Abstract
In response to the challenges associated with conventional management of hatchery residue in Quebec, the technical and economic feasibility of an alternative valorisation system coupling initial fermentation and subsequent black soldier fly larvae bioconversion was evaluated. This study aimed to propose a viable implementation strategy and determine the break-even sales prices of larvae and frass to ensure profitability. A total of 32 production scenarios were compared using an economic prediction tool accounting for geographical and system-specific factors. These scenarios included centralised and decentralised models at scales ranging from 10 to 110 tonnes of residues treated per week (tpw), as well as different reproduction strategies (in-house colony vs external neonate sourcing) and sales approaches (bulk vs retail). Capital and operational costs, along with potential revenues, were estimated for each scenario over 4 years, considering a production start at 30% of design capacity and subsequent ramp-up of 30% per year. Results indicate that a large-scale centralised model with an in-house black soldier fly colony and retail sales is the most profitable one. However, decentralised models could also benefit hatcheries processing at least 15 tpw of residues by reducing fees associated with conventional thermal rendering services. Beyond the economic aspects, challenges related to the supply of skilled labour, social acceptability, regulatory constraints, and market competition for the supply of residues and the marketing of insect products are discussed to ensure the feasibility of implementing the process in Quebec.
1 Introduction
Black soldier fly (Hermetia illucens; BSF) farming presents a promising opportunity for the valorisation of various animal-origin agricultural residues in Canada. In the case of hatchery residues (HR), their management poses an environmental challenge due to the presence of pathogens and unpleasant odours. However, HR could serve as a protein-rich substrate for the rearing of BSF larvae. In addition, this alternative method of valorisation could provide a sustainable pathway for nutrient upcycling of HR and potentially reduce waste management costs for the hatcheries compared to the conventional thermal rendering method (Dallaire-Lamontagne et al., 2024). Nonetheless, before establishing such a system, a technical and economic feasibility study is required to compare different possible production models and propose a viable implementation strategy. Beyond technical and economic factors, environmental and societal considerations should also be addressed to provide a more complete perspective of the benefits and limitations of the HR management system using BSF (Barragán-Fonseca, 2024; Barragán-Fonseca et al., 2023)
Developing context-appropriate production models is essential for ensuring the viability of insect farming, particularly in temperate and northern climates, where production infrastructure must cope with extreme seasonal variations, from cold winters to warm summers, while maintaining optimal indoor conditions for rearing BSF in a complex closed system (Cadinu et al., 2020; Chineme and Assefa, 2023). Local economic and regulatory contexts can further influence market opportunities, product value, and production processes requirements, depending on substrate restrictions or quality standards for insect products imposed by regulations (Lähteenmäki-Uutela et al., 2021). To this end, centralised and decentralised production models could offer distinct advantages (Grau et al., 2023). Niyonsaba et al. (2025) determined that, in a European context, an integrated full-liner BSF production system targeting the pet food market is more robust in terms of technical and economic feasibility than a decentralised system targeting aquaculture feed. Their results are based on local regulations as well as factors such as energy costs and environmental requirements. Large-scale production models have also been traditionally favoured for their potential to achieve economies of scale and justify significant capital investments (Surendra et al., 2020). However, the recent financial difficulties experienced by prominent industrial insect farming companies such as Enterra, Ÿnsect and Aspire (Byrne, 2024; De Bono, 2024), including insolvency and workforce reductions, have highlighted the limitations and risks associated with such approaches. Consequently, the assumption that large-scale systems are necessarily the most advantageous is being challenged, and alternative smaller-scale models with lower technical complexity are now being explored (Zurbrügg et al., 2024). In this context, decentralised models, located directly at residue generation sites or product application locations (e.g. livestock supplemented with BSF larvae or fields fertilised with frass), could reduce logistical costs related to transport of residues or infrastructure needs (Grau et al., 2023; Suckling et al., 2021). European companies such as Reploid (BSF) and Invers (Tenebrio molitor) are already applying such models (Reploid Group, 2024; Invers Groupe, n.d.).
