Rabobank: Innovation Can Turn Around Food Waste
16 March 2015
The European Food & Agribusiness (F&A) industry is currently losing EUR 60 billion of value each year through food that is wasted in the supply chain and never reaches the consumer. According to Rabobank’s latest report, it is vital that the industry looks to address the issue and F&A companies have much to gain themselves from doing so. Rabobank sees innovation as the most effective means of making an immediate difference to reducing waste. However, for it to be successful, optimisation of supply chain processes and business models may be required.
“Looking at the food chain from farm to fork, most wastage occurs within and between F&A companies during agricultural production, post-harvest handling and storage, processing and distribution. For almost every type of food, producers account for more than half the loss of value,” says Rabobank F&A supply chain analyst Paul Bosch.
According to Rabobank’s report, the potential value of innovation in F&A is significant. There are three main areas where innovation can tangibly help: harvesting and handling crops, packaging food and monitoring fresh produce. Through these, companies can realise up to EUR 10 billion of savings by using new approaches to reducing food waste.
For example, companies can invest in new machinery to harvest greater volumes whilst reducing bruising or damage to the crop. Better use of packaging can also protect against damage, whilst monitoring can give producers information about food freshness to optimise sales and availability.
However, some packagers and growers may feel they have few incentives to invest in the necessary technology. Reduction in food waste, after all, may result in retailers buying less product.
While the initial benefit of implementing innovation is reducing waste, there are other essential benefits for processsors. These include: improving product consistency, enhancing inventory management and increasing flexibility in logistics. Valorising these benefits is key to reduce foodwaste in a profitable way.
Rabobank suggests food processors and retailers should start to select partners who see the benefit in reducing waste and have the potential to benefit from the additional effects on the supply chain. Nevertheless, companies should realise that innovation is not for all partners, but an asset that will attract like-minded companies and markets to becoming supply chain partners.