Sally Lee and Esther Lo at ShookLin & Bok LLP contributed to this alert.
This article follows our introduction to the alternative protein industry and the legal considerations for companies and investors operating within it. The focus of this article is on the regulation of insects as food and feed in the European Union (“EU”), United Kingdom (“UK”), U.S., and Singapore.
Newcomers might wish to read part 1 of the series.
Background
While insects are traditional sources of food in parts of Latin America, Asia, and Africa, the insect protein industry worldwide is currently experiencing a surge in investment, and is expected to be worth over £3 billion in 2027.[1] This investment growth is driven by two key factors: first, insect proteins offer excellent nutritional value — the exoskeleton of insects, known as chitin, contains fibre and acts as a prebiotic; and second, insects are a viable way to reduce inefficiencies in, and the environmental costs of, our food systems — insect production can be compliant with circular economy principles. Entocycle in the UK, Ÿnsect in France, Bitty Foods in the U.S., and Nutrition Technologies in Singapore are active in the insect protein market. However, the sector is currently constrained by consumer reluctance to try novel foods (food neophobia), cost, and regulation.
Unlocking Growth in the Insect Protein Industry
The actions being taken by the industry to overcome the barriers to growth in the EU, UK, U.S., and Singapore, include:
- Consumer reluctance to explore unfamiliar foods (food neophobia). Companies are working around this by introducing insect proteins (in the form of powder or oil) into familiar products, such as nutrition bars, burgers, bread, and pasta. Cutting-edge restaurants, such as Noma in Denmark, have also begun featuring insects on their menu, seeking to create “a gastronomic argument that will make insects an acceptable food in the western world”.[2] Alongside this, the industry has moved into the animal feed space, which is now a key area of the market, as insects present a viable and more environmentally friendly alternative to soy and fishmeal.
- Cost. Insect proteins are still expensive to produce; the equipment and processes required to produce them need optimisation for large-scale production. Some consumers are willing to pay higher prices for the health and environmental benefits of insect protein, but many are priced out of this market. To address this, companies and some governments (e.g. in Singapore) are investing heavily in production R&D and partnering with food conglomerates to gain efficiencies. This is a trend that we expect will continue as the insect protein industry grows.
- Regulation. There has traditionally been a lack of regulation and certainty on the rules relating to the use of insects for food and animal feed. Current regimes regulating insect protein for human consumption are constraining the speed at which the industry is moving. The regulatory regimes generally entail time-consuming, expensive, and complex approval processes, and/or generate uncertainty for producers. They also present significant hurdles for start-ups. Regulators are weary of the food safety risks presented by insect proteins and, in particular, the risks associated with intra-species feeding of animal proteins—a practice which has historically led to outbreaks of diseases such as Transmissible Spongiform Encephalopathies (e.g. mad cow disease). We present some further thoughts on the regulatory regimes below.
A Snapshot of the Regulation of Insects in the EU, UK, U.S., and Singapore
a. Insects for Human Consumption
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EU
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Regulation (EU) 2015/2283 (the “Novel Food Regulation 2015”)
Whole insects and their derived products constitute “novel” foods under the Novel Food Regulation 2015. The regulation provides that in order for them to be sold on the European market, they must be authorised by the European Commission (i.e. must have market authorisation).
Obtaining market authorisation requires a safety evaluation of a particular food by the European Food Standards Agency and approval from the EU member states.
Once authorised, the food is added to the EU authorised novel foods list, and producers can begin selling it, provided that they comply with any conditions specified in the approval.
Producers must also comply with EC Regulation 999/2001 (the “TSE Regulation”), which limits the substrates that can be fed to insects to materials of vegetal origin. Former foodstuffs containing meat and fish are not permitted substrates.
Exceptions
The following member states do not fall within the regime outlined above: Finland, Sweden, Estonia, Latvia, Lithuania, the Netherlands, Belgium, Czech Republic, and Portugal.
