Cape Town: The Centre Of Black Soldier Fly Farming

Agriprotein, founded in 2008 and based in Cape Town, was the first major black soldier fly (BSF) farming business in the world. After testing and learning the technology, they opened their factory in 2015 with an investment of $11m, including a grant from the Bill and Melinda Gates Foundation. They then raised a further $100m+ in 2018 and targeted a global reach with their BSF innovation. The result was a factory that processed waste, bred flies, grew larvae, produced BSF meal, oil and frass and distributed this to the market. Unfortunately, Agriprotein entered administration in February 2021 and the company's assets were liquidated 5 months later.

But, all is not lost. I have spent a bit of time in the Western Cape speaking to the people in charge of Agriprotein, trying to get to the bottom of why it failed. What I found was that the BSF industry has, in fact, blossomed with strength in collaboration, innovation, and resilience. Instead of scaring enthusiastic start-ups away, the area's expertise has lowered barriers through increased government awareness and action, increased local support, and greater knowledge sharing. In this blog, I will share with you why I think Cape Town is at the centre of black soldier fly innovation.

Contextualising Cape Town's BSF Industry

Cobus Kotze, the co-founder of Agriprotein, was the first person I went to visit. Since leaving Agriprotein, Cobus has launched his BSF technology company, Nutrisek, where he wants to develop housing and operating hardware for medium scale BSF productions, primarily in the developed world. When in conversation, I opened my eyes to how the industry has evolved in the region and I was put in touch with Sam Smout of Greencape, as he was facilitating many of the conversations.

I spoke with Sam and he explained that Greencape, a not for profit organisation, is linking industry, government, investment and science together which is something that I haven't experienced anywhere else in the world. Through Sam's hard work, he happens to know most of the people involved and he opened many doors for my visits and meetings around Cape Town.

So I spoke with Tim Egan of Regen Organics (RO), which primarily runs operations in Kenya with its parent company Sanergy and is working to recycle the waste produced in Nairobi. Tim is working on some innovation that is more specific to the Cape Town context. I spoke with Gerhard Gous who quit Agriprotein to co-found BSF Breeding, an egg production company. Dean Smorenburg, who gained his expertise as a consultant at Agriprotein and founded Maltento was next on my list. Dean showed me round his production facility and I learnt how he is uniquely marketing his product. After this, I visited Philafeed, a new entrant run by Jason Fine and Maya Zaken, in partnership with Max Breitensteiner, looking to connect insect farming with conventional agriculture. I finished the tour with a chat with marketing wiz, Jonah Lewis, who is responsible for Flybox's swish brand and delivering a guest lecture at the University of Cape Town.

It is worth noting, that I spoke with the following people prior to my visit, but unfortunately didn't manage to meet in person:

• Rishal Sooklal, Assistant Director: General Waste Minimization for the National Department of Forestry, Fisheries and the Environment. Rishal was instrumental in including BSF specific processes in waste policies that I think can be demonstrated around the world.

• Elsje Petersie - researcher and business woman in decentralised BSF models.

• Mikhail Koert - innovated with a probiotic that turns frass into a feed additive.

• Lowell Scarr - I didn't have a meeting, but his company, Nambu, sounds very interesting…

Key Learnings for BSF

1. A local supply chain developing and this encourages collaboration

I've heard many terms for the approach of Agriprotein, notably centralised, full-liner and A-Z. In this context, I'll call it the secretive approach, because when one single company does it all, they do not need to open its doors to others or to collaborate.

You'll see my last blog post about what I think the BSF industry requires to move forward and I believe Cape Town are well ahead in developing this. BSF Breeding and Nutrisek are developing inputs in the process in the form of technology and eggs. Maltento and Philafeed are producing larvae in two differing models, centralised vs decentralised. Genbiosol is providing lab expertise for testing production systems and output formulations. Maltento also manages to process and market their products expertly.

The main thing that is missing is large scale processing. I believe that this can only come once the larvae production has reached a certain scale. How much, I don't know. But for it to be cost effective it has to be in the 1000's of tonnes per week, for which we are a long way off!

2. I encountered effective value addition for the first time.

Dean Smorenburg was a management consultant in Johannesburg before starting Maltento in 2017, where he went into agreement with SAB Miller to process their brewers grains into protein, using BSF. His experience as a consultant meant creating maximum value out of your products came naturally to him. He explained that competing with commodities is impossible, so I eagerly asked him if what he meant by this was that he was supplying protein into pet food. He responded no. He is not selling protein into pet food, but it is a protein pet supplement. Dean is not competing with the bulk protein providers of beef, chicken and fish, or pet food commodities. Therefore, he has the ability to add significant value to his product and increase the margin.

I have seen countless examples of cost management across my travels. This could be small low cost container solutions such as from Manna Insect, or huge productions seen at ENORM that can dilute big overheads over even bigger volumes to drive down the unit economics. However, this is the first time I have seen someone effectively mark up the product, whilst managing the cost down. To achieve profitability, both the cost and the selling price need to be optimised. For this to happen, it's important to stay away from a commodity market.

3. Government, investment, business and science are all linking together

I feel like this is a common problem with many industries, in developing bonds with all the stakeholders. The problems I've encountered specific to BSFs is that there is not enough production right now or any proof that it works. Current regulations are holding back the industry, particularly in Europe, but governments won't change policies very quickly unless they see meaningful forward movement. This makes investors uneasy too. All of this makes it hard to get all the stakeholders in a room together.

Sam Smout at Greencape is doing exactly this. Greencape is facilitating the movement of the Western Cape to a greener economy and is putting a lot of focus on BSF in processing the organic waste. He has been networking with scientists like Anwar and government officials like Rishal, along with all the business people in BSF. He knows private and NGO investors who he can link up with all these people. He has been having monthly meetings with all the producers to find ways he can further develop their business models.

This has been well met by the industry and the Western Cape feels confident about its target for zero organic waste to landfill by 2027. This is fast-tracking the development of BSF as the industry now has the foundations to manage the regions waste. Meanwhile, over in Gauteng, Rishal Sooklal has been instrumental in writing a new waste management policy that incorporates BSF processes into the wording, meaning the practice has proper regulation that enables best practice solutions.

In summary…

I think there is a big learning for the UK to take from Cape Town. Instead of competing, we need to view our ideas and business's as a team to enable widespread access to this fantastic bio-technology. We need to think smarter and add value where we can. The protein and frass have super biological benefits for our soils, livestock and pets, but we're not currently applying business sense to the equation. How can we prove that the benefits demand significant value on the price point? We talk a lot about the price of sustainability and welfare, but it won't work long term if it doesn't generate a sound business case. And this is exactly the point. The sooner someone creates the business case that partners can get behind, the sooner the investors will flood in and the sooner governments can get write BSF into the policies.

What's next on the great big bug tour?

I fly to East Africa, where I want to understand their ultra-low cost models, the local regulatory and political landscape and learn more about the local culture. I've heard a lot about the emerging industry in Kenya and actually learnt a fair bit of my basic knowledge on YouTube from producers in Kenya. Tanzania has some interesting sites too, whilst I'm looking forward to understanding how Rwanda has recovered from the genocide and taking their country forward. Lots to look forward to, lots to see. Bring it on!