How We Changed the Legal Environment of Our Startups

The 20th of September 2017 big news came out: Evira, the Finnish FDA, changed its interpretation of certain EU-level regulations to allow the sale of insect products for human food and for animal feed in Finland. Before the change, all insect products sold for human consumption were banned and there were serious restrictions on insect feed for farmed animals. This change means the end of the years-long waiting period and the Finnish Insect for Food and Feed (IFF) companies have been able to start selling full speed.

The legal environment is one the risks that every company must consider carefully in their business plan regardless the industry they are operating in. In general, a hostile legal environment is seen as a big minus and something that is difficult to change, especially in short term.

No matter how unlikely and how difficult it was considered to be, the Finnish IFF- startups were able to lobby the authorities to change their viewpoint and open the markets. Similar changes are expected all over the Western world, but Finland changed it’s interpretation now sooner than others.

How exactly the Finnish startups spurred the change and how can you do the same in your home country and your industry?

Positive Relationship with Media

The hype around rearing insects for food and feed started around 2011 when FAO started to promote insects as a sustainable choice over conventional animal protein sources. The media attention reached Finland as well and since has been featured multiple times on all major media platforms. Finnish start-ups started to emerge some years after 2011 and since they have featured the articles and news regularly as well.

The IFF- industry is quite unique in many ways and this is one of the major reasons why media has covered so much of it nationally, but all the startups have been not only accepting invites for public speaking and giving interviews, but also reaching out for reporters. What has been great to notice on many occasions I have been asked to cover for other players in the industry to cover for them for e.g public speaking if there has been a double booking. This tells of shared understanding that raising public’s understanding and awareness is very important, even if the publicity points goes to the neighbor company.  For emerging industries many times the competition is not the companies doing similar things than you, but the companies you coming to steal the market from. This essential idea is widely spread in the small Finnish industry and now we all share the fruits of co-operation.

Make Regulators Work for You

Some years ago I had a discussion with Entocube, one of the Finnish startups. I criticized their approach to bring to market end-user products, even though their main business the insect farming technology had at that point many open questions. Now looking back Entocube’s vision to raise awareness about their company and industry by their clever “kitchen decoration products” (insect food was banned) was very unselfish and brave, but also the right thing to do. By pushing the limits of the regulating bodies and sparking even more discussion with their products in media gave the initiative for Evira to start looking seriously on their approach to the topic.

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Above is a picture of the “Cricket Jar”- kitchen decoration jar. Not for consumption! A great way to raise awareness and push the limits. This product forced the regulatory body to react. 

We did not have common plan or organization

What was not done is equally important with what was done. Finnish companies have not formed a registered association, but what we have shared so far is a common goal and modern perception of markets. Also, it is worth noticing that there are no Finnish members in the global association of IFF-companies IPIFF.

To me, this tells that organic communication from different entities was at least in this case the key to build up political pressure that leads to this change. Could it be that when the communication is natural and organic instead of designed and always politically correct it is something that interest media and the big audience more?

Three learning points

Every country is their own case, but I see that there are three points to learn from this case.

  • Raise public’s awareness. This is the first step for people to start accepting the idea of something new and to introduce more wide pressure for the public sector to start thinking of the current policies.
  • Force the regulating bodies to react. Especially in a field that was never been though of carefully by the lawmakers by pushing the boundaries, you force them to draw the lines for the first time. What is most important here is that the decisions must be justified. If there is clear lack of regulation, the wheels will start to move within the public sector.
  • Co-operation of the industry. It is essential that the companies operating in the field do not fall into the trap of thinking that they are each other’s enemies. Even though they are working in the same field, the growth in nascent markets is gained from the growing market, not by winning market share from the competition. When the common goals are understood by the industry players they can work together and achieve bigger targets that they could ever be done alone.

Finnish IFF-industry in 2017:

Industry Insights, Interview with Ilkka Taponen

The interview below was done by International Insect Centre and published in their newsletter in May 2017.

After completing an internship at Ynsect involving his thesis paper titled Supply Chain Risk Management in Entomology Farms Case: High scale production of human food and animal feed, Ilkka developed a keen interest in the insect industry, setting up a blog dedicated to developments in this sector. Combined, the success of his blog as well as his activities in market potential projects for insect products has given Ilkka significant insights into the current market for insects, especially in scaling up production in the novel foods sector. He is now employed at Green & Gold Foods based in Finland, developing alternative protein products for the consumer markets.

Speaking about the growing interest in the insect sector, Ilkka explains that since news of new EU regulations has been clarified, interest in this business has greatly increased. “Last summer there was a real lack of contact on the blog, but since November I have received a lot more emails from interested persons, possibly because news of EU regulation [regarding insects in feed and food] has become clearer”, explaining that this could’ve rejuvenated interest in the sector.

