The Entomology Industry is Entering a New Era

I have been updating the Entomology Company Database in this site now for 1,5 years and the list of active companies has been growing a month after a month until this summer. There was a two month break that I didn’t find a single new company and when I finally did find the summer’s first I had the feeling that there must be something happening in the background. I went through the complete list of the companies on 20th of August and this is what I found out:

25 companies had their status changed from active to  not active.

8 companies had their status changed from active to unknown.

Even though 25 up to 33 companies have left the industry it does not mean that the industry would have lost its potential, but it tells of loss of the biggest hype and arrival of realism. The ones with no real potential are moving on.

What is worth noticing is that of the 25 closed down companies only four were farming companies. This change is a step towards healthier structure of the industry. Before this change, and also still today there are very little raw material producers (beginning of the supply chain) compared the end product manufacturers and sellers (end of the supply chain).

Would be really interesting to know the reason for the companies to quit. Are the end product companies quitting mostly because of:

  1. Difficult regulatory environment?
  2. Challenges entering the markets with insect products?
  3. Because of the lack of supply in the raw material side?

Any idea about this? Please leave a comment!

Check out the latest update of the Entomology Company Database here: https://ilkkataponen.com/entomology-company-database/

How I created and published an audiobook

About one month ago my thesis Risk Management in the Supply Chains of Entomology farms was published as an audiobook in all major platforms like iTunes, Audiobooks.com and Audible. I am still waiting for the first numbers, but at least three people have told me they have bought it!

I got the idea from hearing multiple sources that “yeah the thesis sounds really interesting, but I do not have the time to read it”.. Well, no you have no excuse left!

Now when the project is happily over I though I should share some of the experienced to help you out as well to make your own audiobook from an existing, ready written document:

  1. Edit the book to fit the new format. In the case of a thesis academic references play a big role the document, but in the audiobook format they are simply useless: No one wants their listening pleasure to be interrupted all the time for a list of names and dates. In the beginning of the audiobook it is announced that the references have been removed, but are available accordingly in the written document. Second thing to modify is references to graphs and pictures in the written document, as obviously the listener cannot see them.
  2. Hire a professional narrator. I had access to professional recording gear, but even though I know English quite well, I am not a native speaker. I think I could have made a reasonable recording, but I think people would have lost the enjoyment of listening quite soon. One hour and 40 minutes is not a long audiobook, but it is really long time to listen if the narrator is not really good.  I used the Fiverr- service to find the narrator. I contacted three people who all seemed very friendly and professional. In the end I chose the person who answered me the first, and the result came out really nice. It really sounds like a real audiobook and the price was good as well.
  3. Use a publishing service. This advise is a not only an advise, but a must for all non-UK and non-USA based publishers. The main publishing platform is ACX that handles everything for iTunes, Amazon and Audible. They do not accept private uploads if the person does not have tax-ID in either in UK or USA. To go around this obstacle I contacted some publishing houses but found only one suitable one: Author’s Republic. They are a USA based company that offers similar service as Tunecore offers for bands and musicians: They will upload your copyright- materials to all agreed platforms and they will do all your paper work for you against a fee / portion of your royalty income. I can only say positive things about the arrangement I have with Author’s republic: Very fast and friendly service and my audio book was published in very short time.

You can purchase the audiobook behind the following links:

http://www.audiobooks.com/search/author/Ilkka%20Taponen

https://www.overdrive.com/creators/1120533/ilkka-taponen

http://www.audible.com/search/ref=a_hp_tseft…

https://www.hoopladigital.com/title/11615148

The audiobook also available at iTunes, just search for “Ilkka Taponen”.

I am looking forward to hear your thoughts about the work!

Entomology Patent Database Analysis

Some of you might have already noticed that I have opened a new tab to my page called “Entomology Patent Database”. This is a one more database project I have, this time I have collected insect rearing related patents to a file, analyzed them and put them into the right category.

The study of patents in an industry is one of the key tools to collect Competitive Intelligence, the topic I wrote about in my previous blog post. Looking at the patents you can learn many things: On what species are companies focusing on, what techniques they are using and how they feed their insects? Also by looking at the big data you can learn from which countries, companies and universities the patents are coming from and by looking at the publishing year you can see if the pace of new patents coming up is increasing or decreasing. Maybe one might also want to look for individuals behind patents for hiring purposes?

Here are some numbers from the database, any surprises for you? At the moment the database consists of 400 patents.

258 of them were originally filed in in China, 73 are originated in USA.

173 are granted patents, 227 are patent applications.

The patents are originating from 286 different companies, organizations and individuals.

