(Bloomberg) -- Tyson Foods Inc. is making its first foray into the insect-protein industry as the meat giant seeks to diversify its operations.

The American meatpacker said Tuesday that it agreed to buy a stake in Dongen, Netherlands-based Protix BV to help fund its expansion. The companies will also form a joint venture to build and operate a US facility that will produce bug-based meal and oil, which are typically used in fish feed and dog food. Financial terms of the deal weren’t disclosed. 

Food giants including Cargill Inc. and Archer-Daniels-Midland Co. are facing greater environmental scrutiny and increasingly looking at bugs, such as the black soldier flies farmed by Protix, as a lower-carbon source of protein. For Springdale, Arkansas-based Tyson — which produces roughly 20% of the beef, chicken and pork consumed in the US — the move represents a new avenue for expansion and a new feedstock for the billions of chickens and hogs it raises every year. 

“It’s a multibillion-dollar industry opportunity that has tremendous growth potential, and we see Protix as being a leader there,” Tyson Chief Financial Officer John Tyson said in an interview. “In the long run, insect-protein inclusion in animal-feed diets can be a real thing that exists and can be one that is good for people, planet and animals.”

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For Protix, which was formed in 2009 and is backed by Aqua-Spark Management BV and Cooperatieve Rabobank UA’s private equity arm, the partnership with Tyson means an opportunity to more quickly expand operations. The company supplies insect-based protein to pet-food makers such as Nestle SA and Mars Inc.  

“It is definitely a huge way to establish ourselves into an international context,” said Kees Aarts, the company’s founder and CEO. “This was really the tipping point we have been working for.”

The new US plant, which still doesn’t have a site and won’t be ready before 2025, will be as much as four times larger than Protix’s existing facility in the Netherlands, Aarts said. The plant will house all steps of bug-protein production, including the breeding, incubating and hatching of insect larvae. Waste from Tyson meatpacking operations will be used to feed the flies. 

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