From Maggots to Millions – How AgriProtein, A South African Business, is Making Amazing Products from Maggots

From Maggots to Millions – How AgriProtein, A South African Business, is Making Amazing Products from Maggots

Written by  smallstarter InspireMe! Saturday, 18 October 2014 16:54

 

  Photo credit: ebaumsworld.com

In South Africa, one young business is doing the unthinkable. AgriProtein is breeding billions of flies on a farm to mate, lay eggs and produce maggots. Yes, maggots, those horrible looking creatures that are likely to make you want to vomit. These maggots are fed on organic waste material - producing a nutrient-rich fertilizer in the process - before being harvested and dried into a natural and sustainable animal feed. AgriProtein’s maggot-based animal feed is more than 15 percent cheaper than other alternatives and has been proven to be highly nutritious for livestock, especially chickens (poultry), fish and pigs. The company recently attracted more than $10 million in capital to build more fly farms in South Africa. This article reveals the lucrative aspects of this business and why it’s a multi-million-dollar idea. I’ll also show you how AgriProtein successfully grows its maggots and three key lessons you should learn from the success of this business.

 

Why should anyone be interested in the animal feed business?

Many of you reading this may be wondering why AgriProtein is going through the hassle of raising maggots to target the animal feed market. Do you have any idea how huge the animal feed business really is? Allow me to break it down for you…

Before a piece of beef, chicken or pork ends up on your plate, it was fed on animal feed to produce the meat that now sits on your plate. Animal or ‘livestock’ feed, like human food, is a booming international business.

 

In June 2013, I wrote an interesting article about the huge opportunities in the billion-dollar animal feed business. The growing demand for meat and fish worldwide is driving up the demand for animal feed used by livestock farmers to grow chickens (poultry), fish and pigs. The amount of money spent on animal feed every year is huge because on average, farmers around the world spend between 45 to 75 percent of their total costs on animal feed alone.

The international trade in animal feed has an estimated turnover of nearly $400 billion every year. Despite Africa’s huge demand for animal feed, it produces less than one percent of global animal feed output. The small amounts we produce locally are not enough to satisfy domestic demand. As a result, the African market currently depends heavily on imported feed from the USA, Europe, South America and Asia (especially China).

AgriProtein wants to shake up the international animal feed business by producing a cheaper and more valuable product that will help farmers around to world to make extra profits by reducing some of their feed costs. This is definitely a product that will interest farmers around the world who have been suffering the burden of rising animal feed prices for many years. If AgriProtein can pull this off in the $400-billion animal feed market, the company could easily be worth millions of dollars in just a few years.

Why maggots?

I know what you’re thinking and I totally agree with you; maggots are very disgusting and the sight of them could easily make me vomit. But to a chicken or fish, for example, maggots are a juicy treat. Apart from its good taste, maggots are very nutritious and rich in proteins, a vital element in every animal feed. Proteins are important because they are a critical component in developing muscles in these animals which eventually become the meat that we humans eat.

Interestingly, maggots are hardly, if ever, used in animal feeds that are used by livestock farmers around the world. For decades, proteins in animal feed have come from two main sources: Soybeans and Fishmeal. I’ll use the next paragraphs to take a quick look at these two protein sources and how important they are to the global animal feed industry.

Soybean is the major source of plant protein for animals. About 85 percent of the world’s soybean crop is processed into meal that is used in animal feed.  Only about two percent of the soybean meal is further processed into soy flours and proteins for human food use. The problem with soybean is that cultivating the crop requires a lot of land and water, and the intensive monoculture involved is creating adverse environmental impacts on our planet.

Worse still, as you will notice in the chart below, the price of soybean has risen sharply over the last decade. This means that farmers have been paying a lot more to buy animal feed that contains sufficient protein (soybean) to grow their livestock to market size.

In recent years (2002 – 2014), the price of soybean has skyrocketed beyond all levels in history. (source: crops.missouri.edu)

Fishmeal is the major source of animal-based protein for livestock. More than 20 percent of fish caught in the seas and oceans are crushed and processed into fish meal which is added as a protein provider in animal feeds. This fishmeal is fed to pigs, cattle, poultry and farmed fish. Fishmeal has remained a popular ingredient in animal feed because of its high protein content (it actually contains more protein than soybean). image credit: tradeindia.com

The problem with fishmeal is that natural fish stocks in the oceans are reducing drastically across the world. Due to overfishing and the negative effects of climate change, using our fish stocks as a source of raw materials for the animal feed industry is no longer sustainable under the current conditions. If we continue to harvest fish from the seas and oceans at the current rate, we could run out of fish in less than 30 years. Evidence of this scarcity is already showing in the price of fishmeal on the international market. From 1999, the price of fishmeal rose from less than $500 per metric ton to over $2,000 in 2012. That’s a 500+% growth!

The steady rise of fishmeal from 1999 to 2014 has led to high animal feed costs for livestock farmers across the world (source: UndercurrentNews)

Maggots, unlike Soybean and Fishmeal, are very new to the scene as a suitable source of protein for animals. They are very rich in proteins and contain a wide range of amino acids and minerals that provide the necessary nutrition for livestock growth. The best part is, producing insect-based protein (maggots) doesn’t come with the adverse environmental consequences of producing animal protein (fishmeal) and plant protein (soybean) which require more land, water and energy resources.

