Related Expertise: Food Systems and Food Security, Climate Change and Sustainability, Supply Chain Management

Closing the Food Waste Gap

More than a billion tons of food will be lost or wasted this year, even as hundreds of millions of people go hungry. But it doesn’t have to be that way. Businesses, governments, NGOs, and individuals all have roles to play in combating this issue and mitigating its far-reaching effects.

To catalyze the effort, BCG has identified five key drivers of food loss and waste as well as corresponding solutions:

• Awareness. There is poor visibility into the extent of food loss and waste—and of the forces that contribute to the problem.

• Supply Chain Infrastructure. A huge amount of food is lost because it goes bad before it can get to markets and consumers.

• Supply Chain Efficiency. Combating food waste means designing incentives, processes, and structures to ensure it doesn’t happen.

• Collaboration. A lack of coordination among players across the value chain, particularly between raw material producers and processors, contributes significantly to inefficiency, loss, and waste.

• Policy Environment. Disposing food is cheap and easy. Generally, regulatory and tax policies do not penalize companies and consumers for the waste they create.

Finding food waste solutions means rethinking supply chains, energy usage, public-private collaboration, regulation, behavioral economics, and so much more. To learn how you can help, click here.

Closing the Food
Waste Gap

The cost of inaction is enormous—and so
is the opportunity to make a difference.

It’s 2030. This year 2.1 billion tons of food will be lost or wasted.

That’s equal to $1.5 trillion in squandered value, putting food waste in the top 7% of global economies, relative to GDP. If food waste were a country, it would be the third-largest emitter of greenhouse gases.

Meanwhile, more than 840 million people will go hungry...one-tenth of the human population.

+

The average North American household wastes approximately 130 pounds annually. The global average is nearly 35 pounds higher. By any metric, the situation looks grim. But it doesn’t have to be that way.

Businesses, governments, NGOs, and individuals all have roles to play in combating food loss and waste and mitigating their far-reaching effects. It can seem difficult for nonspecialists and individuals to make a dent in other major global issues, such as climate change, armed conflict, COVID-19, and income inequality. But when it comes to food waste, most of us can make an immediate, measurable impact. And it is critical that we do. The pandemic and climate change were already putting massive pressure on the global food supply. Now, the war in Ukraine threatens to make matters significantly worse, straining resources and pushing up prices in an inflationary market.

In this context, understanding the root causes of the loss and waste—and identifying ways to address them—is an essential humanitarian undertaking.

The Scope of the Problem

It is estimated that one-third of the world’s food is lost or wasted each year. Other studies suggest the true figure is even higher.

While no single actor or process is responsible, a tremendous amount of food is lost or wasted as it moves from the farm, factory, or fishery to table. (Click here to learn how food loss is different from food waste.) In low- and middle-income countries, the problem is largely one of loss, as food fails to make it out of the production and transportations stages. Waste among retailers and consumers is the bigger issue in higher-income countries.

To better understand loss and waste along the value chain, let’s take a closer look at fruits and vegetables. They account for roughly half of all the food lost or wasted each year.

Assume—conservatively—that approximately one-third of all apples will drop out of the value chain annually. Imagine 10,000,000 of them...

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What is food loss and waste?

Though “loss” and “waste” amount to the same thing—food not being consumed—these closely interrelated terms nevertheless refer to distinct problems that occur at different steps of the food value chain. Here's how the UN’s Food and Agriculture Organization (FAO) defines each term:

FOOD LOSS
The decrease in the quantity or quality of food resulting from decisions and actions by food suppliers in the chain, excluding retailers, food service providers, and consumers.

FOOD WASTE
The decrease in the quantity or quality of food resulting from decisions and actions by retailers, food service providers, and consumers.

imagine starting with

10,000,000
apples

down to 8.7 million

13% will be lost
in production

down to 8.1 million

6% will be lost
in storage,
handling, and
transportation

down to 8 million

1% will be lost
in processing
and packaging

down to 7.4 million

6% will be lost
in distribution
and retail

down to 6.6 million

8% will be
wasted by
consumers

IN the end

3,400,000
are wasted from
farm to table

Sources of Loss and Waste

The first step to finding food waste solutions is understanding exactly how and where food waste occurs. The answer is complicated—dependent on region, type of food, and other factors. Let’s take a look at some of the ways food gets lost along the value chain.

1

Production

The greatest share of food loss occurs pre- and postharvest or, in the case of fish, after it is caught. Overproduction is more common in high-income countries, while premature harvest is more likely to occur in low- to middle-income nations, where farmers have a greater need for cash flow. Animal death and climatic challenges (flooding, drought, and pestilence, for example) are root causes of food loss, as are ineffective agricultural practices that fail to maximize yields.