36 of the patents were published in years 2015-2016, 109 in years 2013-2014.

79 different species are individually mentioned in the patents. 118 are related to more than one species. 26 patents are focusing only on Black soldier fly.

In the database there are five categories of patents: Methods (92), Apparatus (172), Insect feed (83), Separation / Collection (43) and Processing (67).

Before starting to study the patents, I did not realize that there is so big concentration of patents in China. USA being one of the main countries making patents to this industry (or almost any other industry) is no surprise. What surprised me as well was that so big number of patent applicants have applied only for one patent. The 400 patents have 286 different sources, giving the very low average of 1,4 patents per applicant. Though, must be noted that in the database for example a company A+ Individual B is considered to be different applicant as the company A alone.

Here are some of the most interesting patents in my opinion:

“Industrial scale farming apparatus for mealworm”  from China, 2014.

“A fast method of forming a fly pupae” from China, 2014.

“Antropod egg harvesting method and device” from USA, 2014.

“Continuous feeding device and harvesting of larvae of diptera insects” from Spain, 2015

” Automated insect breeding system” from Singapore, 2010.

This database is not available on my website, but if you are interested, more information is available at https://ilkkataponen.com/entomology-patent-database/ or just click on the top menu for Entomology Patent Database.

kirva

 

 

 

Competitive Intelligence in the Entomology Industry

Here is a text a I wrote some time ago for a project and I thought this would be of interest for a wider audience as well. It is about competitive intelligence especially in the entomology industry. What are the aspects you should look into and how to collect the relevant information? Enjoy!

How the intelligence is gathered

Competitive intelligence gathering can be divided to four steps; Planning and Direction, Collection, Analysis and finally Dissemination.

In the beginning of the process, the planning and direction, the company must define what the questions are, the Key Intelligence Topics (KIT), which the company must track and understand in order to be successful. Example KIT-questions could be for example “Where do you and your rival sell products, and to which target audiences”, “What products does your rival have in the pipeline, and how will they be marketed” and “How is your rival’s company organized and how well operations are performing”. The KIT- process is necessary so that the research done in the field will be done on the relevant topics because no matter how big or small the company there is only a limited amount of time and resources to be used on the research. Additionally, the overload of information can bury the relevant information under the irrelevant. Suggestions for the KIT’s of IFF-industry are presented later on.

Overload of data is a real danger so keeping the focus on the predefined questions is essential. Once the data is collected is time for the analysis. Here the relevant is separated from the irrelevant and the knowledge is looked into for pattern and a report is created.

The last step, dissemination, is the step where the analyzed data is given to the company management for them to adjust their plans accordingly if needed. It is likely that new questions will arise from the given analysis. The new questions require the cycle starting from the beginning. Because of the repetitive nature of the CI- collection it is collect a process and a project. Project is thing with a clear beginning and an end, but in this case the collection does rounds one after another so it is a Competitive Intelligence process.

Competitive Intelligence in IFF-industry

What is special about the IFF- industry compared almost every other industry is the novelty state combined with the rapidly growing interest. Before FAO-released their publication “Edible Insects” in 2013 to promote insects as food and feed there were only around 10 small companies rearing insects. At that time the products were sold in Asian markets and for pet animals. Now in 2016 there the number is somewhere around 200 and increasing all the time. You can look at the entomology database in the this site, just select the database from the top menu.

As the high scale insect farming has never been done is such extent and by Western regulatory requirements the technology, Good Manufacturing Practices (GMP), and logistics networks are missing. Additionally, the legal environment is not up to date. For example, it is unclear when EU will allow the insect to be sold for human food or is the slaughtering act of EU will concern insect in the same way as other animals. This is simply because there has never been interest on topic before. The missing data, operational standards and changing legal environment all increase the importance of Competitive Intelligence and they form the Key Intelligence Topics of the industry.

How to collect Competitive Intelligence in IFF-industry?

As mentioned earlier the industry is still in its infancy meaning that there are only a limited amount of operators in the field. As the number is limited keeping an eye on the identified competitors through news, social media and their homepages is not too big of a task. Though, the situation will change eventually.

Before the industry grows further networking is possibly the best way of gathering Competitive Intelligence. The circles are small so even if you would be missing a contract to a certain company, it is possible to reach a company that knows them well.