However, although growth seems to be positive, Ilkka explains that the role that insects will play in the future is a little more obscure; “It is hard to say; some companies are working on feed whilst others say that there is no sense in this, with food being the main goal. Considering that these are often companies with significant resources behind them, they are approaching this business very differently so it is impossible to say who is right and who is wrong.” Having worked both in the insect protein sector and the plant-based protein sector, Ilkka points out that insects must compete with plant-based alternatives and that this may result in them having more potential for feed applications than food based. “For example, one place in which insects are clearly the best option is in animal feed. However, taking salmon farming as an example, the demand for the quantities that are needed to enter the market are huge, whilst the profit margins are very low. It’s a difficult combination.” Ilkka explains that economies of scale will be needed in order to bring the cost of insect-based feeds down. “Increasing the scale and automating the process is key, but it’s difficult to say how long it will take for the costs of fish raised on insect feed to meet the price of conventional products.”

Another factor that is also involved in the development of the insect sector is risk. According to Ilkka, due to the novelty nature of insects as an ingredient in both feed and food, many companies are reluctant to carry out R&D using them due to the risks that this can entail. This is further amplified by the current lack of insect suppliers; “this makes it very risk intensive for companies to introduce insect ingredients because suppliers end up with all of the [negotiation] power.” Continuing, Ilkka points out that there also needs to be research into the end consumers that would be interested in buying sustainably raised fish fed on insects. “Who is going to buy these products? Generally, the people that would be interested in buying these products will most likely choose a plant-based alternative.” Ilkka explains that therefore, fish fed on insects cannot be sold based on this value added sustainability aspect alone. This suggests that in order to be viable, insect fed fish must become the ‘norm’ and not a speciality product. “The fish farmer has to pay 5% extra [to use insects], as do their clients, having a knock-on effect down the supply chain. The real question is; are consumers willing to pay for this?”

However, with regards to feed production in particular, insects have one major benefit over many non-fishmeal alternatives; they are live animals. This makes them suitable for feeds aimed at carnivorous and omnivorous animals, an advantage that plant-based alternatives cannot compete with, according to Ilkka. “I think that this is the key that will determine the future. This is one of the only places where using animals [for feed] is very advantageous; for feeding other animals. In this situation, insects are most definitely the most sustainable choice.”

Continuing on the subject of sustainability, Ilkka clarifies his thoughts on insect proteins. “We must also take plant-based proteins into consideration, especially when looking into feed conversion rates. As I have said, insects are the best option for animal-protein based feed, but for food purposes, plant based proteins offer the same benefits but in a more culturally acceptable and cheaper way at this moment.” Despite this, Ilkka remains positive that there will be significant growth within the sector for edible insects, however compared to alternatives, it is uncertain whether they will be able to compete long term. As for the animal feed sector, Ilkka expects that insects will play an important role in the market with regards to the future of sustainable animal feed, beginning in the aquaculture sector.

Thank you IIC and Poppy Eyre for putting my thoughts nicely into text! Visit IIC at http://www.insectcentre.com/

Starter Kit for Ento-Entrepreneurs

Lately, quite a few people have reached out for me for tips for starting a new Insect for Food and Feed- companies. I am very happy to see the industry growing and it is my pleasure to help out. To make your starting easier I have here collected some links and tips on how to get started and how to avoid some of the pitfalls.

I believe strongly in the Lean movement, not only in daily work but also larger projects that starting a new company is. To prevent unnecessary work and loss of resources, start by collecting data and objectively evaluating the potential of your business plan.  To learn more about Lean and modern business management check out the great Lean Startup- book by Eric Ries.

Study the literature. Unfortunately, there are only very few publications on the business side of IFF- business, biological knowledge can be found much easier. My thesis that I wrote in 2015 is still one of few publications looking at the production and supply chain side of this specific industry. The thesis comes with full list of references that can you use to dig deeper into all the discussed topics. Here below are some links I recommend you to read. Other than the links listed here you might want to check also the Directory from the menu bar, from there you can find all my blog posts e.g about how to choose the best species to farm.

Get connected with insect entrepreneurs. The largest database online with contact information can be found from this website, just click the “Entomology Company Database” from the menu bar. I also recommend that you will contact your local association of IFF companies, here are some links:

By getting connected you will get essential tips from more experienced people and you can team up to work on topics that you the concerns about (health of genetic pool, fighting horizontal integration issues etc).

Contact your local Food Safety Authority. In the USA it is the FDA, in EU- level its EFSA. In other words, the one that interprets the national laws regarding food and feed. They are there to serve you and they will tell you the status of insect food and feed in your environment. A nice collection of the legal status’ can be found here.

Stay up to date. The following links are for news sites and social media channels that keep you up to date with the latest news in the field.

