Feedstock from food waste
Feedstock from food waste
Business Model Description
Deliver biotechnologies to produce proteins for feed from food waste.
Expected Impact
Close the loop in food production and provide an environmentally beneficial alternative for food wastes.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- South Africa: Western Cape
- South Africa: Gauteng
Sector Classification
Food and Beverage
Development need
To reach its targets for SDG 2 - Zero Hunger, South Africa requires sustainable and resilient food production, equal access to land and technology, and access to markets across the agricultural value chain.(2) Three million households still ran out of money to buy food by the end of 2016, the large majority (90.8%) of whom were black South Africans. Further, there is a lack of nutritious food evidenced by the prevalence of underweight children under 5 years old in South Africa (16% in 2017).(1),(2)
Policy priority
Investments in sustainable agriculture will increasingly play a significant role in securing food sources in responsible ways, reducing climate change and protecting scarce natural resources (particularly arable land and water) for generations to come.(7)
Gender inequalities and marginalization issues
During April 2020, the estimated nominal cost of the National Agricultural Marketing Council's (NAMC’s) 28-item urban food basket increased by 1.5%. This occurred in an environment where women are losing their incomes the most, and when children are at home and not benefitting from the school-feeding scheme.(25)
Investment opportunities introduction
The sector is fairly resilient to economic shocks, has high potential for job creation particularly in emerging and rural farming, has large multipliers due to its extensive links to the rest of the economy, and is important for export led growth.(4)
Food and Agriculture
Development need
South Africa's agricultural sector plays a significant role in food security, job creation, international investment and exports: 95% of local food is produced by 3% of large industrial farms, 5% is produced by small scale farmers.(11) With a significant rise in the cost of energy and insecurity of supply, commercial farmers and agri-businesses are becoming increasingly pressured from export markets and consumers to reduce carbon emissions and to offer low-carbon agricultural products.
Gender inequalities and marginalization issues
37.2% industrial farm workers are women.(9) 70% of smallholder farmers are women.(9) Providing targeted support to current female food producers, especially in the informal agricultural sector, is necessary to prevent them from exiting the sector.(25)
Agricultural Products
Pipeline Opportunity
Feedstock from food waste
Deliver biotechnologies to produce proteins for feed from food waste.
Business Case
Market Size and Environment
R11.5 billion can be unlocked per year through waste diversion.
The waste economy contributed around R24.3 billion to South Africa's gross domestic product (GDP) in 2016. It provided 36,000 formal jobs and supported around 80,000 informal jobs/livelihoods. A further R11.5 billion can be unlocked per year through waste diversion.(10)
Indicative Return
15% - 20%
5% - 10%
Profitability is highly dependant on technology specifications as well as output market prices, including of by-products in some cases.(23),(24)
A techno-economic study of food waste valorization via fungal hydrolysis, microalgae cultivation and production of plasticizer, lactic acid and animal feed estimates an internal rate of return (IRR) of 18.98% can be achieved.(23)
Another techno-economic study of low-technology biorefinery specifications indicates profitable scenarios (orange waste) with returns on investment (ROIs) (annual) of 2% to 9% depending on transport costs.(24)
Investment Timeframe
Short Term (0–5 years)
Choice of technology is critical in determining return and payback period. Real world implementation is between 3 and 15 years.(24)
Waste management operations, such as those offered by Inseco, have the potential to produce cashflow shortly after project implementation (i.e.<5 years).
Ticket Size
USD 1 million - USD 10 million
Market Risks & Scale Obstacles
Market - Highly Regulated
Impact Case
Sustainable Development Need
30% of all food produced globally is wasted.(14) In South Africa, 10 million tons of food go to waste every year. This equates to a third of the 31 million tons produced annually in South Africa.(13) The Council for Scientific and Industrial Research (CSIR) has valued this loss at R61.5 billion (13).
Concern is a growing about the inadequacies of solid waste management in developing countries.(15) Organic waste produces harmful greenhouse gases (CO2 and methane), which has a negative impact on the environment.(10) A growing population, scarce water and land resources, and declining natural fish stocks further exacerbate the need to find sustainable waste management solutions.(8)
Traditional methods of producing proteins for feedstock in the agriculture sector, such as using fishmeal, are unsustainable.(8) These methods strain scarce water and land resources, and declining natural fish stocks. New sustainable sources of complete protein can help reduce organic waste and minimise the negative environmental impacts associated with it.
