China faces three pressing challenges: how to handle food waste, how to feed its 1.3 billion population, and how to sustainably fight climate change. Though these challenges are daunting, enterprising entrepreneurs in China now have a scientifically-solid solution - but it might make you feel uncomfortable. 
China produces up to 18 million tonnes of food waste every year – enough to feed up to 15 million people and worth an estimated $32bn.
How do the Chinese authorities handle it? Alarmingly, studies show these mountains of wasted food are rarely recycled.
In Beijing, less than 10 per cent of the 13,500 tonnes of food waste produced daily gets recycled with the rest sent to landfills or incineration plants – and that’s bad for the environment.
Landfills produce methane as food waste decomposes, and methane is one of the most hazardous greenhouse gases (GHGs), which research shows is 84 times stronger as a pollutant than carbon dioxide.
And that’s one of the reasons why China is believed to be the world’s biggest source of GHG, estimated to generate around 60 million tonnes of methane in 2015, with an estimated 8 million tonnes coming from food waste alone.
As if this wasn’t bad enough, China’s food waste challenge is likely to get tougher.
Rapid urbanisation – estimated to see an additional 120 million people move to China’s cities by 2025 – will put even more pressure on China’s food disposal and supply chains, and all the research shows that China is not well resourced enough to handle it.
Feeding 1.3 billion people
But China’s food fight isn’t just limited to handling food waste, it stretches to producing enough food for 1.3 billion people in the first place, and in a sustainable way.
And that challenge is getting tougher, particularly as diets change.
The average Chinese person consumed 48.7kg of meat per year in 2015, 62.3 per cent higher than the average in 1995, and that’s predicted to grow to 53.9kg by 2025, up by 10.6 per cent.
Source: OECD
This trend is going to put even more strain on China’s livestock sector and will work its way down the food chain into greater demand for animal feed.
And China increasingly imports its animal feed needs, which drives huge demand for soybeans, making China the world’s largest importer.
Soybeans are a valuable case in point. China’s meat production industry is geared toward pork production, and soybeans are regarded as an excellent feed for pigs because of their high protein and energy content.
But China’s growing appetite for soybeans has major effects on the environment, for two principal reasons:
Soybeans are one of the most water-intensive crops: soybeans require an estimated 900 litres of water to produce one kilo of crop.
Growing soybean demand feeds through into deforestation: as China has emerged as a huge market for soybeans, producer countries, like Brazil, have converted forest space into arable land for soybean crop exports, resulting in the deforestation of an estimated 21,000 sq km of land.
Source: University of Illinois
So, as Chinese demand for meat grows, the knock-on effects on the global environment are growing increasingly severe, adding an extra dimension to the food challenges that China faces.
In an ideal world then, scientists could create an efficient way to process food waste, as well as creating a ready and sustainable supply of nutrient-rich feed to give to animals.
Even better if these solutions could be bundled into one focused package.
The good news then is that enterprising entrepreneurs in China have come up with what they think could be an answer. And the solution is cockroach farming.
Cockroaches: a cure-all for China’s food challenges?
Li Yanrong, founder of Shandong Qiaobin Agriculture Technology, based in Jinan in China’s north-eastern province of Shandong, has built a climate-controlled complex to house cockroaches and sustainably address China’s food waste and supply challenges.
Li’s solution involves collecting food waste, processing it into a liquid substance, squeezing it through tubes that empty into the cockroach sheds, watching as the cockroaches eat it up, and then turning the cockroaches into animal feed at the end of their one-year lifespan.
Li believes cockroaches are a sustainable solution to the food waste problem.
Firstly, it’s because cockroaches are highly efficient waste consumers, meaning they can get through a lot of waste in a very short time period.
For instance, the estimated one billion cockroaches at Li’s farm can munch their way through 50 tonnes of food waste per day – the equivalent in weight to seven adult elephants.
Secondly, cockroaches are efficient at not only working their way through waste, but also highly efficient in turning that waste into edible protein, a key factor to consider when sustainably developing animal feed.
Finally, when corralled into temperature-controlled sheds, cockroaches require little else in the way of inputs, meaning they are a low maintenance food processing solution.
And why are cockroaches a solution to animal feed challenges?
They are highly nutritious and considered a viable alternative to plant-based animal feeds, according to numerous research studies on the subject in the field of animal feed research.
Because of their size and minimal input requirements, they are an attractive alternative to land-intensive animal feeds, like soybeans, and put less pressure on the environment.
Bug business?
When interviewed by Reuters, Li Yanrong revealed that he had plans to build even more cockroach farms, and estimates the three he had planned could process approximately a third of the food waste produced by the city of Jinan.
One constraint on growth remains sorting the food waste, most of which comes unsorted when delivered to the processing plant. Automation may solve this problem through tech-driven processes to sort the waste capable of being fed to the cockroaches from inorganic waste.
Finally, since the use of cockroaches in food processing is relatively new idea, there is still not enough research completed on potential hazards involved with putting them into the food chain as an animal feed alternative.
Get ready for ‘sustainable protein’
Wider trends in the global feed industry suggest what’s happening in China could be part of a gathering global trend. Feed companies all over the world, like Cargill, Wilbur-Elllis and Buhler Group, are investing heavily in ‘sustainable protein’ sources like insects as they grapple with changing diets and increasing demand for meat.
But the cockroach story is also an important example of how private companies are responding to the challenge of climate change, and also that China is an increasing source of new, innovative ideas and technologies that have the potential to change the world we live in.
And as momentum grows toward sourcing and developing creative solutions to tackle climate change, we believe China will be an exciting source of innovative and investible ideas in the sustainable investing field for many years to come.
Michael Baldinger is head of sustainable and impact investing at UBS Asset Management. The views expressed above are his own and should not be taken as investment advice.