Faces of Food Waste E05: The economic downsides of food waste
An estimated 1.3 billion tons, approximately one third of all produced food is wasted globally on an annual basis, according to the Food and Agriculture Organization (FAO) of the United Nations. Food is lost throughout each step of the food life cycle, from production, through storage and distribution, to end of life (Gustavsson et al., 2011). Thirty five percent of all wasted food is accounted for by shops , supermarkets and households that are throwing out food that’s still perfectly fit for consumption (Wasted Food Statistics, TheWorldCounts).
It doesn’t come as a surprise for too many of us, that food production and food waste in particular has a great share in greenhouse gas emissions as well as the usage of precious natural resources such as land and fresh water, however, it also has a significant economic impact.
Food that never reaches the plate
Food in the fields can be lost due to failed crops caused by diseases, or other factors like weather conditions. Additionally, food suitable for human consumption may be left in the fields to rot when low market prices make harvesting unprofitable to farmers.
When the food does leave the farm, insufficient transportation conditions, such as the lack of cooling also lead to food being lost and thus wasted. In Sub-Saharan Africa, one of the world’s poorest and most food-insecure regions, the World Bank estimates that a mere 1 percent reduction in post-harvest losses could lead to economic gains of $40 million each year, most of which would go straight to the smallholder farmers that grow the food (Lipinski, 2015).
Farmers making profitable investments in reducing food losses could be a potential way of reducing the cost of food, making it affordable for poorer consumers, thus avoiding food waste due to high prices (Gustavsson et al., 2011).
Although having been harvested and transported, supermarket chains can still reject food when it is oddly-shaped, doesn’t meet the established size standards or is blemished. Food wasted for these reasons contributes to the additional cost for farmers especially when the rejected produce can’t be re-used for animal feeding. A solution to this problem can be farmers selling their produce directly at farmers’ markets or in farm shops, however, the relatively small scale of this kind of trading cannot save all crops.
Supermarkets and other retailers also waste food when storage conditions are not suited for particular food products or when they reach their “best before” date. Reduction in prices can attract consumers to buy such produce while it is still suitable for consumption.
Globalized food supply chains
In today’s increasingly globalized food supply chains, food produced in one part of the world has an impact on food availability and food prices in other parts of the world. Moreover, when food is wasted in one part of the world, it affects food availability and prices in other parts of the world.
Food produced and wasted in one country in the pre-retail stages can impact food availability and food prices in importing countries, because of the fact that, due to the amount of food wasted, less of it can go to import, and this can increase prices in the importing country as demand for the food item(s) in question remains unchanged. Less food available for import can increase transportation costs per unit of food, which is reflected in the retail prices. It also is a financial loss to wholesalers in today’s world where large retail chains have ever growing powers in establishing the prices they are willing to pay for the food they purchase. In addition, unrealized wholesale and retail profits can arise due to unsold imported food caused by higher prices, all a result of food wastage in the producing country(s).
Costs for local authorities
According to a report published in 2015, 32 million metric tons of food ended up in landfills in the US alone, which represents a mighty $1.52 billion cost to local governments. The problem however is global, with the total cost of food waste amounting to an estimated $400 billion a year. Local authorities’ waste management costs include maintenance of landfills, transportation of food waste and the costs of operating the waste treatment plants. (Ahamad, N., 2018) Some countries, like the UK, spend large sums to collect food waste for composting and to invest in anaerobic digesters (Gardiner, B., 2014). However, these costs have a negative impact on governments’ public spending in other areas of the economy.
Additionally, governments support the agricultural sector with subsidies that may contribute to the production of surplus quantities of farm crops, of which at least a proportion is lost or wasted.
In developing countries, food is predominantly wasted at the production and distribution levels, while in industrialized countries it shifts to the retail and consumption levels. It’s clear that all stages of the food lifecycle need attention, and all actors from farmers to consumers, retail chains and governments need to have their share in finding solutions to the food waste problem if we want to be able to provide food for an ever increasing global population.
Ahamad, N. (2018, March 18). Food wastage: Economic, social and environmental impact – Mysuru Today. https://citytoday.news/food-wastage-economic-social-and-environmental-impact/
Gardiner, B. (2014, April 23). The Economic and Environmental Costs of Wasted Food. The New York Times. https://www.nytimes.com/2014/04/22/business/energy-environment/the-economic-and-environmental-costs-of-wasted-food.html
Gustavsson et al. - 2011—Global food losses and food waste extent, causes .pdf. (n.d.). Retrieved 31 March 2021, from http://www.fao.org/3/mb060e/mb060e00.pdf
Gustavsson, J., Cederberg, C., & Sonesson, U. (2011). Global food losses and food waste: Extent, causes and prevention ; study conducted for the International Congress Save Food! at Interpack 2011, [16 - 17 May], Düsseldorf, Germany. Food and Agriculture Organization of the United Nations.
Lipinski, B. (2015, September 22). What’s Food Loss and Waste Got to Do with Sustainable Development? A Lot, Actually. | World Resources Institute. https://www.wri.org/blog/2015/09/what-s-food-loss-and-waste-got-do-sustainable-development-lot-actually
Wasted Food Statistics—TheWorldCounts. (n.d.). https://www.theworldcounts.com/challenges/people-and-poverty/hunger-and-obesity/food-waste-statistics/story