However, the conclusions of context-specific studies are not easily transferable to other settings. For example, a production model based on plant-based substrates in a region with strict insect rearing regulations may not be optimal in a more permissive context, such as Canada, where the use of animal-derived residues like HR could be legally feasible. Likewise, insights from decentralised, open systems in Indonesia, as described by Grau et al. (2023), cannot be directly applied to closed, highly automated systems operating in northern climates such as Quebec. Furthermore, as noted by Biteau et al. (2025), economic forecasts for insect farming often rely on context-specific or theoretical assumptions that may not provide solid foundations for business projections elsewhere and fail to reflect real production conditions. This gap highlights the need for context-adapted modelling tools that account for both technical and economic aspects when evaluating the feasibility of insect production systems.To address this, in a previous work, a financial evaluation tool has been developed to assess the viability of different BSF production scenarios for HR valorisation in the province of Quebec, Canada (Dallaire-Lamontagne et al., 2026). Unlike existing BSF production tools like a scenario-based business model tool and web-based cost model tool, developed for tropical regions by Eawag (2024), this tool incorporates climatic, economic, and geographic conditions specific to the Quebec context. By accounting for both operational and capital costs, as well as potential revenues from by-products such as frass, the tool has the potential to conduct a comprehensive analysis on the economic feasibility of various production scenarios at different scales. This related article demonstrates the application of this tool. The primary objective of this research was thus to compare different BSF production scenarios for the valorisation of HR in Quebec by determining their cost and revenue associated, but also the break-even prices of their resulting products to ensure profitability. Ultimately, this study aims to propose an optimal implementation strategy for BSF farming systems in Quebec, with potential scalability to similar contexts.
2 Methodology
Previously, a forecasting tool was developed to compare 32 BSF production scenarios for the valorisation of HR using fermentation and black soldier fly larvae in Quebec, as described by Dallaire-Lamontagne et al. (2026). These scenarios included four models in total: one centralised model with a large-scale processing capacity of 110 tpw of residues, and three decentralised models with processing capacities of 10, 15, or 25 tpw of residues. These models were selected to reflect either (i) a centralised large-scale facility capable of valorising the total weekly volume of hatchery residues (HR) generated in Quebec, or (ii) decentralised scenarios in which individual hatcheries process their own residues, based on the actual sizes and weekly HR outputs of the five main hatcheries in the province. For each model, two HR fermentation strategies were evaluated using dairy co-products available in Quebec (dry or wet whey permeate) as carbohydrate sources to optimise the process. Two levels of integration for reproduction were also compared: maintaining an in-house BSF colony or sourcing neonates externally, as this decision could influence both costs and profitability. Finally, two marketing strategies were considered (bulk versus retail) since market type affects packaging costs and selling price.
The forecasting tool integrates data on capital expenditures (CAPEX) for infrastructure and equipment, broken down by production steps, including input transportation, fermentation, bioconversion, reproduction, and the processing of finished products. These values were then summed to calculate total CAPEX. The total CAPEX also includes financial costs associated with the full repayment of loans, including interest, used to finance the infrastructure and equipment. Additionally, the tool evaluates labour, input, and energy requirements specific to the various scenarios and production steps, along with maintenance and equipment depreciation costs. These are classified as operational expenses (OPEX). The tool also calculates revenues over time using reference prices for dried whole larvae and composted frass, established from market studies and industry data for both retail and bulk sales. In addition, it estimates break-even prices (zero-profit threshold) for one product (dried larvae or frass) while keeping the reference price of the other constant across target markets. All financial parameters used in the predictions are detailed in Dallaire-Lamontagne et al. (2026).
In this study, the previously developed tool was used to perform financial predictions for the different production scenarios over four years, starting at 30% of design capacity with a gradual production ramp-up of 30% per year. Break-even prices for larvae and frass were calculated for each production scenario to determine profitability. Total costs for each production step or category were expressed per ton of residues valorised, and weekly profits were reported in USD per ton of residues (dry basis) for each scenario.
Using the generated economic data, the profitability of the different scenarios was compared to identify the optimal implementation strategy in the Quebec context. In addition, technical feasibility, societal aspects, and environmental factors, considered as potential strengths, weaknesses, opportunities, or threats (SWOT; Krongdang et al., 2025), were also discussed to provide a broader analysis of the options and to determine which scenario is the most advantageous, beyond economic profitability alone.
3 Results
Capital expenditures (CAPEX)
The distribution of CAPEX in USD/t of residues (dry basis) processed weekly by production stage, along with the total loan required to finance CAPEX, is presented in Table 1. Total CAPEX costs ranged from 680 158 USD in the decentralised 10 tpw model using dry whey permeate and external neonates to 10 749 732 USD in the centralised 110 tpw model using dry whey permeate and an in-house colony.
