Food Waste: From Problem to Opportunity

$1 trillion dollars worth of food is wasted annually [Credit: Taz — https://secure.flickr.com/photos/sporkist/126526910]

Each year, 1.6 billion tons of food worth about $1.2 trillion are lost or go to waste according to The Food and Agriculture Organization (FAO). This is one-third of the total amount of food produced globally, with many tons of edible food ending up in landfills. In the U.S. alone, consumers, businesses, and farms spend $218 billion a year, or 1.3% of GDP, growing, processing, transporting, and disposing food that is never eaten. This results in massive amounts of wasted water, landfill use, climate pollution, and other environmental damage.

At the same time, one in eight Americans lacks a steady supply of food. According to a study by the Natural Resources Defense Council in the U.S., 68% of discarded food is still edible.

Economic approach to total welfare in relation to food wastage quantities (“Food wastage footprint: Full-cost accounting,” FAO, 2014)

In addition to the USD 1 trillion of economic costs per year, the Food and Agriculture Organization of the UN (FAO) found that environmental costs reach around USD 700 billion and social costs around USD 900 billion. Particularly salient environmental and social costs of food waste include:

• 3.5 Gt CO2e of greenhouse gas emissions. Based on the social cost of carbon, these are estimated to cause USD 394 billion of damages per year.
• Increased water scarcity, particularly for dry regions and seasons. Globally, this is estimated to cost USD 164 billion per year.
• Soil erosion due to water is estimated to cost USD 35 billion per year through nutrient loss, lower yields, biological losses, and off-site damages. The cost of wind erosion may be of a similar magnitude.
• Risks to biodiversity including the impacts of pesticide use, nitrate/phosphorus eutrophication, pollinator losses, and fisheries overexploitation are estimated to cost USD 32 billion per year.
• Increased risk of conflict due to soil erosion, estimated to cost USD 396 billion per year.
• Loss of livelihoods due to soil erosion are estimated to cost USD 333 billion per year.
• Adverse health effects due to pesticide exposure are estimated to cost USD 153 billion per year

Direct impacts of food wastage and additional scarcity costs (“Food wastage footprint: Full-cost accounting,” FAO, 2014)

Full landscape of the impacts of food wastage on the environment, society and livelihoods (“Food wastage footprint: Full-cost accounting,” FAO, 2014)

We can solve this. Food waste was once seen as a necessary evil or, at best, just a matter of corporate social responsibility. But it’s emerging as a business opportunity. Estimates say that grocery retailers in the U.S. waste $18 billion of food every year, which is double the industry’s profits. Supply chain partners can use digital tools to lower food waste and improve their bottom lines.

Investors are also taking notice. Companies fighting food waste in the U.S. attracted about $125 million in venture capital and private equity funding in the first 10 months of 2018. With Oprah and Katy Perry as Investors, Apeel Sciences raised $250 million in 2020 to become the first “unicorn “ to fight food waste.

Several research firms estimate a total addressable market for food traceability tech at an average of US$14.3B in 2020. The firms include:

• BCC Research (Boston) estimates the global market for food traceability technologies market at $10.7B in 2016, reaching $15.1B in 2021, with a CAGR of 7.1%.
• Kenneth Research (NYC) valued the 2017 total addressable market at US$12.3B, and estimated a CAGR over 9.64% between 2018–2025.
• Market Research Engine (Miami) estimates TAD at $19.5B by 2025, with a CAGR of 9%.

Four data improvements would create vast efficiencies that would reduce waste as well as billions of dollars in financial, reputational and health risk: 1) gathering more granular food data, more economically; 2) connecting the disparate systems that store that data; 3) sharing this real-time data with all supply chain participants; and 4) operationalizing the data via AI.

Transparent Path is creating a hardware and software platform to provide near-real-time visibility into food products as they travel through the supply chain. This platform consists of IoT sensors that feed a shared and blockchain-secured data ecosystem, and combines predictive analytics to operationalize food origin, location, and condition data.

We can reduce food waste and risk by creating a more agile, more resilient, and more certain supply chain.

Originally published at https://www.linkedin.com.