These countries permit the commercialisation of whole insects and their derived products pursuant to a transitional measure introduced by the Novel Food Regulation 2015 (“Transitional Measure”). This allows insect producers who had lawfully placed specific insect products on their markets before the commencement date of the Novel Food Regulation 2015 (which was 1 January 2018) to continue to do so in line with national food safety regulations, until generic market authorisations for the respective products are granted.[3]
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UK
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The Novel Food Regulation 2015 was implemented in the UK through the Novel Foods (England) Regulation 2018, but the Transitional Measure was not.
The UK’s Food Standards Agency (“FSA”) now manages the pre-market authorisation process in the UK.
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U.S.
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Products in the insect protein industry in the US are currently subject to the U.S. Food & Drug Administration’s (“FDA”) general human and animal food regulations. The FDA has not yet engaged in rulemaking or issued guidance specific to edible insects.
In response to requests for information, the FDA has commented that “bugs/insects are considered food if that is the intended use.” The FDA has also noted that insects for human consumption must be clean and wholesome; raised specifically for human food following current Good Manufacturing Practices; and properly labelled. This strongly suggests that edible insects in the U.S. must be raised specifically for human consumption, and not collected in the wild.
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Singapore
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Singapore introduced a novel food regulatory framework in 2019. Novel foods and food ingredients are defined as ingredients that have not been “consumed as an ongoing part of the diet by a significant human population, for a period of at least 20 years [...] without reported adverse human health effects”.[4] Insects fall within this definition according to the Singapore Food Agency (“SFA”).[5]
The SFA is responsible for approving novel foods. In order to obtain approval for products containing novel foods, companies are required to: (i) undertake and submit evidence of safety assessments of products to cover potential food safety risks, including toxicity, allergenicity, safety of production methods, and dietary exposure arising from consumption; (ii) disclose the materials used in manufacturing processes; and (iii) provide evidence of how such processes are controlled to prevent food safety risks. Applications are assessed on a case-by-case basis by the SFA and their review can take three to six months.
At present, the SFA has confirmed that the import and sale of insects for human consumption in Singapore is not allowed. However, we note that two Singapore edible insect start-ups (Asia Insect Farms Solution and Altimate Nutrition) have partnered with insect rearing farms in Southeast Asia with the aim of eventually setting up their own production facility in Singapore. The two companies expect to receive regulatory approval to commercialise their products in Singapore in Q4 of 2021.6
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b. Insects for Animal Feed
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EU
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The use of certain insects as animal feed is permitted under EU Commission Regulations.
Regulation (EU) 2017/893 authorised the use of (i) processed animal protein derived from seven species of insects, and (ii) compound feed containing such processed animal protein, for feeding aquaculture animals.
In August 2021, Regulation (EU) 2021/1372 authorised the use of processed animal proteins derived from insects in poultry and pig feed. This regulation came into effect in September 2021.
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UK
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Regulation (EU) 2017/893 also applies in the UK, but as the UK left the EU on 31 January 2020, the new Regulation (EU) 2021/1372 authorising the use of insect proteins in poultry and pig feed does not apply.
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U.S.
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Generally speaking, the FDA also has regulatory authority over animal feed, which includes both food for farm animals and pet food and treats for cats and dogs. Currently, the FDA has not issued guidance about insects for animal consumption. However, the FDA works with the Association of American Feed Control Officials (“AAFCO”) to decide which ingredients can be used.
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Singapore
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The SFA is also responsible for regulating animal and bird feed. As part of the licensing requirements for establishments rearing insects to produce animal feed, the SFA requires that the substances used to feed the insects are properly handled and traceable to ensure the safety of insect-derived animal feed.7
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Commentary
a. Insects for Human Consumption
In the U.S., there is still a lack of legal certainty for producers operating in this area. The FDA may consider insects for human consumption to be food additives under the Food, Drug, and Cosmetic Act (“FDCA”). A food additive is a substance “the intended use of which results or may reasonably be expected to result [...] in its becoming a component or otherwise affecting the characteristics of any food”, 21 USC § 321(s). Food additives require premarket approval by the FDA unless they are generally recognised as safe (“GRAS”), which for novel foods requires a consensus among qualified experts. GRAS certification may prove challenging for insects for human consumption given the vast number of insect species and the complexity of the evaluation process. In the meantime, best practices are for producers to ensure that their food is “wholesome”, sanitary, and not misbranded.