Distribution of CAPEX costs (USD/t of residues, dry basis) by scenario and production stages
Citation: Journal of Insects as Food and Feed 2026; 10.1163/23524588-bja10352
In centralised models, extra costs, including infrastructure expenses not tied to a specific production stage, such as employee parking or cafeteria facilities, as well as professional fees for building construction, constituted the largest proportion of CAPEX (45–47%). In contrast, for decentralised models at 25 tpw, the largest share of CAPEX was attributed to the bioconversion stage, while processing dominated at 10 and 15 tpw. As production scale increased from 10 to 25 tpw in decentralised systems, economies of scale in processing reduced its share of CAPEX from 77 to 24%. This reduction increases the share of CAPEX allocated to bioconversion, which ranges from 16 to 66%, compared to only 13% in centralised models. In comparison, in large-scale centralised models, the processing stage consistently represents nearly 30% of total CAPEX.
The proportion of CAPEX costs related to transport was negligible in decentralised models, as no infrastructure was required, and only represented 1% of CAPEX in centralised models. The form of whey permeate influences storage and fermentation infrastructure costs, with wet whey permeate increasing these costs by approximately 1% compared to dry whey permeate. Establishing an in-house colony for fly reproduction accounts for 3–4% of CAPEX, whereas this proportion was null when an external supply of neonates was selected.
Operational costs (OPEX)
The distribution of weekly OPEX costs in USD/t of residues processed weekly by production stage is presented in Table 2. The OPEX costs ranged from 716 USD/t of residues for the centralised model to 1939 USD/t for the decentralised model at 10 tpw, both with in-house colony and wet permeate.. Costs associated with equipment depreciation and maintenance, across all production stages, represented a significant proportion of these expenses, ranging from 30 to 42%, depending on the model. Similarly, costs related to the processing stage, such as packaging, energy requirements and labour time, accounted for approximately 24–27% of costs in centralised models, but can represent up to approximately 50% of operational costs in decentralised models at 25 tpw.
Distribution of OPEX costs (USD/t of hatchery residues processed, dry basis) by scenario and production stages
Citation: Journal of Insects as Food and Feed 2026; 10.1163/23524588-bja10352
The form of whey significantly influenced transport and fermentation costs. In decentralised models, wet whey permeate increased the proportion of total OPEX associated with delivery by up to 11% compared to dry whey permeate, while transport costs for inputs remained at 5% in centralised models. However, the use of wet whey permeate tended to reduce costs related to the initiation of the fermentation process due to its lower market value compared to dry whey permeate.
Regarding reproduction, operational costs were reduced when maintaining an in-house colony compared to external sourcing in both centralised and decentralised models, processing 15 and 25 tpw of residues. However, the selected reproduction strategy did not affect costs for decentralised models processing 10 tpw of residues.
Total costs
Weekly total costs could be subdivided into several categories, including CAPEX repayment (loan payments) and OPEX categories (labour, inputs, energy and equipment depreciation/maintenance). The distribution of total costs ranged from 1294 to 2762 USD/tpw of residues processed (Table 3), with increased production scale contributing to a reduction in costs per t.
Distribution of total costs (USD/t of hatchery residues processed, dry basis) by scenario and cost category
Citation: Journal of Insects as Food and Feed 2026; 10.1163/23524588-bja10352
CAPEX expenses accounted for up to 45% of the total costs in the centralised model with an in-house colony and wet whey permeate, while labour expenses accounted for up to 17% in the decentralised model with an in-house colony and dry whey permeate. The proportion of costs associated with labour and energy increases when an in-house colony is maintained compared to external sourcing of neonates. However, input costs related to maintaining an in-house colony, such as chicken feed used as an attractant for oviposition, were lower than those associated with external sourcing, such as the purchase of neonates.
Cost recovery
The sales price of larvae and frass and the sold amounts determine the revenues of the facility. Profit margins per scenario and per ton of residues processed are detailed in Table 4. Results show that even at full production capacity and with retail sales prices for larvae (7252 USD/t) and frass (840 USD/t), positive cost recovery margins are only achieved at centralised sites (584–628 USD/t). In contrast, under the same sales price conditions, decentralised sites incur total losses ranging from 256 USD/week for the scenario at 25 tpw to 2180 USD/week for the scenario at 10 tpw. The scale of these losses decreases from 840 USD/t to 25 USD/t as the production scale increases from 10 t to 25 tpw.
