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 The Economic Cost-benefit Analysis of Black
Soldier Fly as an Alternative Animal and Fish
Feed Ingredient in Malawi
Maggie G. Munthali, Lemekezani Chilora, Mike Goliath, William J.
Burke, M. Eric Benbow, Jeremiah Kangʼombe & Andrew Safalaoh

MwAPATA Institute
Working Paper No. 23/01

March 2023

P.O. Box 30883 Capital City, Lilongwe Malawi

Dr. Maggie Munthali ([email protected]) is a Research Fellow at MwAPATA Institute. Mr. Chilora
is a Research Analyst at MwAPATA Institute. Dr. Burke is an Associate Professor of Agricultural, Food and
Resource Economics at Michigan State University and Principal Investigator at MwAPATA. Prof. Benbow is
a Professor at Michigan State University. Mike Goliath is a Student at LUANAR. Prof. Kangʼombe is a
Professor at LUANAR. Dr. Safalaoh is an Associate Professor at LUANAR.

© MwAPATA Institute, 2023

 The Economic Cost-benefit Analysis of Black Soldier Fly as an
Alternative Animal and Fish Feed Ingredient in Malawi

Maggie G. Munthali, Lemekezani Chilora, Mike Goliath, William J. Burke, M. Eric Benbow,
Jeremiah Kangʼombe & Andrew Safalaoh

Executive Summary

Insect farming is a high-potential emerging farming enterprise in sub-Saharan Africa and

their production has a relatively small ecological footprint. Black Soldier Fly (BSF), Hermetia
illucens, is a promising insect species for a sustainable and innovative alternative protein
source in animal feed. Little or no evidence exists showing whether BSF is a viable
alternative sustainable feed ingredient in aquaculture and animal feed in Malawi or an
economically feasible option for farmers. The objective of the study is to evaluate the
financial feasibility of BSF farming at various scales of production using Cost-Benefit
Analysis (CBA) with data collected from a small-scale pilot BSF farm in Lilongwe. The study
addressed the following research questions:

(a) What are the costs and benefits of farming BSF in Malawi for (i) small-scale
farming (individual farmers, clubs, and cooperatives), and (ii) large-scale
commercial farmers?
(b) What drives variation in the benefit/cost ratio (BCR) of BSF farming across scales?
(c) How could policies improve BCRs of BSF farming to support adoption in Malawi?

The indicators used to assess the economic viability of BSF farming for smallholder and
commercial farmers in this study included Net Present Value (NPV) and Benefit Cost Ratio.
Results imply BSF farming is viable and feasible across scales of production. Small-scale
farmers will generate roughly MK507,100 of gross revenue for one larval cycle and
MK2,535,500 (over $2,500) annually. Commercial farmers can generate MK1,536,100 for one
larval cycle and MK7,680,750 annually. Sensitivity analysis shows BSF farming remains
profitable even within a 10% variation in the cost of production, the price of outputs, and the
yield of BSF larvae and frass.

MwAPATA Working Paper 23/01 i

 To our knowledge, despite enthusiasm around insects as an alternative protein, this study
fills an empirical gap on the viability and feasibility of BSF production across scales. These
results also provide a rationale for further development of BSF farming in Malawi, which has
received little political attention. These findings will enable the government and other
stakeholders to develop strategies and policy actions to promote BSF farming in the country.
Based on the findings, we recommend the following:

(a) Invest in building the capacity of farmers and extension workers' education in BSF
farming and its use in feed to increase the adoption among the farmers.
(b) Raise awareness among the farmers, entrepreneurs and policy-makers on the socio-
economic and ecological benefits of BSF farming to facilitate transitioning from
conventional animal protein sources to insect protein sources.
(c) Provide farmers and entrepreneurs access to capital and formal credit to enhance the
uptake of BSF farming. This would require supporting formal lending institutions such
as commercial banks, microfinance, private sector savings and credit unions to make
their interest rates, repayment periods and lending procedures, especially the
collateral security, more favorable.
(d) Support more R&D in BSF to enable the development of this emerging industry.
(e) Establish a regulatory framework to build consumer confidence in the safe and
effective use of insects as animal and aquaculture feed.

MwAPATA Working Paper 23/01 ii

 Munthali et al.

1. Introduction

1.1 Background

The need is growing for innovation around how farmers raise and feed animals. Global
population growth, urbanization and increased cost of living are likely to disrupt human and
animal nutritional uptake, particularly protein (Henchion et al., 2017; van Huis, 2013). These
unfolding changes may reduce access to the land essential for producing feed used in fish
and livestock production while coinciding with greater demand for their products in diets.
Sustainable insect farming (e.g., BSF farming) in ambient closed or open environments and
reared at various scales either on small-scale farms or large-scale rearing facilities offer
great economic and financial benefits such as employment and income opportunities.
Insects also act as alternative sources of conventional meat products to the growing world
population and feed for animals and fish thereby increasing the production of poultry,
livestock and aquaculture. (Mottet et al., 2017).