Premature harvest contributes significantly to tomato loss in Bangladesh.

2

Storage, Handling, and Transportation

Many of the same issues that are present in the production phase persist as food moves along the value chain. Regional gaps in technology are especially notable in this stage, given the need to keep perishable foods fresh and animals alive in transit.


An estimated 3% of all fish caught in the Amazon in Brazil are lost in transportation because of poor loading techniques.

3

Processing and Packaging

A great deal of loss and waste occurs in canning facilities, slaughterhouses, and during industrial treatment. Crops are needlessly sorted out and edible meat trimmings are discarded. Supply chain issues and disrupted or substandard industrial processes lead to needless waste.


Insufficient processing capacity significantly contributes to mango loss in Kenya.

4

Distribution and Retail

Unnecessarily stringent health and aesthetic regulations (including “best by” and expiration dates), lack of temperature control in certain markets, and neglect from retailers and restaurants result in waste. Many retailers, especially those in developed higher-income nations, overstock; poor packaging design and portioning are also key contributors. And though individuals are arguably to blame for wasting the food they purchase, some have argued that retailers’ promotional activities encourage shoppers to buy more than they will likely consume.


Sub-Saharan Africa leads the world in fruit and vegetable waste at the retail stage, likely due to a lack of temperature control in markets.

5

Consumption

Individuals waste a lot of food. From overpurchasing to discarding leftovers, each of us contributes in no small way to the broader problem. While the amount of food wasted varies by region, consumer waste is a truly global crisis.


It’s estimated that 70% of all wasted food in the United Kingdom occurs at the household level.

Harmless? Think Again.

Seemingly innocuous behaviors and business practices exacerbate the problem. Some are surprising, others counterintuitive. Identifying these—and other—overlooked sources of food waste is an important step to building better consumption habits.

BUY ONE, GET ONE FREE

This promotional activity can drive consumers to take home more food than they can consume—especially when it is applied to perishable items. Some grocers have mitigated the problem through “buy one, get one free later” programs that allow shoppers to reap the benefits when they actually need them.

YEAR-ROUND FRESH PRODUCE

It’s a pervasive and ultimately pernicious myth that fresh produce is more nutritious than the frozen variety; frozen produce actually retains more nutrients. Fresh produce, meanwhile, comes with high transport costs and large amounts of waste.

EXPIRATION DATES

Time to throw away those eggs? Hardly. According to the USDA, food expiration dates refer to quality, not safety. The same is true for “sell by,” “best if used by,” and “freeze by” stickers. In most cases, these dates—which are used irregularly and inconsistently around the world—are unnecessarily conservative.

LEFTOVERS

Leftovers are among the most wasted categories of food. When consumers know they have the next best option (in this case, the ability to take extras home) it can lead to overordering. Too often that food sits in the back of the refrigerator and ultimately spoils. It's a lot easier for people to discard food—and overlook their own culpability—when it starts to stink or look unappetizing.

REMOVING A BANANA FROM THE BUNCH

Though highly specific, this consumer behavior is indicative of the many elusive ways food gets wasted. Shoppers tend to prefer buying bananas by the bunch instead of individually. But many will pull a banana or two from a bunch they are purchasing, creating what becomes a sizable number of single bananas that ultimately get thrown away.

FRUIT BOWLS

Considering how easy it is to lose track of everything stored in a full refrigerator, a fruit bowl sounds like a good idea. But despite how inviting such a collection can look on the countertop, the reality is that not all fruits (or vegetables) get along. Some fruits produce ethylene gas, which causes other fruits to degrade more quickly. Some fruits are particularly sensitive to ethylene. Taking the time to learn which is which—and storing them apart accordingly—is critical to ensuring the freshness of your produce.

Key Drivers of Food Loss and Waste

With so many stakeholders and processes to blame, food waste is death by a thousand cuts. Reducing spillage in a German industrial plant may be a good step, for example, but it doesn’t solve overproduction on a US farm. And, according to the global humanitarian organization Action Against Hunger, “small farmers, herders, and fishermen produce about 70% of the global food supply,” meaning the sources of food waste are varied and diffuse.

Though no single cause of food waste exists, BCG has identified five key drivers of loss and waste—as well as corresponding solutions—that span the entire value chain.

Awareness

There is poor visibility into the extent of food loss and waste—and of the forces that contribute to the problem.