Profit margins (USD/t of hatchery residues, dry basis) for the production scenarios based on ramp-up, using the reference retail prices of products (larvae and frass)
Citation: Journal of Insects as Food and Feed 2026; 10.1163/23524588-bja10352
The most advantageous scenarios for maximising profit or minimising losses depend on the production model and its associated costs. In the centralised model processing 110 tpw, wet whey permeate combined with an in-house reproduction colony is the most favourable option, mainly because input costs are reduced by avoiding the purchase of dry permeate and neonates. At smaller scales, in decentralised models processing 10 and 15 tpw, using dry permeate and externally sourced neonates is more beneficial, as this reduces labour requirements for colony maintenance and service fees linked to frequent deliveries of small volumes of wet permeate. In the decentralised 25 tpw model, the combination of dry permeate and an in-house colony minimises losses. In this case, dry permeate remains slightly more advantageous due to lower CAPEX and depreciation costs for wet permeate storage infrastructure. However, at this scale, maintaining an in-house colony becomes more cost-effective than external sourcing, as savings from avoiding neonate purchases outweigh the extra labour needed for colony management.
Break-even price of products (USD/t of dried larvae or composted frass) for cost recovery across production scenarios and sales markets (bulk or retail), assuming maximum site production capacity
Citation: Journal of Insects as Food and Feed 2026; 10.1163/23524588-bja10352
Break-even price
Based on the yearly total costs and product sales in each scenario, the tool estimated the break-even prices required to achieve cost recovery. To reach a zero-profit point, the break-even prices for larvae and frass vary depending on the scenario and the reference prices associated with the targeted market (bulk or retail; Table 5). In scenarios at sufficient scale, such as the centralised model or the decentralised models at 25 tpw, it is possible to combine retail or bulk sales strategies for one or both products to reach a zero-profit point. For instance, in the case of the centralised model, selling dried larvae at the bulk reference price of 3800 USD/t allows frass to be sold at retail prices ranging from 598 to 629 USD/t. In contrast, for the decentralised model at 25 tpw, selling dried larvae at the same bulk reference price of 3800 USD/t requires frass to be sold at retail prices of 1055–1069 USD/t. This is less competitive than the centralised site but remains close to the upper limit of the retail market price range (1050 USD/t) defined by Dallaire-Lamontagne et al. (2026).
4 Discussion
The type of production model
The type of production model (centralised and decentralised) is one of the primary factors influencing profit margins. Centralised models tend to offer higher margins and can generate profits, whereas decentralised models never achieve profitability when assuming current sales prices of the products.
For a centralised facility operating at a large scale, financial viability appears promising across all variations (whey permeate type and reproduction level of integration). For this model, economies of scale and continuous operations allow for the optimisation of equipment use, thereby maximising operational efficiency and enabling profitability when the facility operates at full capacity. A larger production scale (i.e. access to a larger volume of substrate) could have even further improved profitability. Indeed, in this study, the production scale of the centralised model was limited by the total volume of HR currently generated weekly in Quebec (about 110 t). However, this scale remains relatively small compared to other Western BSF facilities, such as Entosystem’s plant (Drummondville, QC, Canada), which has a processing capacity of 250 tonnes per day (Entosystem, 2023). Moreover, when looking at other companies, achieving production at full capacity could potentially require significantly more than the four-year ramp-up period, as considered in this study. Surendra et al. (2020) estimated a production cost of 1,600 USD/t of dried BSF larvae at a valorisation scale of 375 tpw. This is approximately three times lower than the cost estimated for the centralised model at 110 tpw in the present study, suggesting that large-scale centralised systems could benefit from near-linear economies of scale.
