This only works for small farms but regular animals already fill that spot there too. Chicken and pigs are mainly fed kitchen scraps in these settings. The issue is once you go into large-scale commercial farming it becomes way too inefficient to use waste products and buying feed is more economical viable. Doesn't matter if it's insects or mammals or.

A lot of animal feed is already made up of a lot of "food waste". Rice bran, maize and wheat offal, fish meal, and bone meal, all of that are byproducts of food for human consumption and commonly found in animal feed. You can even find some that have things like sawdust or other wood products inside. There are even studies into using waste paper for cattle. And while this might sound wrong, it doesn't harm the animal. But the issue is, humans don't want to eat something that ate something we don't like. And I don't see that changing with insects either.