The issue of food waste is increasingly gaining attention in the media and in coffee talks since 2012 when the European Union published data indicating that ⅓ of the food produced is lost or wasted. This study indicated that households are responsible for 53% of total food waste.
The rise of conscious and consistent consumers together with new smartphone applications that encourage us to avoid waste are managing (I imagine) to reduce food waste at the destination. I lack data to justify this intuition.
However, while we continue to make progress through technology, there is not enough talk of food waste at the source or during the previous steps through which food passes before it reaches our homes. And the figure is alarming.
How much food waste is generated before it reaches households?
According to the same study of the European Union, the food waste prior to its arrival in households is distributed the following way:
11% of the waste is produced at the source. Farmers are unable to sell the food produced that does not meet the cosmetic standards set by “experts” in food marketing. Even if a product is “aesthetically fit” if the market is saturated and prices are low, the farmer prefers not to harvest it so as not to incur more expenses.
19% during the manufacturing process and sale to the distributor. During the fruit and vegetable harvest season, cooperatives or fruit and vegetable warehouses fill their chambers waiting for orders from supermarkets. The waiting is very concerning because, with each passing day, the food loses shelf life. Supermarkets take advantage of this power to let time pass while the cooperatives are forced to lower the selling price. It is an unbalanced negotiation resulting in an economic and environmental loss and the resources used to extend the freshness of the food.
5% is produced at the point of sale where the food is waiting for consumers to pass by and take it home.
Finally, 12% is produced by the foodservice/catering industry. Restaurant or catering services that prepare food that is never going to be consumed or that buy food that never gets cooked.
This data makes the food supply chain the most inefficient of all supply chains: automotive, electrical, household appliances, etc. It’s hard to imagine a similar loss in another supply chain.
What if out of every 100 cars leaving a factory assembly line, 33 were never driven because the color is not favored or because there simply isn’t enough demand for that model?
It is well known that car manufacturers basically produce what they have already sold. When a buyer orders a car, they must wait a few months for it to be produced and delivered.
Producing under demand vs blind production
In the automotive industry, manufacturers are also responsible for the distribution and sale of cars. Dealers receive orders from customers at an agreed price and factories produce the cars upon request. Prior to the sale, the factories pass on the sales price to the dealers according to their production costs. This chain works efficiently because there is a balance between supply and actual demand for cars.
In contrast, in the agricultural industry, farmers produce blindly, without knowing the real demand or the selling price of what they grow. First, they grow and once cultivated they try to sell it, with the aggravating factor that the window of time to sell their crop is usually small because they are perishable products. In most cases, farmers do not have a strong position to set a price for their product and it is usually global variables that decide the selling price.
In the European Union, these inefficiencies in the supply chain are attempted to be corrected with direct economic subsidies to farmers or cooperatives. The efficiency of these subsidies is, at the very least, debatable: does it make sense to finance the cultivation of a product when we don’t know if it’s going to be sold? This study has led us to reflect on this and other topics that we are analyzing and will soon be able to publish data.
- Agricultural subsidies in the spotlight: are they really the solution to prevent Europe from losing its agricultural sector? Can these subsidies help farmers sell cheaper and turn supermarkets into beneficiaries by being able to buy at a lower price?
- What is needed for farmers to be able to grow food on direct consumer demand?