The High Cost of Waste in Food Supply Chains

The High Cost of Waste in Food Supply Chains

Every year, 1.3 billion tons of food produced worldwide are lost or wasted. That’s about a third of all the food produced annually – and according to the World Food Programme, enough to feed twice the number of undernourished people in the world.

But beyond its economic and social impact, food waste also has massive environmental effects, both in terms of resource utilization and CO2 emissions.

Estimates suggest that reducing food waste could also reduce human-caused greenhouse emissions by 6% to 8%, while valuable resources such as energy, land, or water could be used more efficiently.

So let’s take a look at some of the causes of food waste in supply chains, what it costs, and what strategies companies can adopt to minimize waste in their supply chains.

Causes of supply chain waste

As much as 13% of all food loss occurs in the supply chain. Food waste happens at every stage of the chain and can take many shapes, from expired and spoiled products to unused or discarded food due to poor inventory management or cosmetic imperfections.

Food loss during harvesting

For many reasons, some of which are unforeseeable, crop loss is a common occurrence. Pests, contamination, crop damage by weather, or overproduction to counter potential negative climate conditions, are some of the frequent factors that cause food waste at the point of harvesting.

Food wasted in storage facilities

Food products can easily spoil in cases of improper storage. This includes high humidity and moisture, pest infestation, inadequate packaging, or simply storing items for unnecessarily long periods of time.

Waste during manufacturing

Contamination can also occur in plants where food is manufactured and packaged. Products that do not meet consumption safety standards must be discarded due to health concerns. Unfortunately, food also gets discarded for less significant reasons, such as failing to meet the cosmetic standards of retailers or consumers.

Distribution issues

Transportation is critical to preserving food quality, especially for fresh or refrigerated products. Failing to maintain temperature, humidity, or hygiene levels can easily cause food spoilage before it even reaches retail shelves.

What does lost food really cost?

Wasted and lost food reportedly costs companies around US$1 trillion per year, but is that the full cost of wasted food?

To understand the economic impact of food waste, we have to look at more than just the cost of raw materials or the financial value of discarded products.

Here are some of the indirect costs that affect companies and economies when large amounts of food is wasted in the supply chain:

  • The cost of resources used to produce that food (land, water, energy consumption);
  • The cost of labor invested by workers throughout the entire food supply chain;
  • The cost of lost productivity and disruption to production schedules;
  •  The operational costs of handling and discarding spoiled or unsold products.

So how can manufacturers and retailers reduce the high costs of food waste?

A few strategies for reducing waste in the supply chain

Of course, food loss and waste are not always easy to avoid or prevent during harvesting or the production process.

However, many solutions are available today for farmers, manufacturers, and distributors to reduce the amount of food wasted in their supply chains, as well as its associated costs.

Optimizing crop production

The use of IoT sensors on farms can help monitor and control environmental conditions such as temperature or soil quality in order to optimize crop yield and reduce losses.

Transportation monitoring

Sensors can also be used to track and maintain product conditions during shipping to prevent food spoilage and ensure food safety and quality.

Inventory management

Inventory planning and management solutions can help reduce overproduction and storage issues, ensuring that the right quantities of food are produced in the first place.

Supply chain visibility

Collaboration between all the actors of the supply chain can increase visibility of the entire production process and trust between suppliers and retailers, helping them reduce food waste in the long term.

Transparency

Transparency with regards to food origin, treatment, and shipping conditions can address consumer concerns about food safety and quality, reducing the amount of food products left on retail shelves.

 

At Enismaro, we’re building the one-stop food traceability system that helps farmers, manufacturers, distributors, and retailers reduce food waste in their supply chains.

Learn more about how to address the issue of food waste in today’s supply chains. Join the conversation on How to respond to the challenges of global food supply chains on November 15!

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