Overcoming scaling challenges for emerging aquafeed ingredients: 'Industry must commit early for the long term'

That panel, moderated by myself, was tasked with exploring how novel ingredients can reach scale, at a quicker pace, so as to ensure greater flexibility for feed formulators and to diversify the raw materials basket for aquaculture.

The speakers concluded that industry commitment is key to make this happen, that feed majors along with fish and shrimp players much back such innovation early on, to ensure longer term change.

Algae-based omega-3 startup, MiAlgae, has been addressing soaring infrastructural costs and barriers to scaling by focusing on overall technical and economic feasibility. 

The Scotland-based company's approach is about integrating innovation from the lab scale in a way that is scalable, sustainable, and economically viable.

Douglas Martin, founder and managing director of MiAlgae, told us the startup is also working to ensure that, as its system scales, the unit economics remain sound without significant cost increases. Developing small, decentralized units that are effective and scalable will be fundamental to that strategy. 

“We are also utilizing materials that would otherwise go to waste, thereby shortening the value chain and enhancing sustainability.”

Martin emphasized the importance of early-stage partnerships for scale. Collaborating with partners on the feedstock supply side, energy supply side, and overall R&D is key, while securing commitments on the offtake side is essential to ensure scalability, said the innovator.

“If you're waiting for startups to reach a scale where they can magically drop 50,000 tons into a feed production system, you're overlooking the considerable time it takes to get there. The commitment to scale up is what drives investment and capital for the entire organization. Early commitments in terms of offtakes, with contingencies or otherwise, transform startups into established businesses.”

Long term vision  ​

Aquafeed producers find it challenging to commit to such agreements due to the dynamic nature of the markets they operate in. When asked what innovators can do to address this dilemma, Louise Buttle, Sustell lead for aqua and global key account manager at dsm-firmenich, told the audience:

“Historically, feed contracts have been short-term, but we do see a trend toward longer-term contracts. In terms of early investment in these novel raw materials, new business models are needed.”

Collaboration across the value chain is critical, she stressed. There needs to be recognition that there will be an investment phase: “Developing fermentation units for single-cell proteins and the hardware involved requires significant capital investment; it is expensive.”

The Salmon Group, she noted, has recognized that extended feed contracts offer better opportunities to build closer cooperation and good relationships, giving more leeway to entrepreneurs. “The message here is that it is important to have a longer-term vision for novel ingredient development and to appreciate that it will take time,” Buttle concluded.

Financial viability ​

"The adoption of any component in feed has to be financially viable," said Laurent Develle, executive vice president, group general counsel, and head of corporate affairs at Switzerland-based Regal Springs, a leading producer of farmed tilapia.

When asked what kind of business case would convince a company like his to start incorporating alternative feed ingredients into its production, Develle explained that if insect meal came in at a lower price, Regal Springs would consider it. However, performance and carbon footprint metrics of any raw material are also critical parameters for the fish farmer.

Clément Ray, co-founder and CEO of French insect ingredient pioneer InnovaFeed, agreed that feed performance is the cornerstone, and robust profitability and footprint data are crucial to ensuring the wider adoption of novel ingredients. "Today, I can share that insect protein already has one of the lowest environmental footprints among feed protein ingredients due to the way it is produced," Ray said.

‘Data is pivotal’​

Isn't there a critical need to benchmark both established and novel ingredients using the same metrics?

“It's all about the quality of the data collected and the ability to compare datasets across different commodities. Without this, it is difficult to determine which supply chain is better. Data is pivotal,” remarked Chris Ninnes, CEO of the Aquaculture Stewardship Council (ASC) who was also participating in this panel.

“Through the ASC feed standard, we aim to drive this effort. We want to see feed mills interrogate their supply chains and ensure relevant information is collected to standardize calculations.”

Without standardized data, there is no evidence base to support claims, he commented.

The due diligence requirements for novel ingredients under the ASC feed standard are lower than for other ingredients, he acknowledged. Emerging ingredients come with lesser ‘evidence burden’ so proof of compliance will be easier for insect meal than for soybean meal under that standard, potentially incentivizing its inclusion in feeds.