On the Road to Commercial Production of BSFL |Sorting Out the Chaffby Terry Green on 08/11/14
Scaled up commercial farming of BSFL (Black Soldier Fly larvae) grown off of food scrap and/or animal manure could be a big step forward in reducing the dumping of greenhouse gases into the atmosphere associated with recycling wastes, return and restore carbon, nitrogen and other essential plant nutrients back to soils, reduce overfishing of our oceans and, hand in hand, create new business opportunities associated with the construction and operation of BSFL processing plants (see Hermetia illucens, Recycling Biodegradable Wastes? | Take Your Cue from Mother Nature, Black Soldier Fly Larvae | An Earth Friendly Feedstock?, Black Soldier Flies & Recycling | Keeping Organic Leachates in Perspective, and BSF Metrics & Yields| Scale Up Production of Black Soldier Flies). While the potential in realizing commercial success exists, there are significant hurdles to be addressed if this goal is to become a reality. This blog touches on some of the major challenges yet to be addressed in producing BSFL on a commercial scale.
The most obvious question in building a scaled up BSFL plant is whether or not the operation will become viable from a business perspective. What is, or are, the sources of revenues realized in the production of BSFL relative to the upfront investment in the operation and outflow of capital expenditures? Income projections must be realistic and based upon the best data available. Entrepreneurs contemplating building a commercial production plant need to candidly assess financial strategies in planning how best to achieve their goal of building a viable operation. Unless the net revenue is positive and sustainable, no matter how attractive, inspiring or even noble the rationale for building a plant may seem, it will not be a viable operation and ultimately fail as a business.
A good starting point in analyzing the prospects of building a commercial BSFL plant is to calculate how big a plant facility must be to generate a positive income stream based on the yield of BSFL realized in processing a specific waste stream, the footprint required for the operation in terms of land and building space, how much waste will be needed, and how it will be secured, sorted and delivered to the plant.
Additionally, entrepreneurs need to assess what markets they intend to target in securing a steady income stream through the sale of BSFL harvested at the plant, and the cost of harvesting, drying, packaging, storing and shipping harvested larvae (keep in mind that BSFL are perishable unless dried or otherwise preserved after harvest!). Entrepreneurs also need to consider what revenue streams and costs can be realized from BSFL byproducts and leftover residues generated by the plant.
Answers to these questions, applied to companies currently claiming scaled up commercial BSFL production capabilities suggest that there are no companies presently realizing commercial success in this field. Most, if not all, will likely not achieve viability as business ventures without changing their present marketing strategies and redesigning their facilities to operate much more efficiently.
It is not the point of this blog to call out specific companies working at scaling up their commercial BSFL production levels. Principal BSFL producers active in this field can be readily found through a search on the internet. The honest efforts of entrepreneurs in advancing this new biotechnology toward a commercial operation is highly commendable for all of the reasons highlighted in the introduction of this blog. But like any new technology, there are no shortcuts – the heavy lifting by trial and error and getting into the nuts and bolts of the technology must be done, and lessons learned applied in refining the technology in making it a viable operation. If one considers the importance of successfully designing and executing a truly viable BSFL plant facility and how to get there most efficiently, a good starting point is to have an open dialogue underway in looking at the warts and all, and it is in that spirit the questions and comments that follow in this blog are raised.
Look, for example, at the varying layout designs found on the internet, varying company marketing strategies, the dearth of basic long term knowledge on sustaining large scale BSFL production, relative to the promise and opportunities which receive heavy emphasis, and ask yourself - where is the hard data? Does the company have product on hand and is it willing to provide clear cut evidence that it is producing several hundreds of tons of BSFL per year which is by our calculation the very minimum scale needed in getting up to a commercial production scale (see below)?
Additionally, does the company proposing commercial scale up have an efficient method of loading and unloading waste needed to grow BSFL on a large scale in its processing bins/units? Does the company have a strategy for dealing with spent residue (material left over after BSFL have finished feeding on it). Is it collecting the liquid byproduct (leachate) released from the waste that accompanies rearing BSFL and, if so, how is it handling this byproduct in its overall design layout and operations?
While entrepreneurs in a BSFL facility must ultimately decide what works best in their business model, consider for a moment the problem of selling BSFL on a commercial basis as a substitute for Mehaden fish meal in animal feedstocks (Black Soldier Fly Larvae | An Earth Friendly Feedstock?). Menhaden fish meal has been selling on the US commodity market this year between about $1,500 and $2,000 US dollars per metric ton (Mundi Fishmeal US Commodity Index), and assuming there were no restrictions in selling insects on a commercial basis as animal feedstock in the US and Europe (there are, unfortunately, although there are efforts underway to allow commercially grown BSFL to be sold in animal feedstocks in Europe with the US lagging behind somewhat in this area in addressing this restriction). Run through the calculation as to what sort of income could be realized in selling BSFL as a commodity item as a substitute for fishmeal in animal feedstocks and see for yourself if this makes sense from a business perspective.