Moreover, livestock production has been associated with numerous detrimental

environmental repercussions such as soil erosion, loss of biodiversity, acidification due to
leaching of ammonia, depletion of fish, deforestation, desertification, high water footprint,
water pollution, eutrophication, and generation of large quantities of waste (Ermolaev et al.,
2019; Gerber et al., 2013; Lubkowski, 2016; Mekonnen & Hoekstra, 2012; Mertenat et al.,
2019; Sogari et al., 2019; Spranghers et al., 2017; Stamer, 2015; Tacon & Metian, 2008; van
Huis, 2015). Further, the livestock industry is responsible for the increased emission of
anthropogenic greenhouse gases (GHGs), especially methane and nitrous oxide; for
example, 35-40%, 68% and 64% of methane, entheogenic nitrous oxide and total ammonia
emissions, respectively are attributable to livestock (Dopelt et al., 2019; Ermolaev et al.,
2019; Leytem et al., 2011; Mertenat et al., 2019; Pang et al., 2020).

The environmental impacts from conventional livestock production and feed demands
can be mitigated by shifting from crop-based protein sources to alternatives, without losing
important nutritional benefits (Abbasi et al., 2016; Ermolaev et al., 2019; Gahukar, 2016;
Lange & Nakamura, 2021; Mertenat et al., 2019; Pang et al., 2020). In this study, we examine
the prospect of using insects as livestock and aquaculture feed. For developing countries
such as Malawi, insect farming could provide an accessible, cost-effective and sustainable

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 Munthali et al.

alternative protein source for aquaculture and animal feeds (Chia et al., 2019; Limbu et al.,
2022; Pechal et al., 2019). For instance, Munthali et al., (2022) reported that one of the
challenges affecting small-scale aquaculture in Malawi is the lack of access to quality fish
feed and the commercial feed available on the markets is expensive since it is imported from
Zambia, eventually, calling for alternative aquaculture feed. In Malawi, however, insect
farming has received little government attention and minimal private investment. In part, this
may stem from the dearth of evidence regarding its viability.

In this paper, we aim to fill this gap by providing evidence on the economic feasibility of
insect farming, either as a smallholder income-generating activity or as a larger commercial
enterprise. Specifically, we consider the farming of Black Soldier Flies (BSF), Hermetia
illucens L., as an alternative animal and aquaculture feed ingredient in Malawi. We use
primary data collected from Bunda college of agricultureʼs small-scale BSF pilot farm and
cost-benefit analysis to answer the following questions:

(a) What are the costs and benefits of farming BSF in Malawi for (i) small-scale
farming (individual farmers, clubs, and cooperatives), and (ii) large-scale
commercial farmers?
(b) What drives variation in the benefit/cost ratio (BCR) of BSF farming across scales?
(c) How could policies improve BCRs of BSF farming to support adoption in Malawi?

Based on parameters found in the literature and through interviews, we find the benefits
of BSF farming likely exceed the costs in most scenarios. There are, however, actions that
could be taken to improve the return on investments in BSF. This evidence on the economic
feasibility of BSF will be valuable to potential investors and policymakers aiming to better
understand and promote BSF as an alternative to animal and aquaculture feed in Malawi.

1.2 Why Black Soldier Fly?

Insects are a promising sustainable protein source for livestock, and fish because of their
high nutritional value (the protein content of edible insects ranges from 30% to 65% of the
total dry matter), and they emit relatively low levels of GHGs (Bovera et al., 2016; Dobermann
et al., 2017; Ermolaev et al., 2019; Halloran et al., 2018; Mertenat et al., 2019; Pang et al.,
2020; van Huis, 2013; van Huis & Oonincx, 2017). The authors posit that BSF can be used as

MwAPATA Working Paper 23/01 2

 Munthali et al.

an organic waste converter such that total direct GHG emissions from food waste treatment
by BSF larva compositing are lower than those from conventional food waste treatment. The
use of insects as animal and fish feed has increased exponentially over the past decade,
thereby, reducing reliance on traditional feed sources such as soy-based feed (van Huis et
al., 2021). The Food and Agriculture Organization (FAO) recommends incorporating insects
into animal feed to enhance food security and alleviate poverty (FAO, 2013; van Huis, 2015).

Approximately 40% of global arable land is used to produce fields of grain to feed fish,
poultry and livestock (Mottet et al., 2017). Studies have found that insect farming requires
significantly less arable land and water for rearing compared to traditional livestock
production systems (Espitia Buitrago et al., 2021; Payne et al., 2016; van Huis & Oonincx,
2017). For instance, insect farming uses 50‒90% less land per kg of protein produced and
40‒80% less feed per kg of edible weight; produces 1.2‒2.7 kg less greenhouse gas
emissions per kg of live weight gain; and uses 1,000 L less water per kg of live weight gain
compared to conventional livestock production systems(Espitia Buitrago et al., 2021; Payne
et al., 2016). Hence, promoting the use of insect protein instead of plant-based protein will
free up arable land for food production, thereby improving food security.

