While recently skimming over an article by the BBC I was confronted by a picture of a stony-faced Hugh Fearnley-Whittingstall in discussion of the ‘War on Waste’ campaign. Hugh was standing amidst 20 tonnes of “just not good enough for Morrisons” parsnips, and showed it was clear that the levels of waste in the Food and Drinks industry from farm gate to mouth is a systemic issue.
Often floated and generally accepted is the statistic that 1/3 of all food globally produced is wasted. The numbers would look bleak on any balanced scorecard. The story worsens when coupled with statistics from the 2015 Global Hunger Index indicating the level of hunger in the world remains unacceptably high with 795 million people still going hungry, one in four children affected by stunting, and 9% of children affected by wasting. According to the Malthusian theory the issue can only get worse as unchecked exponential population growth will continue to demand more from the food and drinks industry.
There is clearly an opportunity for waste reduction across the whole supply chain. As consultants working within our clients borders, we are continually focused on driving the levels of operational waste to only a few percentage points and reducing the impact on the bottom line. However as yet there seems to be little collaboration with processes up and downstream. How often would a major supermarket work with the supplier in order to minimise waste by the consumer or household? Often the reverse is true, with competitive pressures making individual businesses reluctant to effect significant changes, or the financial penalty is not necessarily suffered where highest impacts to waste are effected. Typically, a small number of food retailers exercise market power over a very competitive large supplier base. To ensure suppliers are not “de-listed” over production is common practice, and where own brand products are created they cannot be resold thus are wasted.
FOOD WASTE – THE NUMBERS
In the UK a charity called WRAP (Waste & Resources Action Programme) produced a report looking at strategies to reduce food waste. The report builds upon a paper written by the Food and Agriculture Organization on global food waste written in 2011, looking in detail at the global food chain to understand the impact and loss points across the whole supply chain.
Findings verify that roughly 1/3 (1.3 billion tonnes) of all food produced in the world becomes waste based on weight (FAO 2011). Significant differences occur between developing and industrialised countries in terms of where the majority of waste is produced along the supply chain. Developing countries produce the majority of waste at the beginning, namely in agriculture and post-harvest. The industrialised world produce more than 40% of food waste at retail and consumer levels.
The study (WRAP 2015) shows that in the UK, by sector, 46% of food and drink waste is attributed to the household while 29% is in food manufacturing and retail, and 6% is in hospitality and food services. The remaining 19% is attributed to pre-factory gate food waste.
Clearly the household is significantly contributing to the issue. It was found that 60% of household waste was considered avoidable, edible at some point prior to being thrown away. Of this, roughly half was due to “not being used in time”, while a third was overcooked, or too much was prepared or served. Whilst there is no financial incentive should manufacturers be more responsible with sell by dates? Do we design packaging such that we always have too much? Could we scrap packaging altogether and have the consumers fill by weight?
Interestingly the latter solution is being implemented by eco-conscious German consumers shopping at Original Unverpackt, a no packaging, zero waste grocery store in Berlin. Consumers purchase exactly how much they need from refillable containers and shelves are re-stocked using a bulk bin system for all products, including milk and shampoo. A similar initiative was implemented in 2014 in South America to combat food poverty.
What is more interesting to Coriolis and where we can have the biggest impact as Operations Consultants is in manufacturing and retail supply chain food waste. However, as previously mentioned working within the borders of a single supplier will not solve the problem. Collaboration between retailers, manufacturers and producers is needed to address the significant and complex interactions and to help distribute the benefits arising from waste reduction more evenly (e.g. producer vs retailer). But how can we drive this behaviour and invoke whole chain collaboration?
French government is close to enacting a law which will force French supermarkets with a retail space above 400sqm to donate food that is approaching its best-before date to charity or sent to be used as animal feed. Supermarkets must sign contracts with charities or face significant fines or two years in jail. Clearly this legislation will have a cost associated with waste disposal and may increase incentives for supermarkets to work with their suppliers on waste reduction initiatives.
Whilst collaboration between retailers and manufacturers is uncommon at present, as governments are lobbied to create new legislation, companies will need to focus outside of their own walls and work with the supply chain as a whole. The question for us is how do we position ourselves to take advantage of that when the opportunity arises?
- WRAP (2015) Strategies to achieve economic and environmental gains by reducing food waste (http://2014.newclimateeconomy.report/wp-content/uploads/2015/02/WRAP-NCE_Economic-environmental-gains-food-waste.pdf)
- FAO (2011) Global Food Losses and Food Waste (http://www.fao.org/docrep/014/mb060e/mb060e.pdf)
Written by Oliver North, Coriolis Consulting Pty Ltd