The biggest forum of the industry is IPIFF, the International Platform of Insects for Food and Feed. According to IPIFF’s webpage their goal is to “help the insect industry to prosper in Europe and worldwide by composing an industry network, encouraging collaboration amongst the members, gathering the interest of members for institutional representation and support high-level research and development”. Even though the description tells that they want to compose an industry network and encourage collaboration so obviously no secrets are shared, but the latest news and trends around the topic are discussed. It is essential for the ambitious company to be part of this knowledge database. One example topic could be the legal issues. It is in the interest of all the members of the IPIFF that the legal changes are tracked and lobbied for. As it serves the common good, the latest information is available for the members and they get a real upper hand against competitors who hear about the news only later on.

The IPIFF- forum only offers the “public” information, the information the industry players are willing to tell and what they consider will not harm their operations, but in IFF-industry the way companies see their competitors vary at least until certain extent from other industries. The lack of companies in the field increase the transaction cost of their clients, for example fish feed manufacturers. When there are only a limited amount of players, the fish feed manufacturer has limited options for horizontal integration meaning higher risks of price fluctuation and delivery difficulties. This leads to situation where the IFF-companies benefit from competitors as they bring more interest and new possible clients that see that relying on only few companies would too risky. This situation will change once the IFF- industry has established itself and once that will happen the companies will certainly co-operate more conservatively.

KIT 1. New competitors and business models

Because the market is very new the companies are still looking for the best business models and trying different approaches how to differentiate themselves from the competition. It can be said that once a company in the field find a successful model of operations, the competition will follow fast.

KIT 2. Technology and GMP

The technology used today by IFF-farms are either self-made or the machines and tools are not used in the farms to something else that they were originally designed for. For example the containers the insect are reared in are in many cases actually containers made for bread industry. Other example are the egg-cartons used for cricket farming. IPIFF says in the homepage that they are aiming to create “white papers” and standardize the best practices of the industry to promote high quality and this way the credibility of the industry. Before such standards are formed the companies are going their own directions looking for the best solutions, others succeeding better than others. The companies must be alert of the technological advantages in field to be sure that they are the one with the best solutions from all the used ways of operating.

Also, by understanding the state of the technology and the expected developments in the near future the investments done today might be outdated tomorrow. For this reason especial care must be taken with this KIT right from the beginning.

KIT 3. Legal changes

The companies that are aware of the coming legal changes the best have a huge advantage in the planning of their operations. The main question in the legal and regulatory field is when EU will open the markets for food and feed. More specifically, in which order the products will be released, is it the fish feed or maybe poultry? These questions have huge impact on to which aspect of research and development the companies should focus on, and when the marketing campaigns are started. Just like in EU, also USA is still thinking of its approach to the topic. At the moment some states allow farming and selling for food and feed, while in the other end some states do not allow any of these activities.

Conclusion

Competitive intelligence is very important in the IFF-industry. Because of the three KIT-issues explained a conclusion can be made that for proper risk management and success in the future a company should do its utmost to find the latest CI. Additionally, the companies must to be flexible and agile to modify its technology and business model according to the latest information from the field.

In case you are looking for help with this topic, please contact me for quotation: ilkka@iffautomation.com

Database Analysis; The Chosen Species

I published my Entomology Company Database in this website about one week ago. I already got a lot of positive feedback and also people informed me of missing companies and mistakes, thank you for that! I will keep on updating the database from now on, if you spot a line that needs updating, let me know!

There are many ways to look at the data and I believe it can be used to serve multiple purposes, but what I will do here is to paint a picture of the insect species that are reared by the industry and what can we conclude from the findings.

Database analysis; The Chosen Species

To get started I first filtered out all companies that are not active. Then I selected companies that are involved in farming.  Also, I filtered out companies whose species are unknown.  This leaves us 69 companies (Note! I am using the database file version 08, uploaded on 14th of January).

Point 1. Most companies focus only on one species

First thing we can learn from this is that vast majority of companies, 43 out of 69, are focused only on one species. Putting the company’s focus to only one species brings many positives effects: R&D resources are better used, hardware investments and inventory carrying costs are lower. Also, benefits of economies of scale can be reached easier. There are negative sides as well; Focusing only on one species means higher environmental and supply risks. What if the chosen species are not among the most popular species when the industry grows? Or even worse, what if the species are not in the list of approved species when the legislation is going through big changes?

More on this you can read from my blog 5 Questions an Investor Should Ask Before Investing into a Insect Farm. https://ilkkataponen.com/2015/06/20/5-questions-an-investor-should-ask-before-investing-to-a-insect-farm/

Four companies have chosen the path of two species that might be a way to control the risks, but in the same time keep the costs low. The companies are Ynsect, Ofbug, Big Cricket Farms and Micronutris.