The Black Soldier Fly (BSF), Hermetia illucens L. is an increasingly popular candidate for
a sustainable alternative feed source (Chia et al., 2019; Limbu et al., 2022; Pechal et al.,
2019). A key difference between BSF and alternatives is the fact that adult flies live entirely
off of nutrients stored during the larval stage (adult flies do not even have functional mouths)
and can survive up to 4 months (Caruso et al., 2014; Edea et al., 2022; Lu et al., 2022; Makkar
et al., 2014). As such, BSF larvae are particularly adept at isolating and storing important
nutrients ‒ they must obtain all the nutrients they will need for their full life cycle before
pupating. Furthermore, BSF can convert a wide range of organic substrates (from food waste
to manure) into a high-quality nutrient source for animals and aquaculture feed thereby
reducing waste in landfills (Caimi et al., 2021; Chia et al., 2019; Diener et al., 2011; Nguyen
et al., 2015; Shelomi, 2020; Stamer, 2015; St-Hilaire et al., 2007; Veldkamp & Bosch, 2015).
The protein content of BSF larvae varies based on the substrates ranging from 37%- 63%;
fat content ranges from 7-39% (Table 1).

Moreover, the byproducts of BSF (frass) can be used as organic fertilizer for crop
production (Anyega et al., 2021; Beesigamukama et al., 2020; Gärttling et al., 2020;

MwAPATA Working Paper 23/01 3

 Munthali et al.

Table 1: Crude protein (CP) and crude fat (CF) content of BSF larvae reared on different
organic matter substrates
Substrate %CP1 n %CF1 n Reference
Cattle manure 42.1 1 34.8;29.9 2 (Li et al., 2011; G. L. Newton et al., 1977)
Chicken manure 40.1±2.5 3 27.9±8.3 3 (Arango Gutiérrez et al., 2004; Li et al., 2011;
Sheppard et al., 1994; Shumo et al., 2019)
Swine manure 43.6;43.2 2 26.4±7.6 4 (Li et al., 2011; Manzano-Agugliaro et al., 2012; L.
Newton et al., 2005; St-Hilaire et al., 2007)
Palm kernel meal 42.1;45.8 2 27.5 1 Rachmawati et al., (2010)
Restaurant waste - 39.2 1 Zheng et al., (2012)
Chicken feed 47.9±7.1 3 14.6±4.4 3 (Bosch et al., 2014; Nguyen et al., 2015; Oonincx
et al., 2015; Spranghers et al., 2017)
By-products2 41.7±3.8 4 - - Oonincx et al., (2015)
Liver 62.7 1 25.1 1 Nguyen et al., (2015)3
Fruits and 38.5 1 6.63 1 (Nguyen et al., 20153; Spranghers et al., 2017)
vegetables
Fish 57.9 1 34.6 1 Nguyen et al., (2015)3
Source: Barragan-Fonseca et al., (2017)
1
All values are expressed on a dry matter basis. Values are mean ± standard deviation; (n) gives the number
of replicates. If n = 2, individual values are stated, separated by a semicolon.
2
Beet molasses, potato steam peelings, spent grains and beer yeast, bread and cookie remain.
3
Original values on a fresh matter basis have been converted to dry matter basis using the water content
reported.

Lalander et al., 2015; Quilliam et al., 2020). Like nutritional values, the quality and
composition of frass vary depending on the substrate used to rear BSF (De Marco et al.,
2015; Gebremikael et al., 2022; Klammsteiner et al., 2020; Spranghers et al., 2017).
Additionally, BSF farming can offer additional income for rural livelihoods (Beesigamukama
et al., 2022; Groeneveld et al., 2021; Mutuku et al., 2022; Onsongo et al., 2018).

In short, BSF larvae are a popular choice among researchers studying insects as feed
alternatives because they appear to be particularly effective at isolating and storing the
nutritional value of substrates (protein and fat) while separating the remaining content
(frass) into component nutrients that can be used for fertilizer. What remains to be seen is
how these benefits compare to the costs of BSF farming in real Malawian contexts.

MwAPATA Working Paper 23/01 4

 Munthali et al.

2. Data and methods

2.1 Economic feasibility of BSF farming

We used Cost-Benefit Analysis (CBA) to assess the economic feasibility of BSF at different
scales. CBA is a widespread technique for evaluating a project or investment by summarizing
the economic benefits and costs of an activity into a single ratio (Shively & Galopin, 2012).
In this study, we estimated the Net Present Value (NPV) of benefits and costs to compute
the Benefit Cost Ratio (BCR). These indicators would be estimated using Equations 1 and 2
respectively. Model specification (components of costs and benefits) and parameter
estimates were determined by key informant interviews and data collected from the Bunda
pilot BSF farm. The Bunda BSF farm is by Lilongwe University of Agriculture and Natural
Resources (LUANAR). The pilot farm is used as a demonstration, training and research unit
for stakeholders and farmers in surrounding communities and Malawi at large.

The Sensitivity analysis was also done to demonstrate the robustness of our conclusions
to uncertainty around the parameters used. Sensitivity analysis also illustrates the relative
risk of establishing this business due to the price volatility of commodities. In interpreting
the investment decision criteria, a proposed investment or project can be reckoned feasible
if the NPV is positive or the BCR is greater than 1. Future costs and benefits are discounted
to account for inflation, risk aversion, and personal utility (people tend to see less utility in
future value compared to the value in the present).