Gender & Marginalisation
37.2% industrial farm workers are women, 70% of smallholder farmers are women
Expected Development Outcome
Using food waste as a protein source for animal feed in the agricultural sector can close the loop in food production. This investment opportunity has the potential to provide an environmentally beneficial alternative for food waste by creating sustainable, high-quality agriculture feed ingredients.
Investments are required to set up zone-wide infrastructure for waste recovery and recycling. Investments in waste management infrastructure will help facilitate the beneficiation of organic waste.(20)
Improve feed self-sufficiency; reduce environmental burden from food waste; divert large volumes of organic waste from landfills; minimise negative environmental impacts associated landfilling waste; offset fishmeal as an unsustainable ingredient in aquaculture, livestock and pet feeds. Increase climate smart agriculture
Gender & Marginalisation
This investment opportunity area can provide targeted support to current female food producers to prevent them from exiting the sector.
Primary SDGs addressed
2.4.1 Proportion of agricultural area under productive and sustainable agriculture
The Agricultural Policy Action Plan (2015–2019), the Integrated Growth and Development Plan (2012), and the Strategic Plan for the Department of Agriculture Forestry and Fisheries (2015–2020) provide the overarching framework for strengthening the government’s commitment to support smallholder producers.(2)
11.6.1 Proportion of municipal solid waste collected and managed in controlled facilities out of total municipal waste generated, by cities
12.3.1 (a) Food loss index and (b) food waste index
Secondary SDGs addressed
Directly impacted stakeholders
People
Indirectly impacted stakeholders
Public sector
Planet
Outcome Risks
Reduce demand for traditional protein-based animal feeds and consequently negatively affect those businesses.
Impact Risks
Unexpected impact risk: If not managed properly, stockpiling organic waste may pollute the environment (methane emissions). Organic waste may also produce strong odours.
Impact Classification
What
The outcome is likely to be positive by diverting waste to landfill and creating a sustainable feedstock solution.
Who
Local municipalities, the environment and agriculture (feedstock)
Risk
Medium risk
Impact Thesis
Close the loop in food production and provide an environmentally beneficial alternative for food wastes.
Enabling Environment
Policy Environment
Chapter 5 of the National Development Plan and Outcome 10 of the Medium Term Strategic Framework): These documents include objectives for absolute reductions in the total volume of waste disposed to landfills each year.(18) To achieve this, municipalities are responsible for diverting organic waste from landfill and composting it.(12)
National Waste Management Strategy: This strategy promotes waste minimization, reuse, recycling and recovery of waste, with the ultimate aim of diverting waste from landfill.(12)
Operation Phakisa: This national government program aims to increase access to feedstock and stimulate growth in market demand.(10)
Financial Environment
Financial incentives: Subsidies can include grants that provide financial incentives to improve various aspects of solid waste management, including research and development. Potential sources of funding include: the Green Outcomes Fund, Employment opportunity funding, grant / green funding, and United States Agency for International Development's (USAID) Development Innovation Ventures.
Regulatory Environment
City of Cape Town’s by-law: This regulation requires that any person intending to perform recycling, reuse or recovery activities, or sort waste must be accredited before commencing activities.(3)
National Environmental Management Waste Act (NEMWA): This Act requires that for any waste investment, the waste storage, recycling, recovery, treatment or disposal activities must be licensed as per NEMWA's listed activities.
Marketplace Participants
Private Sector
Inseco, AgriProtein
Multilaterals
Development Bank of Southern Africa
Non-Profit
GreenCape, Institute of Waste Management of Southern Africa, Organics Recycling Association of South Africa, Bill and Melinda Gates Foundation
Target Locations
South Africa: Western Cape
South Africa: Gauteng
References
- (1) South African Government (2019). South Africa Voluntary National Review: Empowering people and ensuring inclusiveness and equality. https://sustainabledevelopment.un.org/content/documents/23402RSA_Voluntary_National_Review_Report___The_Final_24_July_2019.pdf
- (2) Statistics South Africa (2019). Sustainable Development Goals: Country Report 2019 - South Africa. http://www.statssa.gov.za/MDG/SDGs_Country_Report_2019_South_Africa.pdf
- (3) Statistics South Africa (2019). Towards measuring the extent of food security in South Africa. http://www.statssa.gov.za/publications/03-00-14/03-00-142017.pdf
- (4) Business for South Africa (2020). Post COVID-19: A new inclusive economic future for South Africa – Delivering an accelerated economic recovery strategy.