The answer is unimpressive from a business perspective. For example, a commercial producer selling dried BSFL as a substitute source of high quality protein and lipid in place of Menhaden fish meal, based on the commodity price of Mehaden fish meal as a rough guide on the potential income stream, and producing 100 MT per year of dried BSFL (approximately 200 MT of freshly harvested BSFL), at the very most would realize gross sales on an annual basis of no more than $150,000 to $200,000. This projected income stream is too low to cover the costs of upfront investment and operating expenses in managing a commercial BSFL farm producing this many tons of BSFL per year. To understand why, look at the metrics involved based upon actual data on farming BSFL.
In round numbers, the maximum sustained feed conversion ratio of wet weight BSFL yield relative to wet weight food scrap waste processed is about 1:10, which on an insect:food scrap dry weight basis is a remarkable conversion efficiency of almost 25% , an efficiency not likely to be exceeded in processing other wastes, especially manure which is a far less rich source of nutrient on which to grow BSFL. In the case of food scrap, to produce 200 MT of BSFL (wet weight) grown off the food scrap, a plant facility would need to process roughly 2000 MT of food scrap per year (about 5.5 MT per day). This means that the plant facility cannot realize an income revenue stream producing and selling BSFL of more than about $75 and $100 per MT of food scrap processed selling BSFL on the commodity market (keep in mind that this is not presently even an option). The net income stream would actually be lower since the cost of drying the larvae, packaging, shipping, overall labor and operating costs to get to this production level, and upfront investment costs, are not included in this calculation.
Additionally, in our example, the job of lifting and hauling and loading 5+ MT of waste into the company’s BSFL processing bins/units per day requires investment in heavy lifting equipment, a front loading tractor, for example. The leachate (liquid) byproduct, generated on this scale as BSFL process and grow off of the waste, would likewise require installation of a drainage system, pumps and storage holding tanks adding to the overhead costs of the operation.
Does this mean that commercial BSFL farming is not a viable goal, or feasible from a business perspective, looking forward into the foreseeable future. Not at all. It simply means that entrepreneurs must rethink their business model, marketing strategy and layout design.
The economics of BSFL processing of food scrap waste in the backyard, for example, is already established in favor of the homeowner in offsetting garbage pick-up fees (Recycle Food Scrap at Home & Save Big). A far better income stream than that through the commodity markets could be realized in starting up retail sales in specialty markets in the sale of BSFL. Marketing BSFL to homeowners, for example, is but one largely untapped market with the potential of delivering a reliable income stream that could carry a BSFL producer forward in scaling up operations.
Larvae sold retail in today’s market can be calculated at easily $100,000 per ton based on sales through purchases via the internet. Moreover, the FDA, USDA, DEQ and other state and municipal regulatory bodies in the US, and abroad, have no restrictions on the sale of BSFL retail to homeowners. This market already exists and is accessible.
What is lacking in scaling up on the retail side is the marketing and education of the public on the benefits of using BSFL in backyard operations including savings homeowners can realize in checking off the garbage grid. Even though not everyone will want to use BSFL in recycling their biodegradable wastes, or even be in a place where they can do it, many will and are, and are receptive to this environmentally sound technology. Additionally, municipal large scale composting operators may also realize advantages in integrating BSFL into their composting operations as familiarity with BSFL becomes more widespread, and marketing in this area should not be overlooked.
Other income streams in scaling up BSFL production could also be realized through the sale of leachate byproduct, pick-up dumping fees in processing waste at a BSFL plant facility, the sale of processed residue after BSFL have fed and grown off of the waste, and the sale of specialty byproducts, for example chitin which makes up a significant fraction of the BSFL’s exoskeleton.
Entrepreneurs interested in working with BSFL could also do better in cutting operating costs with more creative layout designs in BSFL processing units designed and built at low cost, and which demand less labor to load, empty and manage overall than traditional bin configurations popularized in small scale BSF systems such as those used in backyards for dealing with compost and food scrap waste.
Potentially new antibiotics and anti-larval agents might also be present and recovered in the leachate fraction making it worthwhile to explore this latter byproduct as a promising income stream upon establishing a scaled up operating plant. In this regard, BSFL are known to suppress the common housefly from propagating in waste they have colonized. The mechanism for this striking phenomenon has not yet been ascertained, but research in this area could lead to the discovery of insect pheromones or anti-larval agents of additional economic value as spinoff byproducts of the plant’s operations.
Stay tuned for more to follow on the management and strategies in scaling up BSFL production.
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