)
!! "#!
NPV = % !
(1)
*+% (%&')

(
"!
, !
!)$($%&)
BCR = (
*!
(2)
, !
!)$($%&)

where
T = Investment/project period (years)
𝑡 = the time period (year);
𝐵* = benefits (revenues) of the year 𝑡 (MK/ha);
𝐶* = costs of the year 𝑡 (MK /ha);
r = an annual discount rate (%).

MwAPATA Working Paper 23/01 5

 Munthali et al.

2.2 Key yield and revenue assumptions for CBA for BSF production

Figures from the breeding unit at LUANARʼs pilot are summarized in Box 1. The assumptions
for estimating BBF larvae production and waste reduction are based on the data from Bunda
BSF pilot data. Further assumptions for analysis regarding yield and other factors across
scales are presented in Table 2.

Box 1: Estimation of BSF larvae production and waste reduction using pilot data
gathered at Bunda - LUANAR BSF Farm
Larval production estimates

With an inventory of 50,000 flies, in a 2:3 male/female ratio;

1 female to lay 450 eggs,
30,000 female BSF > 450 eggs x 30,000 flies = 13,500,000 eggs
With a 75% hatching rate;
0.75 X 13,500,000 = 10,125,000 young larvae
For colony continuation, spare 1% of the 5-day old larvae (DOL) for breeding; (101,250 larvae)
99% of the total 5-DOL will further be fed till they reach harvest stage (day 14 from separation. i.e. at
day 5 from hatching and day 19 from egg incubation.
At a 85% survival rate, a total of:
0.85 x 10,023,750 larvae (8,520,187 larvae) will reach harvest stage
At day 14 from separation (14-DOL), a group of 200 fresh larvae weigh approximately 80 grams.
Therefore, a total of 8.5 million larvae will weigh:
(8,520,187/200) x 0.08 kg = 3,408 kilograms fresh larvae
When fully dried, BSF larvae lose approximately 44% moisture;
Therefore, their final dry matter content,
3,408kg x 0.56 DM = 1,908 kg dry larvae

Waste reduction estimates

Waste reduction index depends on a type of substrates used with high SRI (Substrate Reduction Index)
in less fibre/cellulose content substrates and low SRI in feed substrates with high fibre/cellulose
content. The efficiency of BSF larvae to consume and therefore reduce the waste load of different
substrates is determined by the SRI. The higher the SRI, the higher the higher/better the substrate
efficiency (Oonincx et al. 2015a)
On average, restaurant/kitchen waste has a SRI of 2.8 - 3.4 (74 - 83% reduction rate)
From 2,000kg waste substrate (kitchen waste), there will be a final residue (BSF Frass) of about 340 -
520kgs that can further be used as organic compost fertilizer for the crop field.

MwAPATA Working Paper 23/01 6

 Munthali et al.

Table 2: Key yield and revenue assumptions for CBA for BSF production using data from
Bunda Farm
Assumption Small-scale Commercial scale
Number of initial BSF 50,000 150,000
Estimated BSF larvae yield (kg) for one (1)
larval cycle 1,908 5,783
Estimated BSF larvae yield (kg) for five (5)
larval cycles or one year 9,540 28,917
Estimated BSF frass (kg) for one (1) larval
cycle 430 1,290
Estimated BSF frass (kg) for five (5) larval
cycles or one year 2,150 6,450
Price of dry BSF larvae MK250/kg
Price of dry BSF frass MK70 per kg
Labour 3 minimum wage labourers at
Family labour Mk50,000/month*.
* Each casual laborer will be receiving Mk88,462 for 46 days (equivalent to 1 larval or production cycle)

3. Findings

3.1 Cost of growing and producing BSF larvae

The summary and estimated costs associated with the growing and producing BSF larvae
are presented in Tables 3, 4, A1 and A2. Small-scale and commercial farmers will require
MK264,050 and MK3,238,986.00 to set up a BSF farming enterprise, respectively (Table 3).
This will carry an operation through the first larval cycle. Each year, a BSF farm can go
through a total of five larval cycles. While most of the full first-year costs are in the initial
setup, a full five-cycle year will require some additional variable costs. In total, farmers will
need MK440,250 (small-scale) and MK5,128,530.00 (commercial scale) to run the BSF
business for one year (Table 4).

The fly stage constitutes more than half of the total cost for small-scale BSF farming while
in commercial BSF farming, more costs are associated with labour, the fly and larval growth
stages.

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 Munthali et al.