The EU regime is complicated and compliance is costly. It is also difficult to navigate, given the difference in approaches across member states resulting from the transitional measure introduced by the Novel Food Regulation 2015.
The fact that the Transitional Measure was not carried over by the Novel Foods (England) Regulation 2018 in the UK has been problematic for British companies, which must now go through the expensive and time consuming FSA pre-market authorization process. This has been a set back for the industry in the UK and has also been a source of frustration for insect producers, as the FSA has instituted a transition arrangement for cannabidiol (CBD) products (which are also subject to the novel food regulations in the EU and the UK).
Additionally, the UK has discretion to legislate freely in this area now that it is no longer a member state of the EU, but the FSA has not deviated from the substance of the EU regulations. The industry in the UK is calling for legislation to be relaxed and for the market authorisation regime to be reconsidered. The hope is that the UK Government will introduce a regime which protects consumers and ensures the quality and safety of products, whilst allowing the industry to reach its full potential.
Singapore is known for its acceptance of alternative proteins for human consumption and it is clearly investing heavily in this space. The SFA was recently established and has, in a short time, organised the regulatory framework for novel foods and a working group to support the framework, and called for R&D grants from the Singaporean government. The intention is for the regulatory framework to be kept under review so that it can be updated as novel food industries evolve. The SFA’s hope is that this will provide a workable scope for businesses to innovate competitively and ensure that any food safety risks can be identified and managed early in the process.
b. Comments on Use for Animal Feed
The use of insect proteins in poultry and pig feed becoming permissible is big news for the animal feed industry in the EU and will provide a significant boost to the European insect industry. However, it will still be necessary for producers to comply with TSE Regulations, which means that they will be limited in terms of the substrates that they can feed to insects produced for poultry and pig feed.
No similar moves have been made in the UK to permit the use of insect proteins in poultry and pig feed. However, such a move would make sense, given the predictions published in a report commissioned by the WWF and Tesco on its potential use. The report provides that “total demand for insect meal from the UK’s pig, poultry and salmon sectors could reach c.540,000 tonnes a year by 2050”.[6] If legislation is not relaxed to allow insect protein to be used as pig and poultry feed, the UK’s insect protein industry risks falling behind.
In the U.S., AAFCO has voted to allow black soldier fly larvae in adult dog food. As of now, no other insect ingredients are approved for use in animal feed in the U.S.
Black soldier fly larvae are also approved for use in fish feed in Singapore. In 2019, Enterprise Singapore, a Singapore government agency responsible for championing enterprise development, announced its investment in Nutrition Technologies, a Singapore-based agri-food tech company aiming to establish the largest high-tech commercial-scale black soldier fly larvae production facility.[7]
Conclusion
Regulation is still a key constraint to the growth of the insect protein industry. We are seeing much progress, but regulators will need to go further (and faster) if they want to enable the industry to reach its potential.
Insect protein producers and investors interested in this space are advised to keep an eye on regulatory developments to ensure that they can capitalise on opportunities when they arise. Accepting that our food systems need to adapt to prepare for the future and, in particular, that they must change in order to stave off the worst effects of climate change, insect protein looks to be a key part of our future food systems.
Julia Kotamäki, London trainee solicitor, contributed to the drafting of this alert.
[1] https://www.meticulousresearch.com/product/edible-insects-market-5156.
[2] https://noma.dk/the-weather-report/the-project-insects-as-a-food-for-the-future/.
[3] Article 35.2 of Regulation (EU) 2015/2283.
[4] https://www.sfa.gov.sg/docs/default-source/food-import-and-export/Requirements-on-safety-assessment-of-novel-foods_23-Nov-2020.pdf.
[5] https://www.sfa.gov.sg/food-information/risk-at-a-glance/safety-of-alternative-protein.
[6] https://www.wwf.org.uk/sites/default/files/2021-06/The_future_of_feed_July_2021.pdf.
[7] https://www.enterprisesg.gov.sg/media-centre/media-releases/2019/july/nutrition-technologies-raises-series-a-funding-from-openspace-ventures-and-seeds-capital-to-set-up-southeast-asia-largest-insect-protein-production-facility.
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