Introduction: on food waste and animal farming
BBC recently published an article on how to manage Earth’s land, discussing several of the sustainability issues that the world is facing today. One of the striking numbers is that 75% of the world’s agricultural land is used for feeding animals that then we ourselves eat, and it is estimated that 80% of the deforestation is caused by animal farming. At the same time, about 40% of the food produced today is wasted.
One of the solutions proposed is to cut meat consumption and throw away less food. Both of them are very valid solutions that we should all strive to achieve, both individuals and corporations. But realistically, it will take time to convince billions of people to change their diet, and corporations to produce less and risk not having enough products for the demand they face. So, what if there was a way to combine these two issues and use part of the food that we humans waste to feed animals? What if we were able to scale this solution to a point where we contribute to reduce waste and free up farmland to human consumption (or reforestation)? Many small restaurants have tried to give away waste food to organic farms for them to feed animals and create a positive impact. What if we could create a system to formalise and scale this process and be able to actually make a difference?
This system would allow us to tackle two of the UN Sustainable Development Goals, number 12 (responsible consumption and production) and indirectly number 13 (climate action).
Business model innovation
The business model innovation that we propose is to create a circular model to recycle food waste from human consumption and transform it to feed animals in farms.
- Type of waste: we identified bread and simple baked products as being the preferred products in the first phase of the project. This is because dry food is easier to process, rework, and store before processing. It is also offers the majority of nutrients that animals already eat, being based on wheat. The old baked products could be re-heated (to comply with existing regulation), vitamins could be added to improve the nutrient content of the new feed, and it could be easier to process in animal feed.
- Waste collection from retail (supermarket and bakeries) and restaurants: we looked at two different models:
- Pay the suppliers of baked products a certain amount per kilo of products. This would be the preferred method to increase the number of stores that would adhere to the project as it would incentivise them to give away the old food that they would otherwise throw away. A similar method has been used by recycling companies in India, who paid private and commercial companies for supplying recyclables such as paper, glass and plastic. However, this would add an additional cost to the business model which might make the breakeven point more difficult to reach. One company that we tracked in India, Pom Pom Recycling, closed after a few years, hinting that achieving profitability with this model could be tricky.
- Ask retailers to pay a fixed monthly fee to be part of the service. The fee should be low enough to be attractive for retailers to join, and possibly balance the amount they would save on regular trash (since the quantities of regular trash they would normally pay for would be reduced). For the retailers, this could be a branding exercise of promoting themselves as a sustainable business (which is becoming more and more important for consumers). To start, we could offer the service as a trial for free and then start charging after the first months.
- Processing of food waste into animal feed: There is existing technology to process the dry food into animal feed, but it is not very efficient. For the launch, we could leverage and use the existing technology to process food but in the medium term, we should look to develop our proprietary technology. This could be a sort of industrial grinder that grinds the old bread, re-heats it to eliminate potential germs, and adds the vitamins needed for a balanced diet.
- Sale of animal feed: this product would likely be sold at a premium compared to industrial animal feed, to take into account the sustainability aspect. Clients will likely be organic farms that value sustainability. The sale could be direct (having a sales force that looks at the region where the processing unit is set up), through distributors (reaching pet stores for example) and possibly also online, to cater to a larger audience.
- Phase II: would include treating different types of food waste besides dry bakery products and launching a proprietary technology.
Achieving a large-scale adoption of this business model would result in significant amount of agricultural land currently used for animal feed to be freed for human use and reforestation. It will also substantially decrease the amount of waste that goes through traditional less sustainable waste management systems. Recent research on transforming food waste into pig feed in Europe suggested that if Europe were to achieve levels similar to those of Japan and Korea (around 40% of food waste recycled), the land required to produce pig feed would be reduced by 20%.
In addition to the sustainability aspect of this business model, we expect that a large scale adoption and a strong final customer knowledge of this technology would force farms to adopt if not ours at least more sustainable technology in order not to be left behind competition.
Existing food waste to animal feed technology
The idea is not new or ground-breaking. There are several restaurants that routinely distribute food waste to the organic farms they supply themselves at. There are countries that are at the forefront of this model, such as Japan and Korea, where it is estimated that about 40% of all food waste makes its way into animal feed. We found companies that are specialised in recycling products from bakeries and transform them into animal feed, such as Wilenta Feed (http://www.wilentafeed.com) and ReConserve (http://reconserve.com) in the US, and Ecostock (https://www.ecostock.co.nz) in New Zealand. All companies seem to be local or national. One of the providers of food waste to animal feed technology is American company Scott Equipment (http://www.scottequipment.com).
Potential Risks
There are a number of risks which would explain why this business model has not been implemented on a large scale.
- Regulation: regulation is different in every country and in some nations, such as the UK, using food waste as animal feed is banned. To implement this initiative on a large scale, we would need to have a team in each country that is specialised on regulation.
- Localisation: this is not a technology that can be developed in one place and adopted just anywhere. Each location where the company would decide to launch would need to have a collection system and a processing plant, thus making the scaling up of the technology challenging.
- Location of pilot project:the location chosen as the first test market would be crucial to ensure the success of the venture. It should be a city/region that has a high concentration of bakeries/restaurants as well as animal farms that could be clients in the vicinity, coupled with a culture of sustainability. Singapore seems to be a good test market, as the government is trying to push for innovation in the recycling field. The city is small enough, while still having a large number of bakeries and restaurants, and has a number of animal farms spread across the island.
- Team: having the right team in place would be crucial for the success of the venture. The core team should include a CEO, a veterinary that could advice on the regulations and feed characteristics, and an engineering team that would work on the development of a proprietary technology (working closely also with the vet).
- Acquiring suppliers: charging a fee to use the service could discourage outlets from joining the project but without charging a fee, the profitability of the venture might not be guaranteed.
- Acquiring clients:the higher price for the feed as well as our sustainability focus will likely alienate us from the biggest buyers (the largest commercial farms available) and would make the potential market much smaller.
Group: Samantha Cheok, Yaesong Jung, Jean-Philippe Pogorzelski, Kruaorn Sugunnasil, Federica Torgneur