Table 3: Estimated cost for BSF farming for one larval cycle
Small-scale Commercial scale
Stage Total cost Percent of Total cost Percent of
(MK) total cost (MK) total cost
Establishing the brood stage (attract 24,000.00 9.09 3.70
120,000.00
females)
Fly stage (collect larva into a greenhouse) 216,850.00 82.12 1,753,100.00 54.12
Egg stage 4,500.00 1.70 250,000.00 7.72
Hatching stage 7,200.00 2.73 114,500.00 3.54
Larval growth stage 11,500.00 4.36 736,000.00 22.72
Casual labour 0.00 0.00 265,386.00 8.19
Total 264,050.00 3,238,986.00
Source: Authorʼs compilation

Table 4: Estimated cost for BSF farming for five larval cycles or one year
Small-scale Commercial scale
Stage Total cost Percent of Total cost Percent of
(MK) total cost (MK) total cost
Establishing the brood stage (attract 56,000.00 12.72 120,000.00 2.34
females)
Fly stage (collect larva into a greenhouse) 351,050.00 79.74 2,121,100.00 41.36
Egg stage 14,500.00 3.29 310,000.00 6.04
Hatching stage 7,200.00 1.64 114,500.00 2.23
Larval growth stage 11,500.00 2.61 1,136,000.00 22.15
Casual labour 0.00 0.00 1,326,930.00 25.87
Total 440,250.00 5,128,530.00
Source: Authorʼs compilation

3.2 Benefits of growing and producing BSF larvae

Tables 5 and 6 present benefits in terms of projected revenue realized from BSF farming
(sales from dry BSF larvae and BSF frass) for one larval cycle (Table 5) and annually (Table
6). Based on the key summary of assumptions described in section 2.4, the small-scale
farmers will generate revenue of MK507,100.00 for one larval cycle and MK2,535,500.00
annually. On the other hand, commercial farmers will generate MK1,536,100 for one larval
cycle and MK7,680,750 annually.

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 Munthali et al.

Table 5: Estimated earnings from BSF larvae for one larval/production cycle
Item Price/kg Yield (kg) Projected income (MK)

Small-scale Commercial Small-scale Commercial

Sale from BSF dry larvae 250 1,908 5,783 477,000 1,445,850
Sale from BSF frass 70 430 1,290 30,100 90,300
Total 507,100 1,536,150
Source: Authorʼs compilation

Table 6: Estimated earnings from BSF larvae for five larval/production cycles (annually)
Item Price/kg Yield (kg) Projected income (MK)

Small-scale Commercial Small-scale Commercial

Sale from BSF dry larvae 250 9,540 28,917 2,385,000 7,229,250
Sale from BSF frass 70 2,150 6,450 150,500 451,500
Total 2,535,500 7,680,750
Source: Authorʼs compilation

3.3 Economic viability indicators

Two indicators (BCR and NPV) were computed to assess the economic viability of BSF
production for smallholder and commercial farmers. A detailed analysis of the NPV for BSF
production is presented in Tables 7 and 8. The results show that BSF production for both
smallholder and commercial BSF farming at 12%1 discount rate is positive. At the end of 10
years, NPV for small-scale and commercial BSF farming was estimated to be
MK12,886,439.64 (US$15,629.782) and MK27,582,340.68(US$33,454.23), respectively.

Table 9 provides estimates of the profitability and economic viability of BSF production
at various levels using NPV and BCR Similarly, the BCR for small-scale BSF farming was
approximately 3 times (10.0) than that of commercial BSP production (2.7) which are both
greater than the accepting range of BCR>1 based on decision-making criteria (Table 9). This
shows that BSF production at various production scales is economically attractive, viable
and feasible. Based on the results, BSF farming could have potential and impact on poverty
alleviation by building sustainable livelihoods and improving food security.

1
Reserve Bank of Malawiʼ discount rate at the time of our calculation was 12%
2
US$=Mk824.48 as of 25 February 2022. Source: Reserve Bank of Malawi

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 Munthali et al.

Table 7: Economic viability of Small-scale BSF farming over 10 years

Cost Benefit Discoun Discounted Discounted NPV
t @ 12% Cost Benefit
Year (i) (ii) (iii) (i/iii) (ii/iii) (ii ‒ i)/( iii)
1 440,250.00 2,095,250.00 1.12 393,080.36 2,263,839.29 1,870,758.93
2 220,000.00 2,315,500.00 1.25 175,382.65 2,021,285.08 1,845,902.42
3 220,000.00 2,315,500.00 1.40 156,591.65 1,804,718.82 1,648,127.16
4 220,000.00 2,315,500.00 1.57 139,813.98 1,611,356.09 1,471,542.11
5 220,000.00 2,315,500.00 1.76 124,833.91 1,438,710.79 1,313,876.88
6 220,000.00 2,315,500.00 1.97 111,458.85 1,284,563.21 1,173,104.36
7 220,000.00 2,315,500.00 2.21 99,516.83 1,146,931.44 1,047,414.61
8 220,000.00 2,315,500.00 2.48 88,854.31 1,024,045.92 935,191.61
9 220,000.00 2,315,500.00 2.77 79,334.21 914,326.72 834,992.51
10 220,000.00 2,315,500.00 3.11 70,834.11 816,363.14 745,529.03
Total 2,420,250.00 25,355,045.00 1,439,700.85 14,326,140.49 12,886,439.64
Source: Authorʼs compilation