- (5) Deloitte (2020). How COVID-19 has affected South African Grocery Retail Consumer Sentiment: Consumer insights pre- and during lockdown. https://www2.deloitte.com/content/dam/Deloitte/za/Documents/za_Deloitte_BrandsEye_Consumer-Sentiment-report_May%202020.pdf
- (6) Nakedi, L. (2020). Project Steering Committee Meeting. April 30 2020.
- (7) Kushke, I.(2020). Sustainable Agriculture Market Intelligence Report. https://www.greencape.co.za/assets/AGRICULTURE_MARKET_INTELLIGENCE_REPORT_WEB.pdf
- (8) AgriProtein (2020). AgriProtein. https://www.agriprotein.com/
- (9) Ajila, C.M., Brar, S.K., Verma, M., Tyagi, R.D., Godbout, S. and Valero, J.R. (2012). 'Bio-processing of agro-byproducts to animal feed', Critical Reviews in Biotechnology, 32(4), 382-400. https://www.tandfonline.com/doi/abs/10.3109/07388551.2012.659172?src=recsys&journalCode=ibty20
- (10) GreenCape (2020). Waste Market Intelligence Report. https://www.greencape.co.za/assets/WASTE_MIR_20200331.pdf
- (11) Inseco (2020). Inseco. https://inseco.co.za/
- (12) Department of Environmental Affairs (2011). National Waste Management Strategy. https://www.environment.gov.za/sites/default/files/docs/nationalwaste_management_strategy.pdf
- (13) Franchise Association of South Africa (2019). Tackling South Africa’s food waste problem. https://www.fasa.co.za/tackling-south-africas-food-waste-problem/
- (14) Food and Agriculture Organization of the United Nations (2020). Food Loss and Food Waste. http://www.fao.org/policy-support/policy-themes/food-loss-food-waste/en/
- (15) Kubanza, S. and Simatele, M.D. (2019). 'Sustainable solid waste management in developing countries: a study of institutional strengthening for solid waste management in Johannesburg, South Africa' Journal of Environmental Planning and Management, 63(1), 1-14. https://www.researchgate.net/publication/332261392
- (16) AgriProtein (2018). USD 105 million raise for sustainable feed firm. https://www.agriprotein.com/press-articles/usd-105-million-raise-for-sustainable-feed-firm/
- (17) IMPAKT Africa (2017). Value Creation Through ESG. https://kudosafrica.com//assets/KudosAfrica_ImpaktAfricaMag_Dec2017.pdf
- (18) Statistics South Africa (2019). Sustainable Development Goals: Country Report 2019 - South Africa. http://www.statssa.gov.za/MDG/SDGs_Country_Report_2019_South_Africa.pdf
- (19) MDPI: Historical Review of Waste Management and Recycling in South Africa. 2017. https://www.mdpi.com/2079-9276/6/4/57
- (20) Vice, M.A.P., Emery, R.C. and Wise, C.C. (2014). The diversion and beneficiation of organic waste from landfill in the Western Cape. IWMSA. https://iwmsa.co.za/sites/default/files/downloads/vice+m-diversion+and+beneficiation+of+organic+waste+from+landfill+inal_approved.pdf
- (21) Western Cape Government. Western Cape Integrated Waste Management Plan 2017-2022. https://www.westerncape.gov.za/eadp/files/atoms/files/Western%20Cape%20Integrated%20Waste%20Management%20Plan%202017-2022.pdf
- (22) Nolet, S. (2017). The Opportunities and Challenges of Insect Farming for Feed. https://agfundernews.com/opportunities-challenges-insect-farming-feed.html
- (23) Kwan, T.H., Pleissner, D., Lau, K.Y., Venus, J., Pommeret, A., and Sze Ki Lin, C. (2015). 'Techno-economic analysis of a food waste valorization process via microalgae cultivation and co-production of plasticizer, lactic acid and animal feed from algal biomass and food waste', Bioresource Technology, 198. www-sciencedirect-com.uplib.idm.oclc.org/science/article/pii/S0960852415012717
- (24) Cristobal, J., Caldeira, C., Corrado, S., and Sala, S. (2018). 'Techno-economic and profitability analysis of food waste biorefineries at European level', Bioresource Technology, 259. https://www.sciencedirect.com/science/article/pii/S0960852418303547
- (25) United Nations Development Programme (2020). South Africa Report 2020: Covid-19 Rapid Emergency Needs Assessment for the Most Vulnerable Groups. https://www.za.undp.org/content/south_africa/en/home/library/rapid-emergency-needs-assessment.html