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The $400 billion opportunity: addressing food loss in supply chains
September 29, 2022
Addressing food loss and waste is a $400 billion opportunity for businesses to regain lost costs, product and capital. Discover the potential to make small investments with big impacts on productivity and sustainability.
An estimated third or 1.3 billion tonnes of food is lost or wasted every year. With supply chain delays, increasing costs, narrowing margins, climate shifts and rising food insecurity, it’s becoming imperative for businesses to minimize inefficiencies across their supply chains. Tackling food loss and waste is a great place to begin. It can help grow customer loyalty and brand trust and also support meaningful environmental and social change. Simply put, doing good can be good business.
The global impact of food loss and waste – what’s the difference?
Food waste happens across retail, foodservice and to end consumers where food is thrown away as it’s past the perceived expiry date or for cosmetic or spoilage reasons.* Food loss occurs between harvest to retail, with about 14% of the world’s food discarded in these two stages,** a cost of $400 billion USD.***
What’s the impact of food loss and waste globally? The costs include significant economic, environmental and social impacts. Sources: Champions 12.3, The Guardian, UN Environment Programme, FAO.
The impact of greenhouse gas emissions and water use from food loss and waste are certainly cause for concern (see graphic above). Meanwhile there are other factors that greatly affect the bottom line, operational efficiency and ability to take on new opportunities, including the use of agricultural inputs, fuel, equipment, labour, capital and time that goes into the farming, processing, storage, transportation, sales and marketing of food that ultimately isn’t consumed.
Quantifying the business opportunity
What if that $400 billion in lost food time, effort and labour was used more productively in our supply chains?
Implementing efficiencies to reduce food loss in supply chains can yield positive ROI. Sources: World Resources Institute, GreenPrint. Addressing food loss offers benefits for everyone from growers to distributors to manufacturers to retailers. According to a World Resources Institute study of 700 companies in 17 countries, for every $1 a company invested in cutting food loss, they saw a $14 or 1,300% percent return on investment (ROI). Most improvements were no-cost or low-cost investments of less than $10,000, such as better waste tracking or packaging or upgrades to quality, cold chain, inventory management or manufacturing processes. The resulting benefits included the creation of new products repurposed from food waste, avoiding the cost of unsold food and ingredients and reducing labour and waste management costs.
There are also ethical, environmental, consumer and regulatory benefits. In addition to reducing the impact on the environment and helping improve food security, there are opportunities for marketing, revenue and brand trust and loyalty growth with supply chain partners, investors, regulators and consumers. As consumer interest in the sustainability of how food is produced and willingness to pay more for sustainable products increases, promoting your sustainable practices and passing along price savings to customers can aid brand reputation and customer loyalty. Many companies have already made zero-waste commitments or adopted sustainable practices to cut or repurpose food waste. Through the 10x20x30 initiative, over 10 of the world’s largest food retailers including Carrefour, Kroger, Sodexo, Tesco and Walmart committed to work with 200 of their suppliers to halve their food loss and waste by 2030. When it comes to repurposing waste, Nestle’s Research and Development team upcycles their agricultural by-products such as cocoa pulp to create new products and revenue streams for example.
These initiatives highlight that the causes, consequences and potential solutions for food loss are interlinked and require more than one company or point solution to solve the issue. In the long term, better collaboration and integration from seed to fork will help drive overall transformation. This end-to-end connection could, for example, enable producers, processors and manufacturers to get downstream signals from each other and end consumers to prevent over planting and overproduction and improve forecasting. A more collective view of food production to reduce waste and loss will be critical to thriving towards a zero-waste future. See our solutions to help drive more efficient production, including Production Optimization for farmers, Supply Chain Management for food processors and Food Quality, Safety and Compliance tools for retailers.
* The State of Food and Agriculture, FAO, 2019: https://www.fao.org/state-of-food-agriculture/2019/en
** Food Loss and Waste Reduction, UN: https://www.un.org/en/observances/end-food-waste-day
*** Food Loss and Waste | Policy Support and Governance Gateway, FAO: https://www.fao.org/policy-support/policy-themes/food-loss-food-waste/en