Table 8: Economic viability of Commercial BSF farming over 10 years

Cost Benefit Discoun Discounted Discounted NPV
t @ 12% Cost Benefit
Year (i) (ii) (iii) (i/iii) (ii/iii) (ii ‒ i)/( iii)
1 5,128,530.00 7,680,750.00 1.12 4,579,044.64 6,857,812.50 2,278,767.86
2 2,361,930.00 7,680,750.00 1.25 1,882,916.14 6,123,046.88 4,240,130.74
3 2,361,930.00 7,680,750.00 1.40 1,681,175.12 5,467,006.14 3,785,831.02
4 2,361,930.00 7,680,750.00 1.57 1,501,049.21 4,881,255.48 3,380,206.27
5 2,361,930.00 7,680,750.00 1.76 1,340,222.51 4,358,263.82 3,018,041.31
6 2,361,930.00 7,680,750.00 1.97 1,196,627.24 3,891,306.98 2,694,679.74
7 2,361,930.00 7,680,750.00 2.21 1,068,417.18 3,474,381.24 2,405,964.05
8 2,361,930.00 7,680,750.00 2.48 953,943.91 3,102,126.10 2,148,182.19
9 2,361,930.00 7,680,750.00 2.77 851,735.64 2,769,755.45 1,918,019.81
10 2,361,930.00 7,680,750.00 3.11 760,478.25 2,472,995.94 1,712,517.69
Total 26,385,900.00 76,807,500.00 15,815,609.85 43,397,950.53 27,582,340.68
Source: Authorʼs compilation

Table 9: Economic viability of BSF farming at various production scales over 10 years
Economic indicator Small-scale Commercial scale
NPV 12,886,439.64 27,582,340.68

BCR 10.0 2.7

Source: Authorʼs compilation

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 Munthali et al.

3.4 Sensitivity analysis

An investment decision can also be made when an investor understands how sensitive (risky
and uncertain) the investment is when subjected to various economic and financial
environments, e.g., the cost/price of commodities and interest rates constantly fluctuating
over time. Results of the sensitivity analysis based on pessimistic (worst) and optimistic
(best) scenarios based on the key economic variables such as discount rate, cost of
production, price of dry BSF larvae and frass and yield changes are presented in Figures 1
and 2.

Our findings reveal that BSF farming is still profitable even if you increase the cost of
production and reduce the price and yield of BSF larvae and frass by 10% (Figures 1 and 2).
However, increasing the cost of production reduces NPVs by 1.1% and 2.4% for smallholder
and commercial BSF production, respectively. As shown in Figure 1, increasing/reducing the
prices and yield of BSF larvae and frass by 10% increases/reduces the NPVs by and 11.1%
(smallholder) and 12.4% (commercial). Further, BCR is sensitive to changes when subjected
to changes in the cost of production, discount rates, prices and yield of BSF larvae and frass
(Figure 2).

Figure 1: Net Present Value of Black Soldier Fly farming based on different scenarios
40,000,000

35,000,000

30,000,000

25,000,000
NPV (MK)

20,000,000

15,000,000

10,000,000

5,000,000

0
Small-scale Commercial

Baeline scenario Cost of production increased by 10%

Price of dry BSF larvae and frass increased by 10% Price of dry BSF larvae and frass decreased by 10%

Dry BSF larvae and frass yield increased 10% Dry BSF larvae and frass yield decreased 10%

Decrease discount rate by 10% Increase discount rate by 20%

Source: Calculations by Authors

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 Munthali et al.

Figure 2: BCR based on various scenarios at different production levels

12

10

8
BCR

0
Small-scale Commercial

Baseline scenario Cost of production increased by 10%

Price of dry BSF larvae and frass increased by 10% Price of dry BSF larvae and frass decreased by 10%

Dry BSF larvae and frass yield increased 10% Dry BSF larvae and frass yield decreased 10%

Decrease discount rate by 10% Increase discount rate by 20%

Source: Calculations by Authors

4. Conclusion and policy implications

The use of BSF as alternative animal and aquaculture feed has gained increasing attention
around the globe. Knowledge of the economic viability of BSF farming in Malawi is scarce
despite being perceived as an emerging and profitable farming enterprise. The use of insects
such as BSF is increasingly relevant in SSA as it offers numerous tangible benefits including
high-quality animal feed, food and nutritional security, job creation, poverty reduction and
environmental sustainability. Malawi has high unemployment levels, especially among the
youth and women; government investment in BSF farming could contribute to the economic
empowerment of these vulnerable groups, although, further research is needed to test if BSF
farming could be a realistic and viable venture for women and youth in Malawi. Insights into
the economic viability of BSF farming at different scales is thus crucial for facilitating
adoption by farmers, designing policy interventions that will drive the BSF farming growth
and ensuring its sustainability. However, further research is needed to if BSF farming could
be a realistic and viable venture for women and youth.

