Could insect farms meet our food demands of the future?

Layers of squirming black soldier fly larvae fill large aluminum bins stacked 10-high in a warehouse outside of Vancouver. They are feeding on stale bread, rotting mangoes, overripe cantaloupe and squishy zucchini.

But this is no garbage dump. It's a farm.

Enterra Feed, one of an emerging crop of insect growers, will process the bugs into protein-rich food for fish, poultry - even pets. After being fattened up, the fly larvae will be roasted, dried and bagged or pressed to extract oils, then milled into a brown powder that smells like roasted peanuts.

The small but growing insect farming sector has captured attention and investments from some heavyweights in the $400 billion-a-year animal feed business, including U.S. agricultural powerhouse Cargill Inc, feed supplier and farm products and services company Wilbur-Ellis Co and Swiss-based Buhler Group, which makes crop processing machinery.

Fast food giant McDonald's is studying using insects for chicken feed to reduce reliance on soy protein.

"This pioneering work is currently at the proof-of-concept stage," Nicola Robinson, McDonald's Corp sustainable supply chain manager, told Reuters. "We are encouraged by initial results and are committed to continuing to support further research."

The fact that such global food production giants are turning to insects illustrates the lengths they will go to find alternative sources of protein that are profitable and sustainable as animal feed or additives to human food. Bugs are just one many alternatives being studied or developed by major agricultural firms. Others include peas, canola, algae and bacterial proteins.

Global population growth and an expanding middle class have raised per capita meat consumption by 50 percent over the past four decades, fueling fears of a protein pinch. Traditional sources of the key macronutrient are growing increasingly unreliable amid a changing global climate and worries about the environmental impacts of row-crop farms and commercial fishing.

Benoit Anquetil - strategy and technology lead for Cargill's animal nutrition business - called developing new sources of protein a "long-term opportunity."

"Sustainable protein is a key challenge, which is why Cargill is evaluating the viability of insects as part of the solution to nourish the world," Anquetil said.

People tend to pivot from grain- and plant-based diets to meat-based meals as they grow wealthier. The problem is that as meat demand grows, feed production needs to grow faster. It typically takes about two pounds of feed to produce a pound of chicken. For pork, it takes four pounds.

Expanded cultivation of soybeans - the foundation of livestock and poultry rations for decades - is not a long term solution because it contributes to deforestation and overuse of harsh farm chemicals.

In addition, supplies of fishmeal - an aquaculture feed made from wild-caught fish and fish by-products - have fluctuated wildly with climactic cycles, overfishing and regulation to prevent it.

Nutritionists and scientists have long touted insect consumption for humans as a sustainable and cheap source of protein, but snacking on bugs is a stomach-churning prospect for people in many countries and cultures. Introducing insect protein further down the food chain may be more palatable.

The bug business still has a few hurdles ahead - like the yuck factor, even when the insects are fed to animals. Regulators will also need to be convinced that ground-up bugs won't introduce new toxins into the food supply.

"They are considered filth in the food system," said Virginia Emery, CEO of Beta Hatch, which grows mealworms above an auto body shop near Seattle-Tacoma Airport.

Feeding bugs to fish

Cargill conducted an insect-based feed trial on poultry in 2015, but the company's efforts with insects have since focused on bolstering its growing aquaculture business, where demand for alternative proteins is most acute.

Beta Hatch is chasing the same market. The small company's mealworms - larvae of the mealworm beetle - will likely end up as fish food as Emery expands her business with the help of an investment from Wilbur Ellis, whose fish-farming customers have pressed for sustainable alternatives to fishmeal.

"Fishmeal has a limited supply, and aquaculture is continuing to grow," said Andrew Loder, president of Wilbur Ellis' feed division. "We see insect meal as one piece of a solution."

Fish farming is growing fast with growing consumer demand and increasing concerns about overfishing, resulting in catch restrictions in many depleted fisheries. Warming oceans in some areas have also disrupted supplies.

That means fish eaten by humans will increasingly come from farms - driving up demand and prices for fish feed.

Fishmeal is made from wild-caught anchoveta, herring and other oily fish that represents about 25 percent of a typical aquaculture feed ration, which typically also includes grains or soybean meal.

But fish farms cannot rely solely on crop-based feeds to nourish their naturally carnivorous stock.

"You can feed an animal all grain, and it will grow, but it may not grow as quickly and efficiently and may be prone to disease," said Andrew Vickerson, chief technology officer at Enterra.

High in protein, fat

Insect farmers grow black soldier fly larvae and mealworms because they are docile, easy to grow and high in protein and digestible fat.

Mealworms can be grown with little water and studies have shown they can "rescue" nutrients by consuming grains not fit for livestock production without passing on harmful toxins. Black soldier fly larvae also contain high levels of calcium and iron and can feed on a broad array of food waste.

Crickets - a favorite for human consumption in some countries - are by contrast picky eaters. They're also noisy, and can damage nearby crops if they escape.

Enterra is expanding to a second commercial-scale plant in Calgary within the next year and targeting opening similar facilities in other North American cities every year for the next five years, with financing from Calgary-based Avrio Capital and UK-based Wheat Sheaf.

Protix opened its first commercial black soldier fly larvae plant in the Netherlands in 2017 and will break ground on a second facility there later this year, aided by a $50 million investment from Buhler. The Dutch company, working with fish farmers, has also launched a brand of "friendly salmon," fed with rations containing insect meal instead of fishmeal.

"If we are able to be successful in Europe, then this will be a global solution," said Protix CEO Kees Aarts.

Neither company would disclose the production costs or capacity, citing proprietary technology. But both said their insect feed prices are on par with to slightly above competing feeds like fishmeal.

Ohio-based EnviroFlight, a black soldier fly larvae producer, will break ground on the first commercial-scale insect meal production facility in the United States near Cincinnati later this year.

Regulatory hurdles

Humans have been eating insects for centuries, but the practice is not common in many western cultures and still spooks food regulators.

Black soldier fly larvae production has gained a handful of approvals in Europe, Canada and the United States, mostly for use in fish farms. Poultry, swine and pet food regulations are not as far along.

"Since fish eat insects in the wild naturally, it is easier for consumers to wrap their heads around insects as part of the feed," Cargill's Anquetil said.

Thorough safety testing of insects as feed will be critical for consumer acceptance, said Thomas Gremillion, director for the Food Policy Institute at the Consumer Federation of America.

"If there was a big change in how animals are being fed, I'd want to see some extra scrutiny of whether the animals were accumulating any kinds of toxins from the insects," he said.

It will take years for the insect farming sector to scale up. But growing the business to even a small market share would make a big difference to the feed industry and the environment, said Robert Nathan Allen, an insect farmer and chairman of the North American Coalition for Insect Agriculture.

"If we're replacing 5 or 10 percent of the proteins that are normally in those feeds with insect protein," Allen said, "That's a lot of resources saved."