deliver value to our clients and the farmers beyond the simple nutrition,” the Entobel spokesperson said.
Entobel declined to answer whether the IFC’s cash injection will enable the company to attract corporate investors.
Photo courtesy of Entobel