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We utilized data from a small-scale pilot BSF farm at Bunda in Lilongwe to assess the
farm-level economic feasibility of BSF farming at various scales of production in Malawi
using Cost-Benefit Analysis. The results shows that BSF farming appears to be viable and
feasible across scales of production. Based on the assumptions described in Section 2.4, the
small-scale farmers will generate revenue of MK507,100.00 for one larval cycle and
MK2,35,500.00 annually. At a larger scale, commercial farmers will generate MK2,535,500
for one larval cycle and MK7,680,750 annually. This implies that BSF production has greater
implications on household food and nutrition security and can also act as a livelihood
diversification strategy among farmers to minimize risks of on-farm activities while ensuring
environmental sustainability. Both the Net Present Value of investment returns and the
long-run Benefit Cost Ratio suggest BSF farming is profitable across scales.

The study also performed a sensitivity analysis and find viability to be robust to up to 10%
changes in the price and yield of BSF larvae and frass. These results have significant
implications that will inform the government and other stakeholders to develop strategies
and policy actions that will promote BSF farming in the country. However, our study did not
conduct probabilistic sensitivity analysis to account for multiple different scenarios given
the uncertainties associated with agricultural production.

Based on our findings, the study, therefore, recommend the following be considered to
promote BSF as an alternative animal and fish feed in Malawi:

(i) Invest in farmer's and extension worker's training in BSF farming

Adopting and promoting new business ventures or technologies is always challenging for
reasons that vary across farmers, extension agents, entrepreneurs and policy-makers. It will
require a collaborative effort from the government and other stakeholders to train more
farmers and extension workers to increase the capacity of Malawians to take up BSF
production. Some of the extension models that have proven successful include farmer-led
demonstration plots, farmers' field schools, farmer field days and training and visits. Strong
advisory and extension services will be crucial to overcoming the knowledge regarding BSF
farming, facilitating the transition from conventional animal feed to insect feed, and
increasing adoption among farmers.

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 Munthali et al.

(ii) Invest in research and development of BSF

Research and development (R&D) play an important role in the adoption of new technologies
and solving complex issues affecting the agriculture sector. Although our analysis sheds
some light, exploration of BSF as an alternative sustainable feed ingredient in aquaculture
and animal feed in Malawi is still at the infant stage. Further investment towards BSF R&D
will help develop the emerging industry. For example, our findings should be validated (or
not) by newer data as it becomes available. Further empirical research is also needed to
understand the perceptions, views and perspectives of farmers and stakeholders towards
BSF as an alternative sustainable feed ingredient as well as the substrates BSF is reared
on. Other research areas to be explored include determining the safety and acceptability of
utilizing BSF raised on various substrates. This information is critical for effective policy
development, implementation and uptake of BSF farming in Malawi.

(iii) Provide farmers, entrepreneurs and industries with access to capital and formal credit

Lack of access to financial capital and credit, especially from the formal lending institutions
or high-interest rates where access is possible are major impediments to new business
ventures in Malawi. This is also true for BSF farming. Improving access to formal credit will
enable the adoption of BSF production among farmers, other potential entrepreneurs and
industries. Although there are several formal credit institutions in Malawi, they are usually
concentrated in urban areas; whereas most farmers prefer to borrow informally, for example,
from village bank savings loan associations (VSLA), money lenders, neighbours, friends or
relatives. To enable farmers to access formal credit, policy makers could employ subsidies,
public-backed guarantees, or incentives to encourage formal lending institutions to offer
lower interest rates, longer, more flexible repayment periods and lending procedures more
attuned to collateral-poor potential borrowers. Additionally, there is a need for the
government and other stakeholders to encourage the institutions to establish branches in
rural areas to serve the specific credit and savings needs of the farmers and also avoid
farmers walking very long distances just to access the credit.

(iv) Raise awareness among the farmers, entrepreneurs and policy-makers on the socio-
economic and ecological benefits of BSF farming

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 Munthali et al.

Although BSF farming is apparently profitable, the low levels of adoption may be due to
limited awareness or misconceptions amongst potential entrepreneurs and their potential
consumers. This could be overcome via information exchange through smart dissemination
channels targeting different actors, including farmers, other potential entrepreneurs,
planners, local communities and policy-makers.

(v) Develop a legal framework or guidelines to regulate the production of BSF and other
insects for feed in Malawi

Safety and effective promotional use of insects as animal and aquaculture feed requires
conducive and supportive policies, standards, laws, legislations and a regulatory
environment. Currently, Malawi has no regulatory framework to support and govern the
development and production of insects for feed. The effort to promote insect farming such
as BSF as an alternative feed ingredient to animal and aquaculture feed cannot be
successful if there is no appropriate legal framework or guidelines to ensure the quality and
traceability of BSF. The present study has provided a foundation for various stakeholders
including governments, academia, industries, the private sector, donors and policy-makers
to initiate debate on the development of a clear and comprehensive regulatory framework to
govern insect farming including BSF. Other countries in SSA (e.g., Tanzania, Kenya and
Uganda) have made progress in regulating insects as feed; Malawi can learn from these
examples.

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 Munthali et al.

Acknowledgements

This research was produced with the help of a grant from the Foundation for a Smoke-Free
World (FSFW) Agricultural Transformation Initiative (ATI) through the Michigan State
University (MSU) Food Security Group. The authors gratefully acknowledge financial
support from The Michigan State University Alliance for African Partnerships for providing
funding for the LUANAR BSF farm unit. The funders of this study had no role in the study
design, data collection and analysis, or decision to publish or prepare the manuscript.
Therefore, the views expressed herein, do not necessarily reflect the official opinions of the
donors but the authors.

