The economics of food waste
Leadership thinker Marga Hoek explores the potential social and economic impacts of ending food waste
Home » The economics of food waste
Published: 31 March 2019
This Article was Written by: Katie Hill - My Green Pod
One of the main challenges we need to solve as soon as possible is food waste and loss. The prize is not only a huge societal impact, and impact on possibly every Sustainable Development Goal, it is also an enormous economic prize. A prize for the western world, but more importantly a prize for the developing countries that, of course, need it the most.
The enormous impact
Roughly one-third of all food produced for human consumption is wasted or lost, accounting for nearly 1.3 billion tons of food, as I describe in my new book The Trillion Dollar Shift. Bearing in mind that food waste and loss also implies the waste of all the resources that went into producing it, we need to put a stop to this.
Right now, the resulting economic loss is somewhere between 780 billion and 1 trillion dollars a year, while with approximately the same amount of money, or less, all of the nearly eight million people who are going hungry every day, could be fed.
It is clear that if solutions are found to prevent food waste and loss, significant headway can be made towards eliminating hunger worldwide, preserving our resources and reducing pollution.
According to a 2013 analysis by the United Nations’ Food and Agriculture Organization, the land devoted to producing wasted food would be the second-largest country in the world, and this wasted food accounts for 8% of all harmful emissions. Clearly, the impact is enormous.
The Sustainable Development Goals (SDGs) offer clear guidance and focal points for businesses and other organisations regarding these and other challenges we face and actually all of them relate to the challenge of reducing food waste and loss.
Food waste and loss is generated all along the supply chain. In developing countries, food loss happens at the beginning of the food chain with 40% of losses occurring post-harvest and during processing. As much as half the food produced in developing countries never makes it to the market. 630 million tons of food equaling 310 billion dollars is lost in developing countries.
Imagine that there are 500 million smallholder farmers worldwide, meaning that more than 2 billion people depend on them for their livelihoods, as was calculated by IFAD. Access to education, information, transportation, and energy which are crucial to reduce food loss, are some of the biggest challenges faced by smallholder farmers in developing countries at the beginning of the food chain.
In developed countries, waste and loss is caused by consumers and retailers. Efficient operations, creative alternatives, consumer awareness and interest are the biggest challenges facing the end of the supply chain. Fortunately, there are a number of business solutions that can help to turn all of this around. But they need to scale in order to have real impact.
Solutions at the beginning
At the beginning of the supply chain, we mostly see food loss caused by limitations and hindrances faced by smallholder farmers in developing countries. The main suppliers of food in many countries of the world are smallholder farmers who make up the bulk of the food producers in poor rural areas in Africa, Asia and Latin America.
In countries like Guatemala, for example, smallholder farmers represent approximately one-third of the country’s entire population. By improving their access to information and education – especially for women – and providing innovative solutions to the issues of transportation and lack of access to energy, smallholder farmers can reduce their food loss.
Businesses and private-public partnerships are initiating projects and products to create these solutions. Software developers and consultants are providing information access to help farmers improve their production methods. Apps such as AgriUp and Farming Instructor provide information to smallholder farmers about weather conditions, planting and harvesting tips.
To cope with the issues of transport and keeping food fresh to avoid food loss in countries with large fishing industries, a Norwegian research institute Nofima designed a form of packaging called Superfresh that will not only keep fish fresh for longer, but also has benefits for transporting the fish. The packaging requires less volume and allows the fish to be transported together with other foods as well.
To combat the lack of refrigeration and access to energy to supply a cool enough environment for fruits and vegetables to be transported without excess loss, an innovative solution has been found by MIT students. Their product, called Evaptainers, uses the highly effective cooling effect of evaporation in their cool-box design, using only sand and water. The water doesn’t even need to be pure, it can come from a river, a pond, anywhere. And what makes it most accessible to poor farmers is the sustainability of it, as it uses zero energy. These and other innovative and focused business solutions are helping to stem food loss at the root but more initiatives and greater scale is still needed.
Solutions at the end
At the end of the supply chain, most food waste is caused by consumer and retail behavior in developed countries. This should be even easier to solve than the issues faced by farmers in developing countries but it still demands concerted effort, focus, innovation and scale.
In the United States alone nearly half of all food is thrown away, with consumers accounting for 40% of that. In France, consumers also generate the most waste with 67% of the 7.1 billion tons of waste in the country caused by consumers. Retail, and other food vendors also generate their fair share of the total waste in developed countries. For instance, in the United Kingdom, the food and hospitality industry wastes 920,000 tons of food, costing £2.5 billion each year.
Recognising the amount of economic loss should propel every business to find solutions. This does not only apply to businesses directly related to food, like supermarkets or restaurants, but to every company. Think of company cafeterias or business meetings with lunch provided.
Solutions for companies are available. Start-up businesses like Copia collect leftover food from a meeting, for example, and deliver it to charities in their area, offering companies a business tax benefit for their charitable contribution and of course helping society by redirecting perfectly good food to those in need.
For restaurants and catering companies contending with the fine line of having enough fresh food on hand while not creating unnecessary over-expenditure, technological solutions are providing an economical remedy. Q-point, for example is a Dutch consultancy that has developed a data collecting and estimation solution to food purchasing and planning for restaurants and catering companies to avoid over-surplus resulting in waste. They are currently expanding their scope to develop applications tailored to hospitals, theme parks and company restaurants.
Unilever has also produced an app for retail businesses, called Wise up on Waste. This app helps professional kitchens monitor and track food waste to identify when and where the most food waste is generated and what the potential cost saving would be if waste is reduced by 20%.
Consumers are being targeted by ICT applications as well. For example, the app Green Egg Shopper helps consumers plan and track their food purchasing, and keep track of the food they have by reminding them when their food will expire.
These apps are useful but there is actually a lot that can be done with simple changes to behaviour, like what the University of California Santa Barbara did at their dining halls when they noticed a lot of food left on their food trays. They simply eliminated the trays. This meant that people could essentially carry their meal and one drink with them to the table. If they finished and wanted more, they were welcome to get more, but this simple measure stopped people from piling their trays with food that looked good when they were hungry, but they actually couldn’t finish. The result was astonishing. UCSB reduced their food waste by 50%.
Consumers can also make minor adjustments that have a significant impact. Just by not stuffing refrigerators full will already help. Food goes bad quicker when there is less room for air to circulate, plus people tend to forget what is in their refrigerator if they cannot see it. Simple.
Also, stop buying in bulk unless you know for sure you will eat it all, and share inspirational recipes for left-overs. These are small adjustments but if it becomes wide-spread standard behaviour, consumers can significantly reduce the 670 million tons of food being wasted per year. When you consider that the average American family throws away 1,500 dollars worth of food every year, it makes you wonder why we are content to literally throw money away.
Food waste and loss cost the global GDP nearly one trillion dollars per year, thus it is a business concern that cannot be ignored. Eliminating this economic loss in vulnerable developing countries also considerably impacts the fight against poverty and hunger.
The Sustainable Development Goals help remind us of our ultimate targets and guide us on pathways to achieve them. The enormous economic value, societal value and environmental value to be gained by focusing on solutions to food waste and loss is worth our attention. It is worth focusing on every day. We can solve this challenge. The solutions are within our reach but must be adopted and scaled.
Marga Hoek is author of The Trillion Dollar Shift which explores the role that business and capital can play in the achievement of the UN’s Sustainable Development Goals. She has been recognised by Thinkers50 as one of the top 30 new leadership thinkers to watch in 2019.