Why less food waste is good for everyone

Reducing waste in the food chain is a topic that is discussed at meeting tables, within the context of innovation projects and even at a hackers’ meeting. Rabobank is involved in these initiatives. What is possible and what will it mean for the world food supply?

A few facts on food waste that have been brought into focus by Rabobank Food & Agribusiness Research analysts:

  • Approximately one-third of the food produced around the world is wasted. This is theoretically around four times the amount of food needed to feed more than 800 million people who are suffering from hunger. 
  •  In the European Union, consumers waste 30 billion euros’ worth of food and another 60 billion euros’ worth of food is lost in the production process. This relates particularly to perishable foods such as meat, fruit and vegetables. 
  •  Consumers in the Netherlands throw away more than 50 kilos of food a year. This adds up to a total of 800 million kilos.

This consequently involves a great deal of food, large amounts of money and the profitability of companies in the food chain.

What is Rabobank doing about this issue?

Rabobank provides stakeholders with access to knowledge and networks. One example of this is the research conducted by Rabobank Food & Agribusiness Research (FAR). Rabobank furthermore organises roundtables with customers and other parties in the chain, such as the Food & Agri Netherlands roundtable that was organised for the potato sector earlier this year. Rabobank is also involved in the October 2014 ‘Hack the food waste’ event in Eindhoven, the Netherlands. Key challenge for data experts and hackers: are they able to make apps and other sophisticated solutions using data from the potato chain that will provide producers and consumers with information on how to reduce food waste?

Why is Rabobank focusing on this topic?

Rabobank is a leading financier of companies in the food and agri sector in a number of countries and is committed as a bank to contributing towards improving the global food supply. ‘Our customers benefit from our involvement with this issue. And if customers are able to improve their returns, it is also beneficial for us as a bank’, says Cindy Koolhout, Business Manager at Food & Agri Nederland. ‘Inefficient use of raw materials has a major impact on the environment and the stability of the food supply.’

What are the causes of food wastage?

‘They differ from country to country’, says Paul Bosch, an analyst at Rabobank Food & Agribusiness Research. ‘In developed countries, the greatest amount of food is lost during the distribution and consumption phase. In contrast, most food is lost during the production, harvest and storage phases in developing countries.’ So this means not enough food reaches consumers in developing countries. More than enough food reaches consumers in the western world. And these consumers can afford to do things such as store potatoes improperly or peel them too thickly.
The definition of the term ‘wastage’ is in itself a matter of discussion in the western world. If, for example, residual products from potato processing are used as feed and the kilos consequently do not end up directly in consumers’ stomachs, does this or does this not constitute wastage? It can generally be said that waste is usually the result of poor harmonisation of, for example, demand or the weather.

Rabobank has discussed the potato chain with the Dutch potato sector. What insights did this produce?

‘Lots!’, says Koolhout enthusiastically. ‘The Dutch potato chain, extending from potato growers, seed potato companies to the fries industry, is very well organised and fulfils a pioneering role internationally. Seeing these organisations come together to discuss this topic is fantastic in itself. It is clear that they are absolutely working on this issue, but just not always with each other. We have also learned that having insight into the data can help companies improve their performance. The only difficulty is that sharing this information is a sensitive matter. We did, however, nonetheless challenge the participants to be open about the challenges and to provide data that data experts can work with at the hackathon.’

What are the solutions to food wastage?

There is not one single solution that will work around the world because the causes differ by region and by product.
The focus in countries in Africa is on achieving higher production per hectare and fewer losses during production, storage and transport.

Innovation in technology can primarily contribute to reducing food waste in the European Union. Examples include apps that allow for improved planning, better assessment of the freshness of products and improved packaging that prolong the shelf life of those products.

Will less wastage in western countries lead to greater availability of food for people in developing countries?

That very much remains to be seen. Rabobank analyst Paul Bosch says this connection is virtually indiscernible. ‘A reduction of food waste in the western countries does not necessarily mean that there will be more food available in developing countries. The first question is whether food production will remain at the same level if demand can be lowered through preservation. The second question is whether the costs of food export to new regions can be compensated by the price paid in those areas. A deeper analysis is required on these topics.’ The first estimate shows that 40 percent reduction of food waste in the European Union may, in the long term, lead to a small but positive increase of food supply (0.04%) and a decrease in food price (0.2%) in the Sub-Saharan Africa region.
‘If you really want to achieve something in developing countries, then you must do it on location,’ says Bosch. ‘This can be done with western knowledge. And it will then have a direct effect on the availability of food in those countries.’ Cindy Koolhout: ‘One of the statements made during the meetings with the Dutch potato sector was: The western world is trying to achieve an additional 20% improvement in yields, while the knowledge we used to achieve the first 80% improvement could be directly beneficial for companies in developing countries.’