The value chain for fresh food is rife with waste and inefficiencies, particularly from a social and environmental standpoint. Food is wasted across the value chain, from farms to grocery stores to people’s homes. There are mismatches everywhere between those with too much fresh food and those with too little. As such, tons of perfectly good food are thrown out every day. However, with emerging technologies like the Internet of Things and digital marketplaces hitting the scene today and over the next few years, there are real opportunities to reduce waste and improve the social and environmental performance of the fresh food value chain.
Take, for example, recent developments with the Internet of Things. The Family Hub smart fridge from Samsung delivers a connected fridge that enables its owners to pull up video feeds from inside the fridge while they’re out shopping so they can see exactly what they have and the state that their fresh food is in, reducing over-purchases and redundant items. Additionally, smart fridges like this one can also adjust their temperatures to optimum levels dynamically, helping to extend the shelf life of fresh food within them. Through connecting appliances with the Internet, shoppers can optimize their shopping behavior to save themselves money and to reduce food waste in their households.
Digital marketplaces are also enabling consumers and shops to reduce inefficiencies related to food waste. Several new apps have been released to connect people with too many leftovers with those who are hungry or could put them to good use. Another app in Italy, Last Minute Sotta Casa, connects stores with shoppers. When these stores have fresh food that they’re a day or so away from throwing out, they can post on the app, notifying shoppers. Interested shoppers can come in and buy the soon-to-be-disposed of food at a discount. The use of digital marketplaces in these settings reduces the costs of having too much food for consumers and stores. Should apps like these be successful, it will help reduce overage costs, and provide social and environmental benefits across the value chain.
Should some of these new disruptive technologies have a meaningful impact on the value chain of fresh food, then stakeholders across the board will benefit. Farms will be able to sell more of their produce to grocery stores, since stores will have a smaller overage cost from stocking too much fresh food. This also means that farms will have to throw out less of the food that they grow, which provides further environmental benefits. For grocery stores, reduced overage costs will help them stock more food and potentially a wider variety. For consumers, having a clearer sense of what they actually need and the ability to redistribute food if needed will provide them confidence and clearer purchasing strategies, leading to less food that goes bad in the fridge and needs to be thrown out.
The bulk of the impact in this space in the short-term will be along the lines of efficiency improvements. Technology will not drastically reshape the fresh food value chain in the short-run. However, given the amount of waste that comes purely from uncertainty around demand and supply, as well as around how much food one will actually buy and consume, there is a large amount of environmental good that can come strictly from reducing inefficiencies in this value chain. In the longer-term, some of the experiments occurring today around extending the shelf life of fresh food could perhaps have an even greater impact on reducing the amount of food waste that is produced each day around the globe.
Food waste is one of the largest inefficiencies in the world today. It is also a problem that is spread across a far-flung and global value chain. This makes it difficult to solve, but it also means that there are opportunities for targeted solutions to help reduce the problem at each link of the chain. With some creative thinking and a deep understanding of costs and incentives, there is the chance to make a real impact in this space for enterprising minds.
Many initiatives and developments in this field focus very much on creating demand for oversupply. As this is mostly done locally (i.e. leftovers offered to others who can pick them up), there is only limited value to society: Take the discounted supermarket produce example. The person who picks up the discounted produce would have either bought the food at full price , maybe at another market that now offers those items at discount later, or not needed the produce at all. In the end, this only reduces average prices of food while increasing the volume of food (over)consumed.
With this in mind, the questions is where these developments feed back into the re-distribution of food globally to reduce inequality? Will there be a long-term shift due to more sustainable food production or distribution of produced food?
An impressive INSEAD alumni is tackling this too… check out Winnow Solutions founded by Marc Zornes (’09J)
Nice to see some ideas, which address the problem of food waste in individual households. I agree with benemanigold that there are limitations to regulating the supply side like supermarkets. However, reducing food waste from end-users will naturally help to reduce the problem.