Unlike the prices of soybean and fishmeal which are currently going through the roof, maggots are abundant and readily available. As long as you have organic waste, maggots can literally be ‘farmed’ in your backyard. This outcome will help farmers to save costs on animal feed while providing their pigs, poultry and fish with high-value protein. (image credit: theblaze.com)

The Amazing Unique Selling Propostion for Maggots

For any new product to succeed in any market, especially an established one like the animal feed industry, it needs to have a Unique Selling Proposition (USP) that makes it different and preferable to other products already on the market. Interestingly, Agriprotein believes that it has a strong USP that will revolutionise the international animal feed business.

According to AgriProtein’s infographic below, for each ton of fishmeal or soybean replaced by its maggot-based products, an environmental saving of between $2,550 and $3,250 per ton is achieved in the form of avoided fossil fuel consumption , land use and carbon emissions.

 

The Smart Guide to Maggot Farming – The AgriProtein Way

AgriProtein’s facility in Cape Town (South Africa) is the world’s largest fly farm and houses roughly 8.5 billion flies that produce more than 20,000 kilograms of maggots every day. To feed the army of maggots it produces, the farm collects over 100 tons of organic waste every day. This includes leftover and uneaten food from restaurants and hotels, blood and waste from abattoirs and animal manure.

Within the farm, the flies are kept in over 300 cages that are designed to maximise mating. Within these cages, the temperature, humidity and lighting are closely controlled to encourage the flies to mate and lay eggs. A single fly can lay up to 400 eggs in a single day. Every day, the eggs are gathered from the cages and hatched in a separate place. Image credit: eadt.co.uk

As the maggots grow, they feed on the organic waste and convert it into protein. In fact, their growth rate is astounding; maggots increase in size nearly 5,000 times in the span of just a few weeks. Their fast growth and efficient conversion of waste to protein is the biggest miracle in the entire process. These maggots recycle smelly organic waste (like blood and animal manure) into odourless humus that can be used as fertilizer to replenish farmlands.

After feeding on and digesting waste for a couple of weeks, the maggots reach the optimum size for harvest and are separated from the residue. Afterwards, they are washed, dried and crushed to extract oil, which is very rich in fatty acids. The rest is milled into a flaked product that is packaged and sold to animal feed mills.

At the end of the process, these are the four main products that emerge as AgroProtein’s market brands:

MagMeal™
This is the core product consisting of dried and defatted maggots that are ground into a high protein meal. It has a dark rich texture with a slightly nutty flavour. MagMeal can be blended into a variety of animal feeds and used just like any other protein such as fishmeal, its nearest nutritional equivalent. It is specifically useful for the feeding of monogastric animals including chickens, pigs and fish.

MagOil™
This is the purified fat removed from the maggots and has a high palatability for animals. It has a light golden brown colour with a medium viscosity at room temperature. MagOil™ can be blended into a variety of animal feeds as any other animal or vegetable fat or oil.

MagSoil™
This is the residue that is left after the maggots have recycled the nutrients in the organic waste. It is a fine and homogenous soil enhancer that is high in bio‐available nitrogen, minerals and nutrients. Farmers use MagSoil™ as an organic fertiliser to improve their soils.

Whole Dried Larvae™
This is simply de-hydrated maggots that are supplied in bulk to the pet food industry and small organic farmers. It can be fed to insect-eating reptiles and birds. It can also be used as a protein and energy source in formulated diets for monogastric animals like chickens, pigs and fish.

What’s next for AgriProtein?

AgriProtein’s products have been approved for sale in South Africa and the company expects to secure distribution licenses in the European Union within the next two years. Product approval is being considered on a state-by-state basis in the U.S. and Canada, with Ohio already having granted permission for them to be sold.

In terms of funding and expansion, the company has received more than $10 million to build more fly farms in South Africa. It intends to build another 38 fly farms across the world and has had expressions of interest from over 40 countries. In fact, the German government has offered AgriProtein one million Euros to set up a plant in Germany. In the long run, the company plans to license its proven technology for industrial-scale maggot production to similar farms across the world.

Here’s a short documentary featuring David Drew, Co-founder of AgriProtein as he runs through the science of the business and its considerable social and environmental impact. It’s very interesting and you’ll learn quite a lot from it.

3 Key Lessons to learn from the success of AgriProtein

We love to share success stories on Smallstarter but what’s most important for you, the reader, is to learn and apply the key lessons that led to success in all the stories. We have identified three key lessons from AgriProtein’s journey to success and we hope you learn something from them. Here they are:

1. Always think long term

Many entrepreneurs rarely take the time to digest and polish a business idea to make viable for the long term. David Drew and his partners at AgriProtein first had the idea for maggot-based animal feed in 2004. However, to solidify their business idea, they knew it had to be backed up by sufficient scientific and business evidence to make it investible.

To achieve this, they partnered with the University of Stellenbosch, South Africa and sponsored Masters and PhD level students to provide cutting edge research in the innovative field of nutrient recycling and animal nutrition under the guidance of the University.

After five years of parallel academic and manufacturing research, AgriProtein was finally ready to launch its business plan on an industrial and commercial scale. Today, its long term thinking has paid off and the company is on track to great and astounding success.

2. Work with the right partners

Working with the right partners can bring a lot of value to a new business. The right partners can provide access to capital, customers, promotion and even important market data. AgriProtein’s partnership with the University of Stellenbosch, South Africa helped to provide the critical research, analysis and credibility that has helped the company.

AgriProtein also enjoys a strategic partnership with the Bill & Melinda Gates Foundation and has received financial assistance from the Foundation to support its work.

3.  Green business ideas can be profitable too

The threat of climate change and its adverse effects on the environment has made green business ideas very attractive to investors, governments, NGOs and even consumers. Any business idea that promotes recycling of waste, protecting the environment or harnessing natural and renewable energy sources has a high likelihood of success in today’s world.