Several drawbacks remain associated with the large-scale centralised model, such as the need for substantial investment and a stable, reliable supply of HR from external sources. Indeed, centralised models require higher infrastructure investments than decentralised models, which can make securing capital for such large-scale projects more challenging (Gomes et al., 2023). These infrastructure costs are primarily due to the additional expenses of constructing buildings and secondary infrastructure, which account for almost half of the capital expenditure in the centralised model. Dependence on external hatcheries for residue supply represents another core vulnerability of the centralised model. Indeed, hatcheries may choose to retain their HR or sell them to competing animal waste recovery facilities, such as biogas production plants (Harumi Enokida et al., 2025). This could compel centralised sites to use other equivalent types of locally available residues, as slaughterhouse wastewater (Wu and Mittal, 2012), in the lack of access to HR for their operations. Additionally, the large volumes of residues processed and the establishment of a new treatment site may pose challenges related to social acceptability, particularly concerning odours. Communities near centralised facilities could experience disturbances, as has been observed with other operations (Trépanier and Dumas, 2024). To mitigate those concerns, it is crucial to avoid residential areas and choose a location where current regulations accommodate the emission of odours typical of agricultural activities. In contrast, decentralised sites, which are already processing their residues on-farm, may face less opposition from surrounding communities (Feiz et al., 2022).
Even without achieving profitability, the implementation of decentralised models can still be relevant for reducing HR treatment costs compared to conventional methods, and offer several technical advantages over centralised models. One major benefit is that they make use of existing infrastructure at hatchery sites, such as composting facilities, roads, and electrical connections. These elements, which have not been included in the capital expenditure (CAPEX) calculations, are already in place and help reduce the initial investment needed to implement the system on the farm. Furthermore, decentralised models eliminate the logistical challenges associated with acquiring and transporting inputs for valorisation, as residues are already available on-site. This reduces costs related to purchasing and maintaining a transport fleet, as well as the operational expenses of transportation.
There are also opportunities specific to decentralised models that are not available to centralised ones. For instance, the proposed alternative valorisation system could be applied seasonally when environmental conditions are favourable. Additionally, the infrastructure can be adapted to minimise the need for controlling environmental conditions. For example, although the northern Quebec climate necessitates specialised infrastructure to regulate environmental factors for BSF farming, producing exclusively during the summer months in outdoor bioconversion parks, as described by Chineme and Assefa (2023), could allow for BSF farming with fewer resources dedicated to lighting, heating, and ventilation. In this scenario, neonates would be supplied during the treatment period. During the colder months, when temperatures drop, residues could still be processed using conventional rendering services, allowing for some savings for hatcheries. However, practical challenges may arise with this type of seasonal valorisation system, including difficulties in marketing insect products that are produced irregularly throughout the year and in recruiting and retaining qualified personnel if they are only employed for one or two seasons per year.
Another opportunity specific to the decentralised model is the direct reintegration of freshly produced larvae into poultry feed on-site. While Canadian regulations require that commercial animal feed adhere to compositional and safety standards (Canadian Food Inspection Agency, 2024), producers who fabricate their feed ingredients for on-site use without selling them might be exempt from these requirements under the exemption outlined in Section 4 of the Feeds Act (R.S.C., 1985, c. F-9). Implementing this solution could reduce costs related to processing stages, such as drying larvae for preservation and packaging, while saving producers money on protein feed ingredients for their birds. However, this would not generate profit from the sale of dried whole larvae, and eligibility for regulatory exemption will have to be validated for each site. In contrast, the centralised model cannot take advantage of this opportunity because it does not produce animals fed with insect-based ingredients, unlike hatcheries that raise chickens. To further reduce the costs associated with processing insect-based products and to facilitate the establishment of decentralised insect farms, an effective strategy could be the development of centralised processing facilities. These centres could offer collection, processing, and marketing services for insect products sourced from small-scale local enterprises. This approach would alleviate the burden on smaller producers, allowing them to avoid handling every stage of the production cycle and helping to prevent the frequent underutilisation of costly processing equipment. A similar initiative was notably proposed by the Entotech project in Lévis (Développement économique Lévis, 2024).
Profitability is essential for the financial viability of centralised models; however, it is less important for decentralised models operated directly by hatcheries. Hatcheries primarily generate income from chick and hatching egg production. As a result, the main financial incentive for implementing an on-farm valorisation system is to reduce disposal costs rather than to generate profit. If the alternative system is cheaper than conventional rendering, it remains a viable option. This is particularly true for scenarios processing more than 10 tpw, which are more cost-effective than conventional thermal rendering. For instance, conventional methods reported net margins of –488 USD/t of dry weight residues (Couvoir Scott Ltée, personal communication). However, BSF valorisation also entails economic and operational risks that are not present in rendering. For example, market uncertainty may limit revenues from insect products generated, while equipment failures or colony disease outbreaks could increase costs and require temporary fallback on conventional rendering services until the BSF treatment facility is restored.
