$400 billion worth of food wasted every year, supply chain solutions sought

Published: Tuesday, December 20, 2022

The Food and Agriculture Organisation (FAO) of the United Nations says about 32% of food is wasted as soon as it is produced; 21% wasted during processing and 14% during distribution, that is even before it reaches the consumer.

The percentages could be more, even while the supply chain logistics (from production to processing to packaging to distribution) has vastly improved. Estimates are that about $400 billion food is wasted every year.

The supply chain challenges indeed are enormous if the Sustainable Development Goal (SDG) target 12.3 of the United Nations has to be achieved. SDG aims at halving per capita global food waste at the retail and consumer levels and reducing food losses along production and supply chains, including post-harvest losses. There is an environment angle to food waste and estimates suggest that 8 to 10 percent of global greenhouse gas emissions are associated with it.

Cold chain logistics market to reach $782 billion by 2030

Cold chain logistics plays a critical part in reducing food waste and thankfully the global cold chain logistics market is growing at a CAGR of 14.6% from 2021 to 2030, forecast to reach $782.27 billion, according to Allied Market Research consultancy firm.

The cold chain logistics market comprises fruit vegetables; dairy products; meat and marine products; pharmaceuticals; floriculture and confectionary and ice cream sectors, each having its own cold chain needs and regulatory compliances to follow within countries and outside too. There is no ‘one size fits all’ to cold chain logistics and here lies the enormity and opportunity as well.

Onus on producer, transporter and retailer

As regards the food segment, supply chain logistics has to worry about temperature zones and temperature flexibility as the accepted refrigerated temperature control is at or just below 4 degrees Celsius and for frozen items it is 0 degrees Celsius, both ensuring that there is uninterrupted power supply.

The proliferation of supermarkets with cold storage in place; the rise of grocery e-commerce; sustainable packaging; refrigerated warehouses; refrigerated trucks etc have vastly improved supply chain and reduced food waste, but lot more needs to be done as consumers demand fresh food, irrespective of its place of origin.

The onus lies on the producer, the transporter and the retailer to ensure that the food on the table is fresh. Companies in the food business have started rethinking their storage and transportation technologies and are using data and real-time solutions to stay ahead of the game, however as mentioned earlier the task of reducing food waste is indeed humongous.

Massive investments happening

Various governments have regulations in place to reduce food waste as much as possible. For instance, the US Food and Drug Administration’s Food Safety Modernisation Act, 2011 insists on products to be traceable, all the way back to the point of origin.

This has triggered massive investments in solutions to document every step in the food supply chain, opening up significant market opportunity for software platforms. In an era of globalised food consumption, temperature-controlled solutions are the answer, as they slow the process of ripening and deterioration of perishable fresh food.

These solutions are for all modes of transportation – be it sea, air or land – and for brick and mortar and online stores, each with varying requirements. Insulated containers with dedicated cooling solutions are deployed by most logistics companies in the food distribution sector as they all the transportation of all types of volumes, products in every temperature range from -20 degree Celsius to ambient.

Similarly for warehouse and their automation partners, this challenge will remain, even as food waste will continue, if not sold by the expiry date, and that is totally unavoidable.

Some countries do have regulations in place to ensure that food is not wasted. For instance, the Garot Law in France insists on the agrifood industry, mass catering and all supermarkets bigger than 400 sqm to donate unsold food to charities.

Improved supply chains will be vital if hunger isn’t to become an even bigger problem, says consulting firm McKinsey while mentioning that 40 per cent of all food loss occurs in the post-harvest agricultural supply chain, between producers and consumers, the severity of the problem being in Africa, Asia and Latin America.

Technologies evolving

McKinsey mentions how hermetic grain-storage silos (airtight metal silos that kill insects and pests in the grain by starving them of oxygen) are an answer. “A market-driven supply chain for metal silo components – including suppliers, manufacturers, retailers and repair services – may be necessary for sustained adoption of the technology.” There is a cost factor to it and that in developing countries could be inhibitive.

The Internet of Things (IoT), artificial intelligence, machine learning etc have potential to resolve the food waste problem, giving example of TeleSense which continuously monitors grain, mitigating spoilage and insect infestation, McKinsey mentions and adds that with low-tech such as sealed silos not much in vogue in food supply chains in the developing world, the adoption of industry 4.0 tech is way beyond.

Nevertheless, technologies are getting developed at a rapid pace, providing real-time and end-to-end monitoring of the perishable from producer to consumer. Remote Container Management with its internal sensors provides the shipper real-time data, thus ensuring that the consumer gets what is promised.

But one must understand that cold-chain buys time by countering perishability, albeit for a short spell, again depending upon the produce itself. Cold-chain does not preserve perennially, hence the requirement for products to indicate shelf-life.

Improving shelf-life

US-based technology company Shelf Engine states that over 40% of deli sandwiches go to waste in the US; over 14% of fresh juice spoils and 35% of bread goes unsold. To address these issues, Shelf Engine grocery supply chain solutions generate the perfect order for every SKU, reduce out-of-stocks by accurately predicting orders for hundreds of fresh items every single day.

Similarly, Wasteless, headquartered in Israel and the Netherlands, is the inventor of a patented markdown optimisation engine for perishable goods with a limited expiration date, enabling retailers to maximize profit across the demand curve.

Wasteless has operations throughout Europe and the US. Another London-based food supply chain company – BlakBear – has developed a paper-based electrical gas sensor that indicates how much shelf life is left for packaged meats, poultry, and fish in real time that the company says is more accurate than traditional expiration dates. The company sells freshness sensors and a cloud API to improve quality control, reduce rejections, and cut food waste from producer to consumer.

Regulations must

Since technologies have their own set of limitations, strict regulations have to be in place and one such is the ATP (Agreement on the International Carriage of Perishable Foodstuffs) which require food products to be transported in food transport containers at a controlled temperature that depends on their recommended storage temperatures. An ATP certificate is required for any distribution journey of over 80 km in 48 countries.

While technology and regulations are interconnected, food waste is not just an economical issue, but also an ethical and environmental issue that needs to be dealt with an individual, community and the industry levels as reducing food waste at the household, retail and food service levels have benefits for both people and the planet.

The supply chain sector is increasingly adopting technologies like never before, providing transparency about products. Industries are investing in solving food waste not just as a matter of corporate social responsibility, but as a business opportunity. At the end of the day, what matters is how to reduce food waste.