One of the biggest problems being faced today globally, especially in the aftermath of the COVID-19 pandemic, is food shortage. One might assume food shortage occurs due to insufficient food production. However, the truth is, despite producing more than enough food for the entire population, roughly 828 million people around the world starve each year.
A leading cause of food shortage is food waste, which includes both food that is lost during its movement along the supply chain, and food that is thrown away by retailers or consumers. Nearly a third of food produced each year is wasted, amounting to roughly $1 trillion USD. These staggering numbers pique one’s interest - what is food waste and how does it impact the world? Let us delve deeper.
What contributes to food waste?
Food waste can be described as a decrease in the quantity or quality of food that is fit to consume, but is disposed of by multiple stakeholders like retailers, food producers, and consumers throughout the different stages of food production and supply chain. The problem of food waste begins way before food reaches the table for final consumption. There are multiple factors that contribute to food waste.
Worldwide, almost half of all the fruits and vegetables and over 20% of the meat and dairy produced
is lost or wasted annually. Both developed and developing countries are facing the food waste phenomenon due to an array of contributing factors, however, the touchpoints are different for both. More than 40% of food is wasted in leading industrialised countries like the United States at the retail and consumer levels. Some of the reasons include:
- Damage or spoilage at the production and supply chain level
- Food rejected for aesthetic reasons by retailers
- Food thrown due to overbuying by consumers
On the other hand, developing countries face around 40% food loss in the process of agricultural production, i.e. during or post-harvest time due to challenges such as:
- Lack of efficient warehouse facilities
- Lack of proper infrastructure and use of technology
- Challenges in supply chain management
Reducing Food Waste: The Way Forward
Reducing food waste is imperative today. The UN’s 2030 Agenda for Sustainable Development includes macro goals of ‘Zero Hunger’ and ‘Sustainable Production and Consumption’, and micro goals of ‘halving per capita global food waste at the retail and consumer levels’ and ‘reducing food losses along production and supply chains, including post-harvest losses.
Achieving these goals will require individuals, corporates, and countries to commit to the cause. While at an individual level, education and the resultant changes in habit will be key to reducing food waste, there is much that can be improved on a systemic level by corporates and the government. Some important ways to curb food waste include:
- Developing better food harvesting, storing, processing and distributing processes
- Efficiently managing cold supply chain to minimise damage and spoilage
- Using technology and innovation in production and supply chain management
- Using rejected food for livestock feed if possible, and recycle responsibly if not
- Better forecasting of demand and matching with supply
Despite several measures taken by individuals, organizations, and governments to reduce food waste, there’s still a long way to go. This challenge has emphasized adopting a technology-led cold supply chain more than ever. The cold supply chain plays a pivotal role in maintaining food's nutritional value and distributing it to multiple locations, which further enables the food manufacturers and suppliers to reduce food waste.
The Global Cold Chain Market
A cold chain is a temperature-controlled supply chain that involves transportation of perishable or temperature-sensitive products. Through refrigerated storage and distribution, the required temperature is maintained to preserve quality and increase shelf life of perishable products, and thus reduce food waste.
Cold chain is a rapidly growing segment in the logistics industry. The global market size of cold chain logistics is estimated to grow from USD $182.5 billion in 2022 to USD $343.75 billion by 2027, at a CAGR of 13.5%.
Many factors contribute to this emergence of the cold chain market, including an increase in the demand for perishable foods such as dairy products, fruits, vegetables, and meat; increase in disposable income, and change in lifestyle.
The Cold Chain Market in ASEAN
In countries with tropical climates, fresh or perishable products get spoiled faster compared to cold weather countries, as microbes grow faster in higher temperatures. The cold chain and transportation system is thus indispensable and plays a vital role in the economic growth of Southeast Asian countries, enabling them to participate in the global perishable products market as producers, consumers, and exporters.
As the quality of local cold-chain services varies widely, consumers opt for refrigerated and frozen products offered by insulated trucks because they are safe, accessible, convenient, and suitable for their lifestyle.
The ASEAN cold chain logistics market is anticipated to grow by more than 12% between 2022-2027. Accelerated by the pandemic, the demand for cold chain logistics has upended and brought major changes in its operations, supply chains, norms, and several other regulation requirements.
Food Waste: Impact
Food waste has a negative impact on food security and nutrition. The mismatch between supply and demand of food leads to increase in prices, making it more difficult for the poorest and most vulnerable people to access and afford basic nutrition. However, food waste has other negative consequences also, like:
Environmental degradation: If food waste were a country, it would be the third largest contributor of greenhouse gases, behind China and the US. Unconsumed produce contributes to greenhouse gas emissions when decomposed. When food rots in landfill, it releases methane that is 28 times stronger than carbon dioxide. Growing and producing food alone contributes to 26% of the global carbon emissions.
Pressure on resources: It takes a lot of resources to produce food, like water and land, and when food goes to waste, the resources used in the process are considered wasted as well. In addition, the final food product goes through multiple manufacturing processes that need a lot of energy and resources, which are wasted if the food is left unconsumed.
Impact on Cold Chain Suppliers
Food producers and food chain suppliers experience a series of issues at different stages of the supply chain. Besides the lack of proper infrastructure to move and store products, other factors such as environmental, economical, consumer food habits, etc. make them vulnerable to financial loss. In an effort to curb further damages, food producers are required to keep their production and food availability in check. Overproduction of produce not only causes a drop in demand and its selling price but also leads to food waste. One of the major gaps between food production and consumption is the lack of proper distribution. Despite producing more than enough food for everyone, hunger continues to be a global problem. As a result of inadequate infrastructure, warehousing, and transportation, the food or products are not accessible to remote areas of many countries.
Role of Cold Chain in Reducing Food Waste
Food waste is a challenge that occurs throughout the supply chain and across borders. Due to inadequate infrastructure such as improper refrigeration and temperature control during food transportation, some food loses its quality and becomes non-consumable or sellable further on in the food supply chain process, resulting in food waste.
An effective cold chain can be an important solution to combat food waste. A combination of technology-enabled hardware and software can help control and maintain temperature of food throughout transit, and also track its journey from source to store. By leveraging the cold chain, manufacturers and suppliers can retain the quality of the food for a longer period of time and significantly reduce food waste and improve profit.
In the modern world, cold chain is an instrumental factor in improving global food safety, providing better nutrition and drug supply to consumers in remote regions. The integration of cold chain in the supply chain provides multiple benefits, such as:
1. Lower deterioration rate of perishable foods
Prevents spoilage and growth of microorganism enzymes through the supply chain
2. Cost-efficiency
Keeps the spoils to a minimum by extending the life of foods and products
3. Better quality and consistency
Maintains and provides standard food quality through temperature-controlled facilities
4. Wider transport spectrum
Helps improve exports and explore new markets
5. Regulatory compliance
Provides easy movement of food and medical supplies across borders
The adoption of technology-led innovations and supply chain automation with the support of government policies can significantly help food manufacturers and suppliers to avoid the challenges that occur in the course of the supply chain. Additionally, a comprehensive approach focusing on efficient food production, and distribution while building a safe working environment for employees with standardised regulations will certainly help us to fight the global problem of food waste.
We at Körber believe in being a part of the solution, not the problem. In this 3-part blog series, we will discuss how an effective cold supply chain can be an important link to reducing food waste and contributing towards eliminating global hunger.
This article is part of a series:
Click here to go to article two: A Case for Automating your Warehouse
Author: Win Thian Chai
Chief Executive Officer
Körber Supply Chain Automation Asia
