Global food wastage could hit 2.1 billion tons by 2030 in 'staggering' crisis

03 September 2018 Authored by Consulting.us

The worsening problem of food waste and loss – which already account for one-third of global production – is slated to get worse in the future, rising to a level of 2.1 billion tons worth $1.5 billion by 2030. However, a new report from BCG contends that collective action addressing five key drivers of wastage could reduce food loss by $700 billion globally.

Massive food wastage is a pressing global issue, with the UN identifying the halving of food loss and waste by 2030 as one of its Sustainable Development Goals (SDGs). Reducing food waste is an important goal not only because it accounts for 8% of global greenhouse gas emissions, but also because 870 million people around the world are currently undernourished.

A new report from The Boston Consulting Group (BCG) has found that the already huge problem of food waste is likely to get worse in the future. 1.6 billion tons of food – or one-third of total food produced globally – is currently wasted every year, representing a loss of $1.2 trillion. Based on an advanced model, BCG projects that by 2030 food loss and waste will reach 2.1 billion tons worth $1.5 trillion – a rise of 1.9% annually in terms of volume and 1.8% in terms of value. The firm projects a significant spike in food loss in Asia, in particular.

The problem of food loss occurs all across the value chain, but is most prevalent at production and consumption. In developing countries, the problem of food waste is centered on production and transportation of food from farms. On the other hand, in developed countries most food waste occurs at the consumption phase, perpetrated by both retailers and consumers.

Food loss and waste occur across the value chain

Though the challenge is monumental – requiring the collective action and commitment of producers, consumers, governments, and NGOs – the consulting firm contends there is a way forward. “This represents a challenge so massive that it was included in the United Nations’ Sustainable Development Goals,” said Esben Hegnsholt, a BCG partner and coauthor of the report. “But while it is a daunting problem, there are steps that can be taken today, actions that draw on currently available technology and know-how, to dramatically slash food loss and waste across the value chain.”

BCG identifies five key drivers that need to be addressed to combat the food waste issue. These include lack of awareness, inadequate supply chain infrastructure, supply chain efficiency efforts that neglect food loss, weak value chain collaboration, and insufficient regulations. The report says if all stakeholders took action with a realistic degree of progress across each driver, they could reduce food waste by $700 billion by 2030 – just short of the UN targets.

First, efforts to boost awareness of food loss and change customer choices that exacerbate the problem need to be launched. According to BCG, many consumers lack the information to choose options that minimize food waste. For example, consumers often believe that fresh food products like meat, fish, and fruits are healthier than the frozen variants when the opposite is true: frozen foods actually retain nutrients better. As such, consumers demand out of season produce, which comes with high transport cost and food waste.

Additionally, retailers promote excess purchasing with bulk sales and 2-for-1 promotions, with the result being that consumer often can’t consume the purchased food before it goes bad. BCG says that raising awareness across consumers and retailers, while encouraging consumers to shift away high-waste purchasing habits could reduce food waste by $260 billion a year.

A $1.5 trillion problem

Much food is wasted because of poor supply chain infrastructure, especially in the developing world. Cold chain (refrigerated trucks, storage, etc.) is non-existent in many emerging countries, leading to large-scale loss. The report projects that $150 billion could be saved annually with more advanced supply chain solutions.

Currently, supply chain efficiency efforts are directed efforts like manufacturing speed since key performance indicators typically don’t address food waste, since these improvements yield a smaller financial gain.  Meanwhile, new digital supply chain tools are available that track loss and waste and even allow for dynamic pricing that can better move products through the chain before they expire. BCG expects loss mitigation of $120 billion from addressing this issue.

As well, there is a lack of collaboration between raw material producers and processors, leading to waste. For example, farmers may harvest earlier than optimal (meaning lower food yield and quality) to relieve cash flow pressure in the absence of agreements with processors. Better coordination in this area could reduce food waste by $60 billion.

Finally, policy and incentives changes could reduce the problem by $110 billion annually. Currently, disposing of food is cheap and policies neither punish firms for food waste, nor incentivize them to reduce it. Expiration dates on products are also unnecessarily conservative, leading to retailer and consumer wastage.

Global coordinated action is needed from governments, consumers, and firms to tackle the problem. According to BCG, governments need to support and subsidize opportunities to reduce food loss, consumers need to adopt habits that cut down on waste, and firms need to step forward and create strategies that reduce waste throughout their value chain.

“While many stakeholders have a part to play in combating food loss and waste, the role of companies is perhaps the most critical,” says Shalini Unnikrishnan, a BCG partner and coauthor of the publication. “Companies are involved in every aspect of the food supply chain, from production through to consumption, and as a result, their decisions and actions have an outsized impact.”

“At the same time, they have deep expertise, insight on potential solutions, and the money to make those solutions happen—which can ultimately help their bottom lines.”

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