In our study, we found that the negative profit margins of decentralised sites processing between 10 to 25 tpw are consistent with the findings of Niyonsaba et al. (2021). Their research indicates that commercial profitability for insect farms in Europe is uncommon. This lack of profitability can be attributed to several factors, including predominantly small-scale production, a reliance on manual operations instead of automation, and limited specialisation in production. In their case study, operational costs (including energy, feed, and labour, but excluding input costs and equipment depreciation) ranged from –837 to 16 337 USD/t of dried BSF larvae produced in Europe. These figures align with the operational costs (ranging from 716 to 1939 USD/t) calculated in our study across all models. A key limitation of the decentralised models is that production scale is constrained by the volume of available residues on-site. Specifically, a small-scale operation processing less than 10 tpw of residues may underutilise the invested infrastructure, as the minimum capacity of industrial processing equipment often exceeds the facility’s processing needs. Similar challenges are observed in emerging mariculture sectors. For example, Engle (2007) reports that in cage culture of species such as mutton snapper, limited fingerling supply can reduce production yields more than the system’s capacity itself. In other cases, hatcheries producing Pacific threadfin are only profitable when reaching economies of scale, with production volumes exceeding local market demand, which limits feasibility if the operation focuses on a single species. These examples show how the availability of inputs can constrain production scale and profitability, a challenge similar to the dependence on on-farm HR in decentralised BSF systems. While market size may not be a limiting factor for the BSF industry, these observations highlight the importance of diversifying substrates to avoid production bottlenecks, ensure sufficient volumes for equipment utilisation, and achieve economies of scale. Using other on-farm residues available in larger amounts, such as pig or poultry slaughterhouse waste (Solinov, 2013), could allow decentralised BSF systems to operate at larger scales, although this option was not explored in our study.
Fermentation step
The type of whey permeate used has a significant impact on operational costs, including transportation, supply of inputs, and infrastructure costs for storage and fermentation. Dry whey permeate is more convenient to store because it comes packaged in 1000 kg tote bags and has a shelf life of up to two years, which reduces the frequency of deliveries. In contrast, wet whey permeate has a maximum shelf life of just two weeks (Agropur, personal communications; Régilait, 2024). Frequent deliveries are necessary, which heightens supply chain risks in the event of logistical delays. To address this, storage silos equipped with agitation systems can be utilised to prevent crystallisation. Another potential strategy is to increase the moisture content of concentrated whey permeate during storage, which may help mitigate crystallisation (Pandalaneni and Amamcharla, 2018). This option was not considered due to the additional complexities associated with storage infrastructure and handling.
A significant advantage of wet whey permeate is its cost, as it is provided free of charge, incurring only delivery costs (Agropur, personal communication). In contrast, dry whey permeate is relatively expensive due to the energy required for the drying process, with market prices averaging around 400 USD/t (Agropur, personal communication). This expense increases the operational costs associated with inputs and is also subject to fluctuations, which could threaten the economic feasibility of the process.
Although the growth of the dairy industry is expected to increase the volume of whey permeate produced, potentially helping to reduce its costs (Rocha and Guerra, 2020), there is a risk of competition for this by-product, especially with its current use as feed for pigs (Nessmith et al., 1997). Ultimately, the use of dry whey permeate is technically advantageous and generally more economically viable for decentralised small- to medium-scale models processing between 10 and 25 tpw. However, for large-scale models that process more than 25 tpw, utilising whey permeate should be considered to further reduce operational costs. Completely removing the fermentation step could additionally lower overall costs, particularly those related to silos and the supply of whey permeate. Nevertheless, omitting this step would not necessarily simplify the valorisation process, as alternative solutions would still be required to address substrate stabilisation, odour control, and microbiological risk management related to HR.
Reproduction step
From this study, sourcing neonates externally offers technical advantages and is preferable for production scales of 10 to 25 tpw. However, from an economic standpoint, maintaining an in-house colony becomes more beneficial for operations processing over 25 tpw. This is due to economies of scale and the high costs associated with externally sourced neonates.
