Laura Heely, Nathaniel Kenninger, Nicholas Patocki-Tomas
“Abundance is the success story of the human species. You look back at the creation of agriculture – 12,000 years ago – that was all about creating surplus … The problem is now that all rich countries in the world (in North America & Northern Europe) have between 150 – 200% of the food that they actually need.”
-Tristram Stuart (@TristramStuart), Founder of London-based Feedback, an environmental organization campaigning to end global food waste
Abundance and Waste
On a planet with finite resources, a culture of culinary abundance will become impossible to support. As the human population grows – likely to at least nine billion by 2050 – the imperative to use resources wisely becomes increasingly dire.[1] World Resources Institute estimates that the world will need approximately 60% more calories per year to feed the ballooning population. Yet, currently, humans eat only a portion of the food grown for our consumption, wasting an estimated 24% of calories produced.[2] Environmentally, this represents 198 million hectares of land (roughly the size of Mexico) used for food never consumed, and an incredible amount of water wasted in the process. Financially, food waste is a burden on households, retailers, farmers, and landfills. Still, people go hungry.
Despite a multitude of benefits associated with reducing food waste – increased food availability, alleviation of poverty, and reduced pressure on ecosystems, climate and water – turning the tide has proved challenging. Support for the cause is shared by governments, NGOs, and businesses worldwide, especially as climate change and environmental degradation make our planet less hospitable to growing food. The United Nations has announced bold goals related to sustainable development as part of their Sustainable Development Goals, with goal 12 addressing trends broadly related to “ensur[ing] sustainable consumption and production patterns”.[3] As the UN tries to track progress against this broad goal, one if its key areas of focus is food waste. Specifically, target 12.3 of Goal 12 aspires for the world “by 2030, [to] halve per capita global food waste at the retail and consumer levels and reduce food losses along production and supply chains, including post-harvest losses”.[4]
Food Waste in the Global Value Chain
Often categorized as “food waste and loss,” food waste can be defined as the edible parts of plants and animals that are produced or harvested for human consumption but that are not ultimately consumed by people.[5] Food is wasted from farm to fork, with an estimated $750 billion worth of food discarded each year throughout the entire supply chain of production, handling and storage, processing, distribution, and consumption.[6] The bulk of food waste takes place in three stages: production (24%), handling and storage (24%), and consumption (35%).[7] Although the UN targets reduction across the production and supply chain, it only explicitly mentions objectives for retail and consumption. Public and private sector efforts have followed suit, focusing predominantly on these last levels of the value chain.
In order to reach the UN’s targets for environmental sustainability, post-harvest losses need to be a bigger focus. The food value chain very much acts like a funnel, so culling waste at the very first stage – production – would have ripple effects for the rest of the value chain and disproportionately help in waste reduction. The environmental imperative is stark, given the strain on scarce resources like water, and high emissions of carbon and other greenhouse gases like methane in agricultural production and animal husbandry. Reducing waste at the farm level can promote poverty alleviation as well, both in emerging and developed markets. According to the World Bank, every 1% reduction in post-harvest losses leads to $40 million in output gains, with farmers as key beneficiaries.[8] Assuming that decreasing post-harvest losses would result in lower costs for consumers, poor families (who spend an average of a third of household income on food) should benefit substantially.
As seen in the data from the World Resources Institute, the main drivers of food waste vary greatly by geography. On the surface, production, handling and storage are problems overwhelmingly faced by Sub-Saharan Africa and Southeast Asia, and consumption waste is the biggest problem in the industrialized countries. However, a good portion of early-stage waste (production, handling, storage, processing) can be traced back to demand preferences of consumers and retailers in the industrialized world. Strict visual specifications for fresh produce contribute massively to food waste at the production level. Rejections from retailers, known as “kickbacks,” can be linked to quality issues as well as market conditions (not to mention inaccurate demand forecasting). Power dynamics between retailers and growers big and small result in outsized losses booked on the level of the grower. The cult of beautiful fruit and vegetables has driven many farmers to hold back larger quantities of acceptable produce before it reaches the retailer.[9] [10] As a result of farm and retailer rejection of edible food, waste in fresh produce is substantial. For example, in the United States, half of all fruits and vegetables are discarded.[11] This discarded produce, whether thrown out by the end-consumer or the farmer, is the largest component of landfills and incinerators in the U.S.[12]
Fork-to-farm: Demand-side strategies to reduce waste
As this oft-overlooked issue is finally attracting attention at the supranational level, smaller-scale efforts are taking off in countries around the globe to tackle food waste. Until now, efforts have been relatively narrow in terms of geography and impact, arguably an appropriate strategy for targeting demand-side changes. NGOs, businesses and governments have addressed demand consumption challenges with campaigns such as “Inglorious fruits & vegetables” in France and “Ugly Fruit & Veg” in the UK, aiming to spark consumer interest in misshapen produce. Charity-focused initiatives also result in increased demand for products nearing end of shelf life, albeit with little to no payment exchanged. Increasing demand for otherwise-wasted food for cosmetic or spoilage issues are often launched locally, but can be successful regionally with buy-in from large food retailers. Several impressive demand-side initiatives are clustered below by country of origin.