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Appendix

Table A1: Cost of small-scale production of BSF larvae

Stage Item Qty Unit Price Total
Step 1: Buckets (medium) 4 No. 4,000 16,000.00
Establishing the Substrate (kitchen waste,
brood stage pig manure (to be mixed
2 90l bucket 1,000 2,000.00
(attract females) with another substrate,
chicken +pig manure)
90 l bucket (Mbiya)/oil
plastic buckets (used for 2 No. 3,000 6,000.00
storage)
Subtotal 24,000.00
Step 2: Fly stage Greenhouse construction
(collect larva into a (greenhouse sheet, timber, 42,500.00
greenhouse) etc.)
Love cage (nails, timber,
4 various 20,000 80,000.00
labour, net)
broom for cleaning 1 No. 150 150.00
Face mask (cloth) 2 No. 500 1,000.00
Work coat 1 No. 15,000 15,000.00
Lab gloves 2 Box 15,000 30,000.00
Rubber boots 1 No. 6,000 6,000.00
face shield 1 No. 2,000 2,000.00
Scrubbing brush 1 No. 2,000 2,000.00
Attractant light (torch) -
Attractant box 4 No. 1,000 4,000.00
Attractant Media
-
(substrate)
Ant trap 16 No. 50 800.00
Akheri chemical 1 No. 3,000 3,000.00
Precision scale -
Eggies (Laying site for
2 No. 200 400.00
BSF)/big cartons,
Water container 4 No. 500 2,000.00
Cotton wool 8 No. 3,500 28,000.00
Subtotal 216,850.00
Step 3: Egg stage Tweezers -
Precision scale -

Chicken feed (23%CP), 5 Kgs 500 2,500.00

soya beans maize mixture

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Hatching Container 4 No. 500 2,000.00

Egg holder - -
Subtotal 4,500.00
Step 4: Hatching
stage Residual container - -
(recycle water containers)
Scoop -
Precision balance -
Plate 4 No. 300 1,200.00
Cups (500ml) 5 No. 300 1,500.00
tray 3 No. 1,500 4,500.00
Subtotal 7,200.00
Step 5: Larval Nursery larvero rack No.
3 - -
growth stage (holds containers)
No.
Nursery larvero (hatching
4 - -
container) recycle those in
the egg stage
Spade -
Bulk scale 1 Box 11,500 11,500.00
Bin recycle 90l buckets in
90l bucket -
stage 1

Chicken feed (23%CP),

Kg - -
soya beans maize mixture/
use substrate in step 1
Subtotal 11,500.00
GRAND TOTAL 264,050.00

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Table A2: Cost of commercial production of BSF larvae

Stage Item Qty Unit Price Total
Step 1: BioPod 2 No. 45,000 90,000
Establishing the Attractant media 5 No. - -
brook stage
(attract females) BioPod rack 2 No. 15 30,000
Subtotal 120,000.00
Step 2: Fly stage Greenhouse 1 No. 1,200,000 1,200,000
(collect larva into Love cage 4 No. 20,000 80,000
a greenhouse) Dust pan 3 No. 1,500 4,500
Face mask 2 No. 7,500 15,000
Work coat 2 No. 15,000 30,000
Latex/lab gloves 4 Box 7,500 30,000
Face shield 2 No. 2,500 5,000
Rubber gloves 4 No. 8,000 32,000
Scrubbing brush 2 No. 2,000 4,000
Rubber boots 2 Pair 15,000 30,000
Attractant light 5 No. 45,000 225,000
Attractant box 4 No. 500 2,000
Attractant media 4 No. - 0
Ant trap 32 No. 300 9,600
Eggies 40 No. 1,500 60,000
Precision scale 1 No. 20,000 20,000
Water container 4 No. 1,500 6,000

Subtotal 1,753,100.00
Step 3: Egg stage Tweezers 5 No. 1,000 5,000.00
Precision scale 1 No. - -
Chicken feed
(23%CP) 15 Kg 1,000 15,000.00
Hatching container 50 No. 4,500 225,000.00
Egg holders 10 No. 500 5,000.00
Subtotal 250,000.00
Step 4: Hatching Sieve 3 No. 6,000 18,000.00
stage Residual container 15 No. 4,000 60,000.00
Scoop 3 No. 2,500 7,500.00
Precision balance 1 No. 17,500 17,500.00
Plate 5 No. 300 1,500.00
Cups and tray 10 No. 1,000 10,000.00
Subtotal 114,500.00
Step 5: Larval Nursery larvero rack 6 No. 50,000 300,000.00
growth stage Nursery larvero 50 No. 4,500 225,000.00
Spade 2 No. 2,500 5,000.00

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Bulk scale 1 No. 56,000 56,000.00

Bin 2 No. 25,000 50,000.00
Chicken feed
(23%CP) 200 Kg 500 100,000.00
Sub total 736,000.00
Grand total 2,973,600.00

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