Maintaining an in-house colony of BSF to fulfil neonate requirements presents several challenges. It requires significant investments in infrastructure and equipment, which can make up to 4% of the capital expenditure (CAPEX) of production sites. Additionally, managing a BSF colony is complex and requires specialised expertise, which is often scarce and affects the feasibility of these scenarios. This shortage can complicate the recruitment and training of qualified personnel (Gomes et al., 2023). In-house colonies may be susceptible to disease outbreaks, even though BSF are generally more resistant to diseases than other farmed insects (Joosten et al., 2020). Moreover, these colonies can experience operational disruptions, which can negatively affect their performance and jeopardise the supply of neonates (Suckling et al., 2021).
Besides, an in-house colony has the critical advantage of independence from external suppliers, which reduces supply chain risks, especially since few companies currently provide neonates for the BSF production industry (Niyonsaba et al., 2021). Additionally, maintaining an in-house colony opens the possibility of selling neonates to external decentralised businesses, creating an extra revenue stream (Grau et al., 2023). In-house production sites can also focus on developing genetically tailored strains that are specifically adapted to high-risk substrates, thereby enhancing performance and creating value-added opportunities (Broeckx, 2025). To tackle technical challenges in the early years of operation, production sites might begin by implementing an external sourcing strategy. Once the other components of the production system are fully optimised, they can transition to maintaining an in-house BSF colony. This phased approach can help minimise risks during the initial establishment process.
Marketing steps
The choice of marketing strategy significantly influences product pricing and, as a result, the profitability of production sites. Retail sales typically offer better prices and revenue for producers, even after factoring in the retailer’s margin and the higher packaging costs compared to bulk packaging. However, selling all products through retail requires substantial marketing efforts for market entry, brand development and customer engagement. In contrast, entering the bulk market is more straightforward, as processors handling retail sales manage all marketing aspects. Nevertheless, ingredient producers must still meet the requirements set by these processors, including quality criteria and a minimum volume of product delivered at specified intervals. This can make accessing the bulk market challenging for smaller farms. For instance, those processing 10 tpw of HR may produce less than the 1-ton minimum weekly volume of dried BSFL required by some industrial pet food processors in Quebec (personal communication).
To address market access constraints while maximising revenue, a combined strategy of retail and bulk sales can be considered. This approach involves selling one product (i.e. larvae or frass) through retail and the other in bulk. By doing this, the marketing efforts are reduced by selling one product on a large scale at bulk prices, while selling the other at a higher retail price. This method allows for increased revenue compared to selling exclusively in bulk. However, profitability thresholds indicate that this strategy is only viable for production scales of 25 to 110 tpw. For smaller production scales, achieving profitability by selling one product in bulk necessitates selling the other product (either frass or larvae) at prices that could be as much as 2.53 times the maximum targeted retail price. Specifically, the maximum retail price for larvae is 9065 USD/t and for frass it is 1050 USD/t (Dallaire-Lamontagne et al., 2026). Pricing the products over these levels would make them uncompetitive, making it challenging to attract buyers. Therefore, for operations processing 10 to 15 tpw, retail sales become a more viable commercial option, although they do not necessarily guarantee profitability. These issues further highlight the benefits of keeping the larvae produced at small-scale decentralised sites for on-site feeding of the birds, rather than pursuing a commercialisation approach for insect-based products.
Other considerations
A significant concern is the uncontrolled influx of BSF larvae from Asia into the North American market. Approximately 7715 t of BSF larvae from China arrive annually at the U.S. ports, accounting for nearly 90% of the country’s BSF larvae imports (ImportInfo, 2024). This influx reduces market share for local businesses. In addition, while foreign companies exporting their feed ingredient are required to meet the same quality standards as Canadian firms (CFIA, 2024a,b), regulatory agencies can still face challenges in enforcing quality control, particularly when products are delivered directly to consumers purchasing larvae online that may not meet the country’s safety requirements (Health Canada, 2024). Without stricter monitoring and regulation of these imports, the influx of BSF larvae is expected to continue to grow as demand increases in the North American market (Meticulous Research, 2021). This trend creates an unfair disadvantage for Canadian companies.