When looking at the “Multiple species” companies 12 of out 23 are companies that mainly focus on biocontrol or pet food manufacturing. When working on these segments of insect farming the higher production costs and loss of the benefits of economies of scale is justifiable as the companies get better price for their product. This is because their selling unit is rather pieces than kilos.  They operate in the a high-end segment, while when producing for food or feed the companies are competing e.g with soy bean that is extremely cheap.

Point 2. The most popular species

Looking at the most popular species is not easy as many companies talk only about “crickets” instead of the actual species of crickets. All the cricket companies make total number of 19. The black soldier fly (Hermetia illucens) farming companies are 21. Maybe surprisingly only seven companies are involved mainly with mealworm or lesser mealworm. Of course some of the “Multiple species” companies are rearing these as well.

Point 3. The lone wolves

Two companies stand out with the selected species: Steak Traz Traz are the only one to choose Grasshoppers so far and Fly Farm Systems only one with Musca Domestica. Being the only raises few issues and increases supply risks. How come these companies have chosen a different answer than others? Do they know something that majority does not, and are they really the one with the better option?  Surely every company is their own individual case and they could justify their chosen species from production and business perspective today, but the in the future the case will be different. One reason is because of the environmental risk explained in Point 1. The biggest risk is not the environmental, but the supply risk that is very significant in the case of the lone wolves. Companies rearing e.g the most popular species black soldier fly will benefit from the wide vertical integration that they build together with other similar companies. This will not only bring security against the supply risk of the company but benefits in increased sales as the demand risk is reduced for the downstream of the logistic chain.

More on the supply risk briefly from my presentation here: https://ilkkataponen.com/2015/10/29/presentation-in-insect-business-and-research-meeting-in-seinajoki-finland/

Or with detail from my thesis here: https://ilkkataponen.com/2015/05/20/thesis-supply-chain-risk-management-in-entomology-farms/

 

Sending Unannounced Live Insect Shipments Is a Really Bad Idea

A vast majority of logistics companies do not accept live insects on board. The reason is that even though insects have very different requirements than e.g mammals during transportation, they fall under the same category of “live animals”. Live animals mean extra work, extra cost and especially extra risk and for these reasons the logistics companies have chosen this policy.

In Europe live animals are declined by at least the following major companies: TNT, FedEx, UPS, DHL, Schenker. Some companies have exceptions if the transportation happens within a country or if airplanes are not used. For example Matkahuolto company in Finland allows ground transportation, but only within the country. What is interesting is that FedEx is doing live insect transportation within different states in USA, but not in the EU.

So if the policies are so strict, how come companies are able to send live insects internationally?

First of all the large global companies do not have consistent approach to the relatively new demand. This we can see from the example of FedEx and their differences in EU and USA. When the logistics companies do not have clear answer, it is possible for some departments or local offices to go around the official policies.

The second reason and the most common way to send live insects is to send them unannounced meaning that the insects are packed and sent without telling what is actually inside the box. The Finnish national post office Posti has told that they know that their network is used for live insect transportation this way. Using this method is a really bad idea in the long run and will lead to big problems sooner or later. In some cases sending unannounced might be the only option to be able to send at all, but the following points should make you consider the option of not sending at all seriously:

When sending purposely against the regulations you might be eligible to cover damages. This is the case if the logistics company notices your violation of the rules and must carry out quarantine actions to isolate the risky shipment from other packages.  The second and a lot more serious and expensive case is the breaking of a live insect box during the transportation. Depending on the case it might be that the logistics company has to decontaminate multiple shelves, or even complete airport hangar, dispose other packages that are affected by the escaped insects and so on. And if this happens you can be sure that they are not willing to pay the bill themselves.

There is no legal or regulatory cover. This goes to both receiver and sender! When something goes wrong with a shipment, and eventually something will go wrong, the logistics company will not cover anything to you once it is clear what was inside the package. If you are using the method of unannounced shipments, is it clear what will you do with you if a shipment doesn’t arrive because of the third party?

So what to do? If you are a supplier you should cover yourself by selling your live insect with the Incoterm Ex Works. This means that you are selling them “free from the warehouse” so that products are available from a given location where the customer or a third party assigned by the customer can pick them up. At the moment of picking up the responsibility of the supplier ends and all possible issues are now in the hands of the customer.

The best options is obviously using a logistics service provider that officially transports live insects. There are now a few options available also in EU. If you are interested to get connected I am happy to help you out!

e-mail me ilkka (at) iffautomation.com or call +358 40 762 9601

Insect Farming Is Best Suited for the Production of Animal Feed

The companies of the growing industry of high-scale insect farming are approaching their businesses from many different angles, but where the use of insects can be justified the best is when the insects are used to create animal based feed for other animals. The “animal based feed” means feed that include proteins and other nutrients that are coming from an animal instead of plants. Certain farmed animals like salmon and pets like some reptiles require animal based feeds for their health and efficient farming.

