Insect Futures: The Next Big Thing

Investors are frantically seeking an edge in the markets…

And with markets like gold and crude oil so crowded, it’s time to start thinking outside the box.

Well, there is a new commodity that’s poised to invade all parts of the market, from agriculture to medicine.

Some people might find it disturbing, but there’s already demand. Over one quarter of the world is consuming this new commodity, and more are catching on every day!

This Idea “Has Legs”

So, here’s a new one to consider: insect futures.

Seriously. Those creepy crawlies are the new big thing in investing… and they could be quite profitable.

In fact, next week in London, the Sustainable Restaurant Awards will honor forward-thinking chefs creating dishes with insects.

Now, insects would be considered a soft commodity – like coffee, cocoa, rice, and lumber.

There are 2,000 known edible species of insects. You can see the most common varieties in the chart below.

The key to this commodity’s demand is the rising income rate in emerging markets, and those countries’ appetites for meat.

You see, raising livestock consumes many resources and can be expensive, especially when grain prices rise or when a drought or other weather disruption affects meat supplies. Insects could be a viable solution to this demand for protein in multiple ways.

In countries where eating insects, such as beetles, ants, and grasshoppers, is already popular, bugs are a good source of protein.

In Uganda, for instance, a pound of grasshoppers is considered a luxury and costs 40% more than a pound of beef.

But in many developed markets, consumers just can’t stomach a plate of insects. Their form is easily disguised, though.

Enjoy a Beetle Juice Smoothie

Insects are already processed into powders and flours, which are then added to food products like pancake mix and pasta.

Plenty of extra nutrients are being added to things like energy bars and smoothies to get the most out of a meal. So why not throw in a bit of bug protein?

Many consumers are ingesting these powders without knowing it, too. And insects are used in medicines, to color lipstick, and to flavor alcohol.

The market extends beyond humans, too.

Most farmed insects are already used as animal feed for livestock, poultry, and fish. In fact, increased aquacultural production and high fish-meal prices are driving research on insect-based feed.

And surely the family dog won’t mind if 5% of his bowl consisted of cheap and nutritious protein from a few bugs.

Insects could also be a form of fertilizer. Industrial farmers could benefit during periods of high potash prices. Plus, insect fertilizer would be a logical choice for organic farming, which is a growing trend.

Supply wouldn’t be an issue, either. Insects are found practically everywhere on Earth. And emerging markets such as Africa, Asia, and South America could harvest them and export them to industries globally.

Some people might worry that extracting insects from our ecosystem would be disruptive to our Earth, animals, and crops – which is a valid argument. But insects are already being cultivated in a controlled, automated environment, separate from our ecosystem.

Plus, it only takes 88 square feet to produce a pound of mealworm protein. Compare that to pork, which takes 269 square feet. And from a greenhouse gas perspective, a pound of pork generates 38 pounds of CO2, while producing the same amount of mealworms only generates 14 pounds of CO2.

Once the insects are farmed and gathered, they can be sold in bulk and transported in bags or containers to millers for processing.

Contracting Creepy Crawlies

Futures contracts for insects are a new concept, so this investment would need some time for market acceptance and liquidity. But that’s part of why this is such an intriguing idea.

One futures contract would represent 5,000 bushels of insects. And like all futures contracts, they would have to be standardized, inspected, and certified by licensed surveyors for quality control to ensure that the product does not include any filler, such as plants or dirt.

But investing in insects could help meet the growing demand for affordable protein with minimal impact on the environment, weather, or climate change.

I say “bon appetite” to the creepy and the crawly. This just may be the next profitable futures contract. And it will fly.

Good investing,

Shelley Goldberg