To Waste or Not to Waste

Are BSF Producers Waste Managers or Protein Suppliers?

By Cobus Kotze – Chief Executive Officer, Nutrisek

Beta Buzz speaks with Cobus Kotze, CEO of Nutrisek, to explore one of the biggest questions facing the insect industry today: are BSF producers waste managers or protein suppliers?

Defining the Role of BSF in Waste and Protein

If there’s one lesson, I’ve learned from 15 years in Black Soldier Fly (BSF) farming, it’s this: our industry is not quite as special as we like to believe.

Yes, we’re solving a tough problem.
Yes, the planet urgently needs what we do.
Yes, insect farming is, let’s admit it, pretty awesome.

But at the end of the day, BSF farming is still a business. If you don’t manage it like one, the money dries up, the team loses motivation, and investors stop caring about the progress you’ve made. Passion alone won’t keep the lights on.

That reality is now shaping into one of the biggest debates in our sector: are we waste managers, or are we protein producers? The answer has major implications for how we design facilities, raise capital, and market our products.

The Big Question

Conversations in BSF circles increasingly circle back to the same question: to waste or not to waste? Should a company define itself as part of the waste management industry earning income from tipping fees while handling the messier logistics, or should it position itself firmly as a protein supplier, producing premium ingredients for feed and fertiliser markets?

Each path comes with trade-offs and choices. Centralized or decentralized plants? Outsourced breeding or fully integrated systems? The truth is, there’s no single right answer. Every entrepreneur has to find the model that fits their context.

That said, I believe medium-scale, decentralized plants processing source-separated, post-consumer organics will form a growing part of the landscape. Once regulatory barriers ease, this model could be transformative.

What Business Are You Really In?

One of the easiest icebreakers when talking about BSF is simply explaining the concept. Most people, whether a shopping mall cleaner or a hedge fund chairman intuitively grasp the logic of turning food waste into protein. It just clicks.

The harder conversation comes when someone asks: “How much do you produce?” or worse: “Are you profitable?” Those moments reveal the uncomfortable truth. Many of us throw everything into perfecting our farming systems and building cutting-edge technology, often without asking if we’re chasing the right goals.

The reality is that BSF farming itself is no longer the bottleneck. Off-the-shelf systems now range from 2 to 200 tons per day. The real question is how you position the business around that capability.

• Waste-first companies need to master logistics: securing reliable feedstock streams, ensuring daily volumes, and managing variability. Without waste, the farm starves. Efficiency means nothing if there’s no food for larvae.
• Protein-first companies typically secure supply through long-term contracts with agriculture or food processing. Their focus shifts toward product development and market access, finding customers willing to pay premiums for larvae meal or frass.
• Small-scale producers, meanwhile, should probably think less about the larvae themselves and more about branding their larvae-fed eggs, fish, or meat to capture higher prices. The feed savings are nice, but not life-changing.

Choosing your lane early is essential. Once the bug bites, it’s hard to step back and ask the difficult questions.

Stripping Farming to the Numbers

At its core, the waste vs protein debate is about risk and reward. How much volatility can you stomach, and what upside are you chasing?

To illustrate, I built a basic model using one of our own bioreactor systems, plus some generic European costings. I hesitated to include it as models are always full of assumptions, but sometimes a spreadsheet tells the story better than words.

Here’s a look at a 20-ton per day operation, covering just the farming side. This version assumes in-house breeding, but you could adapt it to a “grow-out only” setup by buying neonates, which lowers CAPEX but raises OPEX.

Scenario 1: Waste-first (gate fee model).

• Feedstock “purchased” at $50/ton (via tipping fees).
• Wet larvae sold to the processing plant at $400/ton.
• Breakeven for whole dried larvae meal: $1,875/ton.
• Result: ~43% EBITDA margin, Debt Service Coverage Ratio of 2.7. Very investible, even under conservative assumptions.

Scenario 2: Protein-first (market-driven model).

• Feedstock cost: -$35/ton (no gate fee).
• To balance the same model, wet larvae must sell for $870/ton.
• Breakeven for dried larvae meal: $3,340/ton.
• Result: a far tougher sales challenge, requiring premium positioning.

The contrast is clear: the waste-first model provides a cushion through gate fees, while the protein-first model demands high-value customers and strong market differentiation.

Risk, Reward, and the South African Context

Where Nutrisek operates, in South Africa, the story looks a little different from Europe.

Here, most BSF producers work with pre-consumer, EU-grade waste streams to export larvae. Regulations allow feeding pre-consumer waste, but reliable gate fees are scarce. Consistency, however, is the reward: uniform feedstock leads to better conversion rates, steadier operations, and higher-value frass.

The challenge is cash flow. Export markets often mean waiting weeks to be paid, an obstacle that can make or break small producers.

By contrast, a waste-first model with solid gate fees creates a more balanced revenue structure. Even if larvae only sell at fishmeal parity, the tipping income helps cover costs and reduces volatility. The drawback, of course, is the operational complexity of handling post-consumer waste; collection, contamination, and processing all become bigger headaches.

Choosing Your Lane

So, how do you decide?

• waste-first, be prepared to build strong logistics and processing systems. The upside is stable revenue and insulation against price swings. The downside is messier operations and regulatory red tape.
• protein-first, invest early in sales and market development. Success depends on finding buyers who see your products as more than just commodities. The upside is potential premium pricing. The risk is reliance on fickle markets and longer cash cycles.
• small-scale, remember the larvae are a means, not an end. Focus on how they differentiate your farm’s eggs, fish, or poultry in the market.

The Dream vs The Reality

In an ideal world, we’d all enjoy the best of both: charging gate fees for waste while also selling larvae meal and frass at premium prices. In reality, most of us will need to pick one side of the fence.

That doesn’t mean the other path is wrong, it just means the trade-offs are real. And the sooner you make that choice, the sooner you can build focus, efficiency, and competitive advantage.

Final Thoughts

The BSF industry has come a long way in a short time. We’ve proven the biology, refined the technology, and demonstrated the potential. But the future will be defined less by farming breakthroughs and more by business models that scale sustainably.

So, to waste or not to waste? The answer depends not on ideology, but on strategy. Run the numbers. Know your context. Decide where you want to compete.

Because once the bug bites, it’s hard to turn back.

Enjoyed reading this article? You can read the full issue of our Beta Buzz #6: From Waste To Value publication here