Denmark: The Nordics are always one step ahead
Denmark always seems to be on the forefront of sustainable solutions, and food waste is no exception. To reduce waste while increasing access to fresh fruits and vegetables, Bo Welfare has started an innovative model where produce that is just before its “best before” date is collected from supermarkets and then resold in pop-up-shops that cater to low income families. Customers pay 20 kroner (around $2) for a reusable bag and then can fill it up with any products they want.[13] Horsen’s Visionary Kitchen is another initiative looking to reduce waste from shops and restaurants. They prepare free meals with donated food from shops and restaurants.[14] Copenhagen even has its own surplus-food supermarket called WeFood.[15] In sum, there are many initiatives in Denmark related to reducing food waste at the consumer level. However, there is a dearth of examples related to reducing waste on the farm in the first place.
France: Partnering with charities
France has taken a different route to tackle food waste. They passed a law in late 2015 which requires any supermarket larger than 4,304 square feet to hold contracts with either non-profits or food banks to donate unsold food. Additionally, supermarkets will be banned from intentionally destroying discarded food.[16] Although this model encourages collaboration between retailers and other-end-users, it is really focused on the “distribution and market” subset of food waste, which is much smaller in size or overall impact than either production or consumption.
U.S.: New Start-Ups Fill the Gaps
Across the pond, there have been multiple start-ups trying to tackle food waste across the U.S. One of the most innovative start-ups that tries to tackle head-on the issue related to retailer standards is Imperfect Produce. The company, based in the San Francisco Bay Area, acts as a broker with farmers who have had their crops rejected by the big box retailers like Walmart or Whole Foods. Then, the company delivers these “imperfect” fruits and vegetables directly to subscribing consumers, who pay prices below what they would find at a local grocery store.[17] Imperfect Foods is trying to directly tackle the issue of waste in the production process – produce that isn’t sold because of cosmetic constraints. This innovative second-hand market based on customer subscription is one step to tackle a huge source of food waste. Scaling this will be the challenge going forward.
Farm-to-fork: Supply-side strategies to reduce waste
Whilst laudable, demand-side initiatives only tackle part of the problem, avoiding the root. A successful, long-term reduction of food waste must start at the farm. Crucially, supply-side strategies require re-thinking incentives and structures on a larger scale, coordinated globally amongst players across the value chain. Value chain coordination is one of the most complicated problems in food waste reduction. However, effective coordination also arguably offers the largest potential impact. It will be challenging to dramatically reduce food waste without aligning between farmers, distributors, retailers, and consumers. Supply-side coordination can take many forms: secondary markets, technology-enabled farming, retailer incentives for ugly food, subscription payments, or other yet-to-be-thought-of innovations. Systematic intervention will improve the value chain as a whole, much more than the single-point interventions of the past.
Secondary markets
Designing a secondary market for imperfect, near-spoiled, and “spent” food on a global scale can help reduce post-harvest losses and combat global hunger. Many organizations have focused on matching local hunger (demand) to near-spoiled food. While this is a noble cause, several practical and ethical issues arise. Notably, in litigious societies, companies are reticent to distribute unused food via third-parties due to related legal risks. Ethically, it is debatable whether food deemed “not good enough” (assuming this claim has weight) for general consumption should then be handed to the poor. Furthermore, the geographical limitations of such programs poses an issue when seeking to address global hunger. The fact that there are more overweight than under- or mal-nourished people in the world, suggests a distribution rather than capacity issue for food, at least for now. Secondary markets could solve the distribution issue for the imperfect food (sold cheaper at farm, retail or food-service level), near-spoiled foods (re-purpose in cooked foods or animal feed; sold cheaper at retail or food service level). “Spent” foods – for example grains used for beer production that retain nutritional value after use – can be re-purposed at economic benefit.
Technology-enabled farming
Technology-enabled farming aims to decrease losses during and post-harvest by improved resource management, high-performance seeds, and supply-chain visibility and productivity. Government, donor, and private sector interventions have prompted the use of on-farm technologies in areas like rural Africa. Successful partnerships have included a high degree of cooperation between farms and big food companies. Resultant supply chain efficiency gains can result in less resource usage, higher productivity (a study on tomato wastage equated to 7 million working hours lost), and reduced cost of goods sold. The World Bank explains the ecosystem focus: “This “system approach” to tackling postharvest issues emphasizes the links of on-farm activities with other operations within the food and commodity chain, while placing the chain within the wider socioeconomic, business, and political context. Under this approach, value chain coordination is a clear component of the support.”[18] Nevertheless, success stories are rare, especially as technologies are difficult to transfer across regions and agricultural products, where different farming norms exist. Additionally, limited access to capital makes investing in loss-reducing technologies prohibitively expensive for many farmers. The public sector can help farmers improve on-farm technology without overly relying on big food businesses, helping to shift the power dynamics in the industry.