Beyond the sale of dried whole larvae and composted frass, several untapped revenue streams could offer interesting opportunities for companies, even if they were not considered in this study. Secondary processing of larvae, such as producing defatted meal, protein extracts, oils (Smets et al., 2020), or other valuable compounds (e.g. chitin, antimicrobial peptides; Abidin et al., 2020; Xia et al., 2021), could serve as additional income sources. These products may have higher selling prices or access to larger markets compared to whole dried larvae, depending on their intended end use (Meticulous Research, 2021). However, incorporating secondary processing rather than just drying whole larvae would add complexity to implementation and require further investment in specialised equipment. Another potential revenue stream could involve charging producers a valorisation fee for collected HR, as is already the case with rendering companies (Rahman and Keena, 2023), keeping service fees competitive to change current practices. This parameter can have a considerable impact on profitability, as highlighted by Leipertz et al. (2024), who demonstrated that, although improving production parameters alone is not sufficient to reach break-even in an industrial BSF production system aimed at replacing fish meal in the Netherlands, charging only 92 USD per t of valorised substrate could make this scenario profitable. Finally, eco-taxation, especially through carbon credits (Van Wyngaarden, 2022), could be beneficial for companies aiming to demonstrate positive environmental impacts and access green markets. Although this study did not assess the environmental impact of the proposed system, it is likely to yield several environmental benefits, particularly in reducing greenhouse gas emissions compared to traditional thermal processing methods like rendering.
5 Conclusion
In conclusion, this study provides valuable insights into how scaling and operational strategies affect both profitability and feasibility in the valorisation of HR using BSF. While several production scenarios were assessed, not all proved feasible for the alternative process developed. Profitability and technical feasibility are strongly shaped by production models, fermentation inputs, reproduction strategies, and marketing approaches. For instance, sourcing neonates externally and using dried whey permeate can simplify operations, whereas scaling up favours wet permeate and the maintenance of an in-house colony. From an economic perspective, the most promising pathway in Quebec is a centralised model at 110 tpw, which benefits from economies of scale and achieves profitability when products are sold through retail or mixed retail–bulk channels. By contrast, smaller decentralised systems, though unprofitable, can still lower disposal costs compared to conventional rendering, particularly at 25 tpw with dried permeate and an in-house colony. However, operational challenges, such as the need for skilled labour and the difficulty of ensuring consistent market access, remain significant barriers to implementation. Overall, centralised, large-scale production should be prioritised to achieve profitability, while decentralised models may still serve farms generating more than 10 tpw of HR by reducing waste management costs. Future research should explore extending this approach to other organic streams and investigating additional revenue sources or seasonal valorisation strategies to further enhance resilience and feasibility.
Corresponding author; e-mail: marie-helene.deschamps@fsaa.ulaval.ca
Acknowledgements
The authors would like to express their gratitude to the following individuals, listed in alphabetical order by institution, for their valuable assistance and contributions to this project: P. Audy (BDC, Canada), D. Peguero and M. Schon (Eawag and ETH Zurich, Switzerland), S. Diener (Eclose, Switzerland), G. Moritz (ETH Zurich, Switzerland), B. Choquet (Hagen, Canada), J. Lavoie (Couvoir Scott Ltée, Canada), J. Chamberland (Université Laval, Canada), T. Marjanen (Manna Insect, Finland), and S. Berrens and L. Broeckx (Thomas More University of Applied Sciences, Belgium). A special thanks is also extended to Eawag for hosting M. Dallaire-Lamontagne as an intern from April 1 to November 30, 2024, which contributed significantly to the successful completion of this project.
Conflict of interest
The authors disclose the following financial interests or personal relationships that may be considered potential competing interests. M-H. Deschamps has received financial support from Couvoir Scott Ltée. M. Dallaire-Lamontagne has a consulting or advisory relationship with Couvoir Scott Ltée. J.-M. Allard Prus is employed by Couvoir Scott Ltée. C. Warburton is employed by Entosystem. S. Rivest is employed by Sogenix Groupe Conseil Inc. M.Pouliot is employed by Agropur.
Funding statement
This project was financially supported by Couvoir Scott Ltée and the Alliance program of the Natural Sciences and Engineering Research Council of Canada (Award Number: ALLRP – 568489-21). Additional funding came from a Mitacs Accelerate Entrepreneur scholarship, a Canada Graduate Scholarship Michael Smith Foreign Study Supplement (CGS-MSFSS), an Alexander Graham Bell Canada Graduate Scholarship from the Natural Sciences and Engineering Research Council of Canada, and a mobility scholarship from the Fondation Famille Choquette. These funds were used to support the research project as well as cover the salary and international internship expenses of M. Dallaire-Lamontagne. The funding sources did not have any involvement in the conduct of the research or the preparation of the manuscript.
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