  • 4ento is a news center for everything around the topic.
  • Robert Nathan Allen is the founder Little Herds- association. Follow him on Twitter for the latest especially in North America.
  • Food Navigator is news center for Food & Beverage industry, follows closely also IFF- industry.
  • All About Feed is similar to Food Navigator, just with the feed aspect.
  • Facebook-group Food Insect Newsletter.

2016 Was a Successful Year!

It is the time of the year to look back and anticipate a little bit the future as well. The amount of visitors and pages viewed on this site more doubled even though I was able to contribute less on writing. The reason to the slowing pace of blog posting was that I started my current full-time job at Gold & Green Foods Ltd. G&G Foods is company in search for the perfect protein and so far we have brought one product to the market: Pulled Oats. If you are interested to learn more, see our website at http://www.goldandgreenfoods.com

Here below are some graphics and numbers from this blog. I am really happy Finland is not anymore the number one country from which the visitors are coming from (can’t say anymore its just my mom reading my posts). Numbers that I not did put here are the downloading rates of the files I offer: Patent database was downloaded 120 times, the company database 540 times.

Other than working at G&G Foods I did few consultation works and I gave few speeches, maybe most interesting one was Woven network’s event in Nottingham. Link to the speech: https://www.youtube.com/watch?v=8V74_exxTGY&t=14s

Also, I published my thesis as audio book. I explained the publishing process in this blog: https://ilkkataponen.com/2016/05/08/how-i-created-and-published-an-audiobook/. What is crazy about this audio book is that in Audible, the most recognized audio book platform in the world, I am the most sold Finnish author with 34 books sold between April and November. What explains this status is that there pretty much aren’t any other Finnish books available there. That facts takes something out some of the fame, but anyway its a nice title, right?!

In the coming year I have already agreed to take part to one nice insect related publicity campaign here in Finland. I am also thinking of taking this blog more and more away only from insect-related topics towards the wider whole new-proteins, food security and climate change issue. Let’s see what happens!

Happy new year!

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Collective Consciousness in High Scale Insect Farming

In the Finnish national broadcast company’s radio channel Yle Puhe there was a great program by a man called Jari Sarasvuo.  His latest talk show encouraged me to write this post. What he was talking about among many other things was Collective and Social Consciousness. These are not theories of his own, but his way of telling really struck me and made me notice many aspects of these theories exactly in this industry of high scale insect farming. For all the Finnish speakers here is the link for the show: http://areena.yle.fi/1-3092290

Earlier in this blog I have discussed the issues related to the conservative approach to co-operation by many in the entomology business. Companies are not willing to discuss even the very general approaches for example to the business strategy. I claim that this is a wrong approach that is wrongly justified. It is a way to kill your own business but its also hurting all the other operators in the field. Now in the current situation the restricted communication is forcing all the companies to do the same failures in e.g their trials related to scale up and the start of production. The situation in this specific industry is underlined by the lack of public studies.

I have understood that the companies do not want to share their knowledge because they feel they have used resources to collect it and they justify their approach not to co-operate by saying “because we have suffered for this, you should suffer too”. Behind this thinking is a wrong assumption that other insect farms or for example other insect product processors would be competitors for each other, but it is not true. While there is still so few operators in the field and the market demand of insect products is not even closely satisfied, the competitors are found from the replacing products that are the traditional protein sources.

It is a fact that the lack of operators in the industry is hurting all the companies, but still we do not want to help each other, we rather build barriers around ourselves. I think is fair to say a company’s competitive advantage is not in knowledge that can be achieved by six months of learn and fail experiences, but the same missing knowledge from the starting companies creates a barrier of entry and increases the risks of failure. Every failed company in the field is a loss from the whole industry as it narrows the horizontal integration. More on this in my seminar presentation that you can find here: https://www.youtube.com/watch?v=In_ONp_PoY0

The Collective Consciousness is a way of thinking where individuals are thinking “us and them” over the Social Consciousness way of “us”. The Collective is a part of conservative management were people were reflecting their lives and getting their motivations mostly through their own eyes. The Social way sees that the individual benefits the most when we think of the benefit of everyone over the battle between the two groups “us” and “them”.

Now you have struggled through the set-up and we get to the cricket-steak:

For many insect industry entrepreneurs the desire to find the company is coming from Social Consciousness- motivation. We want to build something sustainable and ethical for the good of the planet, right? For the good of not only us, but of you as well. By doing this we believe that us and you will all enjoy a healthier future.  So how is it so that the similar thinking is not transferring to the actual work the companies are doing? Is it the wrongly identified competitors, lack of business understanding or can it be that motivations of the entrepreneurs are after all more Collective or the Social?

The future belongs to Social Consciousness and the co-operation will always be more beneficial than isolation. There is always more to win from co-operation than there is to lose. It is choice of all companies to make the decision whether they will anchor themselves to core of development by co-operating or are they hurting themselves by building walls around themselves.