Retailer incentives for ugly food
Introducing retailer incentives for uglier food on a market-level would provide tangible benefits across the value chain. Firstly, it would reduce systemic overproduction by farmers who no longer would need to systemically destroy visually imperfect produce. By aligning quantities produced and sold, farmers would decrease the amount of waste generated in the production and handling stages, as well as decrease their cost of goods sold. Some of this decrease in COGS we assume could be passed onto consumers, who would benefit from lower prices on average, and especially for lovers of ugly food (which we assume would be lower priced). Governments and intra-governmental organizations have two real options when considering incentives: the carrot, or the stick. Research from Yasser Al-Saleh and Sami Mahroum at INSEAD around managing incentives in a sustainability context suggests that both are necessary.[19] In order to curb unwanted behavior long-term, financial punishments will likely need to be used. Incentives often provide short-term motivation for businesses, and thus are not sufficient catalysts for change.
Supply Chain Traceability – From Farm to Fork
Incorporating the aspects of technology and retailer incentives mentioned above, high-tech traceability of produce could provide another way to reduce food wastage. If retailers and consumers have full visibility into where their food is produced and the statistics behind the production of the food (water usage, pesticides, date of picking, origin, et cetera) this could change demand patterns and encourage sustainable consumption, while also shaming producers who are wasteful. Marks and Spencers is already rolling out laser imprinting on avocados to show origin and “best-by” dates.[20] If this were extended to laser printing of QR codes to better inform consumers, this could help to reduce waste on the farm and at the table.
Concluding Thoughts
The more we researched food waste, the more imperative we realize the issue is. But, we’ve also found a number of innovative business models that give us hope that through coordination and alignment, there may be light at the end of the tunnel. We’ve proposed a variety of business models to address food wastage, especially at the farm level. In order to create a sustainable business model to tackle food waste, financial incentives between farmers, retailers, and consumers must be aligned. Although the perfect business model hasn’t appeared yet, we do realize that whatever model is scaled to minimize farm food waste, the growth of this model will create winners and losers. Farmers will hopefully produce less (but market prices would remain stable) thus leading to a decline in their income. Some type of subsidy to replace this lost income will be needed or payments from secondary markets high enough to make up for the lower cost of selling to them versus to traditional retailers. Nailing this feedback loop and correctly incentivizing the farmers will be critical to ensure faster adoption of more sustainable methods of farming and eating. We remain confident that humans will work together to reduce food wastage across the value chain, but for the foreseeable future, these initiatives will remain concentrated at the local level. Our hope is to find a model that can be scaled that mitigates the amount of food that ends up wasted globally. Only then will target 12.3 of the UN Sustainable Development Goal 12 be met.
[1] https://www.theguardian.com/environment/2015/oct/13/agriculture-farming-food-addiction-meat-harvest-hungry-world
[2] http://pdf.wri.org/reducing_food_loss_and_waste.pdf
[3] https://sustainabledevelopment.un.org/sdg12
[4] Ibid.
[5] http://pdf.wri.org/reducing_food_loss_and_waste.pdf
[6] http://www.wri.org/blog/2015/09/what%E2%80%99s-food-loss-and-waste-got-do-sustainable-development-lot-actually
[7] http://pdf.wri.org/reducing_food_loss_and_waste.pdf
[8] http://documents.worldbank.org/curated/en/358461468194348132/pdf/603710SR0White0W110Missing0Food0web.pdf
Baldwin, Cheryl. The 10 Principles of Food Industry Sustainability. John Wiley & Sons, 30 Mar 2015
[10] http://feedbackglobal.org/wp-content/uploads/2017/05/Causes-of-food-waste-in-international-supply-chains_Feedback.pdf
[11] https://www.theguardian.com/environment/2016/jul/13/us-food-waste-ugly-fruit-vegetables-perfect
[12] Ibid.
[13] https://www.theguardian.com/environment/2016/jul/13/how-did-denmark-become-a-leader-in-the-food-waste-revolution
[14] Ibid.
[15] https://donate.danchurchaid.org/wefood
[16] https://www.usatoday.com/story/money/nation-now/2016/02/09/french-supermarkets-must-now-donate-unsold-food-charity/80076632/
[17] https://www.usatoday.com/story/news/2016/03/04/ugly-food-startup/80815244/
[18] http://documents.worldbank.org/curated/en/358461468194348132/pdf/603710SR0White0W110Missing0Food0web.pdf
[19] https://knowledge.insead.edu/blog/insead-blog/achieving-sustainability-the-stick-or-the-carrot-3601#SJK0DCwEyDBeEOU4.99
Seeing the dumpsters behind a Las Vegas Blvd. hotel is a sobering view. In parallel, I wonder if an arguably radical shift in our diets (say, less meat) might help solve the waste problem along the way.
This concept is very familiar to me as I have spent a majority of my upbringing volunteering for Food Bank in the US. Similar to WeFood, Food Bank collects and distributes food to hunger-relief charities. It acts as food storage and distribution depots for smaller front line agencies, and usually do not themselves give out food directly to people struggling with hunger. They received their supply as donations from national food and grocery manufacturers, retailers, shippers, packers and growers and from government agencies and other organizations. Aside from WeFood, I also found the idea of Horsen’s Visionary Kitchen to be very interesting and innovative at the same time. If only we can get some of the top chefs to create meals for the poor using “almost” expired ingredients.