When evaluating where the insect based products should be used, the animal based feed is the only group of products where the insects stand out in a positive way against the substitute products. Other products that can be made out of insect are human food, chitin and fertilizer. Chitin and fertilizer are side products of the main purpose of the insect farming that is aiming to produce food either for human or animal consumption.

Let’s go through some of the approaches the insect farming industry has made so far, and how they match up with the substitute products.

Human food

When talking about human food, insects are associated to it as a protein source and replacement for other animal products and beans like soy. There is no doubt that insect farming have significant benefits over these two product groups, but when looking at other new protein products, insects are not anymore the number one choice. Single-cell proteins (Algae, fungus and bacteria), cultured meat and bio engineering (e.g plant based products mimicking animal based products) can all offer the same value proposition as insects, but they do not carry similar risk exposure for the producers making them. For this reason the substitute products are more likely to be produced with more efficiency.

The main difference and in the same time the source of higher risks compared to these other modern food sources is that the insects are the only animal based, or putting it more precisely, the only one coming from live animals.  When farming animals in high-scale the pathogens are a risk for the health of the animals themselves. This risk is underlined in the coming years as the pathogens’ are building bit by bit more resistance against antibiotics. Secondly, when dealing with live animals the end products are also exposed to pathogens like salmonella more than plant based products.

The factor that insect industry has over the substitutes is the possibility of nutrient recycling. Nutrient recycling in this case means that nutrients can be saved from bio waste or even manure by feeding them to insects. Using bio waste brings multiple benefits for an insect farm, but it also highlights the risks. When the raw material of the production is bio waste the cost is very low. This lower cost can make up some of costs of higher risks when comparing the substitutes and underline positive environmental impact of the insect farming.

There are a few negative sides of using bio waste. Depending on the source of the waste the quality and quantity of it changes and this makes the forecasting of the production more difficult also in both quality and quantity. Additionally, when the waste is so unstable it bring additional pathogen risks. There are ways to mitigate these issues: If using waste from bio waste created by facilities such as breweries the quality and quantity are consistent, but the price is not as good as the same waste can be used for example in bio gas production. Other way to make the raw material consistent is for example fermentation and mixing of different high standard deviation batches to make them consistent by quality, but these solutions increase the production and inventory carrying costs. Lastly, the issue of regulations might be a problem from companies using bio waste. At the moment it is unknown how for example heavy metals and medication residues build-up in the food chain of insects. This is one of the main reasons why EU has not yet opened the markets for insect based food and feed. It has been speculated that the first steps of the opening of the markets will include only certain insect species fed only with certain feeds, and those fees would not include bio waste.

All these downsides may compromise one of the main arguments of insect farming, the possibility of nutrient recycling. If you are interested to read more about this aspect, see my blog post “Using bio waste as feed” here: https://ilkkataponen.com/2015/08/20/using-bio-waste-as-feed-for-farmed-insects/

Animal feed

When looking at the substitutes in the animal feed sector “insect feed” is competing with wild fish, side streams of traditional farming and plant based proteins like soy. The prices of these products are low and the quantity demand is extremely high. It will be difficult from the insect businesses to answer these numbers especially when the industry is still building up, but insect feed have other significant benefits over the competition.  Both wild fish and insects are part of the natural diet of predatory fishes like salmon, but unlike the wild fish, insects can be produced locally and insect products are a lot more sustainable. Soy is one of the key elements in the modern fish farming even though it is not a part of for example salmon’s diet. This area is not my expertise, but it is my understanding that soy is being used as fish feed only because it is the cheapest possible protein source, and if the price of an animal based protein source would be close soy, soy would be ditched right away. Additionally, the rise of the wild fish based fish feed prices is expected to continue. This will be closing the price cap year after year in benefit of the insect feed.

Conclusion

Keeping in mind the explained issues and when thinking about the industrial scale food production it can be concluded that insect are most suitable for animal feed for situations when the animal based nutrients are a must. When thinking of human food the new and modern substitute products offer more efficient and, depending on the type of the feed used for insects, more environmentally friendly solutions. When looking at the topic from non-industrial point of view insects are a great solution for human food. For developing countries and areas where arable land is scarce insects can offer great benefits over mammal farming that need huge areas of land and water. Topic that was not discussed in the blog was taste; will it work in benefit of insect or other protein sources? This question I leave for other bloggers and experts.