The lack of awareness is particularly acute among consumers but is also an issue among farmers, food services providers, restaurants, and hotels. Businesses, in particular, are well positioned to educate and build awareness along the entire value chain. Governments and nonprofits can also take steps to promote awareness.

Poor harvest techniques severely limit bean harvest yields in Guatemala.

Potential Solutions

  1. Establish public-private partnerships to train farmers and workers on how to protect their crops against pests, diseases, and weeds, and how to reduce loss during and after harvest.

  2. Implement tools and training programs to ensure that employees have the skills to manage inventory and properly repurpose waste.

  3. Revamp products, packaging, and promotions to extend shelf life and positively influence consumption behaviors.

  4. Run campaigns that inform shoppers on the harms of waste and ways to mitigate it.

  5. Launch and promote food management apps that help families keep track of the food in their refrigerators and pantries—as well as expiration dates and potential recipes based on what’s already been purchased.

Supply Chain
Infrastructure

A huge amount of food is lost because it goes bad before it can get to markets and consumers.

Building the right infrastructure could go a long way in addressing food loss and waste, but too often it is lacking.

Traditional grain stores in sub-Saharan Africa, made from basic earth materials, do not offer sufficient protection from pests.

Potential Solutions

  1. Deploy (or improve) end-to-end cold chains in places where they are absent to reduce spoilage.

  2. Adapt technologies designed for large-scale commercial operations to smallholder farming operations—by building solar-powered refrigeration units in small farms in areas where electricity is scarce, for example.

  3. Develop technology for repurposing and reusing food waste for agricultural, cosmetic, and construction products.

Supply Chain Efficiency

Combating food waste means designing incentives, processes, and structures to ensure it doesn’t happen.

“What gets measured is what gets managed” is an appropriate adage when it comes to dealing with food loss and waste. Wide-scale digitization and big data are needed to match supply and demand, streamline transactions in the supply chain, and enable the tracking of loss and waste. They even allow for dynamic pricing, which can move products through the system before they spoil.

As of 2015, only one of the fifty largest food companies worldwide had set specific food-and-waste targets aligned with the UN’s sustainable development standards. (That number has risen dramatically since.)

Potential Solutions

  1. Localize supply chains, reduce time to market, and source ingredients and inputs locally to reduce spoilage.

  2. Establish KPIs related to food loss and waste, track performance against those metrics, and adapt to improve performance.

  3. Deploy dynamic routing and pricing models to help move products through the system before they expire.

  4. Invest in food traceability technologies that make it easier to track and measure food waste in supply chains.

  5. Use enhanced food-sorting capabilities to ensure that edible products ultimately make it to consumers.

Collaboration

A lack of coordination among players across the value chain, particularly between raw material producers and processors, contributes significantly to inefficiency, loss, and waste.

Competing incentives and mismatched priorities hinder organizations’ abilities to stem the tide of waste.

Processing plants in the US have run low on storage during the pandemic, forcing farmers to discard milk and other products.

Potential Solutions

  1. Structure contracts and agreements among producers, handlers, processors, and retailers in a way that reduces loss and waste (by disincentivizing overproduction, for example).

  2. Build more effective demand-forecasting models; public agencies, for example, can set up data clearinghouses that aggregate and anonymize consumer demand forecasts from processors and retailers. This information can be shared with farmers and other producers, who can adjust their product plans accordingly.

  3. Establish or participate in industry-level partnerships to develop and deploy broad-scale solutions.

  4. Host networking events and other opportunities for producers, processors, and other players along the value chain to provide greater visibility into each business’s operations to find ways to mitigate waste.

Policy Environment

Disposing food is cheap and easy. Generally, regulatory and tax policies do not penalize companies and consumers for the waste they create.

Nor does today’s regulatory landscape incentivize change. In fact, subsidies and other structural programs can create perverse incentives for producers—often large-scale farmers—to grow an excess of crops. Expiration dates are unnecessarily conservative, businesses do not have the right mechanisms in place for donation (or they fear litigation), and cosmetic standards are arbitrarily restrictive in certain markets.

Argentine taxpayers can retain value-added tax credits on food that is discarded, but they have to pay the full cost of this credit when donating food.

Potential Solutions

  1. Standardize global imported food laws, which will make it easier for producers to shift their exports in response to changes in demand.

  2. Revise produce and packaging standards.

  3. Advocate for regulation that penalizes waste and makes it easier for business to donate food that would otherwise go to waste.

  4. Push for broader alignment on international industry standards on food cosmetics and sell-by (or expiration) dates.

Curbing Food Waste

It’s notoriously hard to measure the full extent of food waste—and though further studies will be needed, early research suggests that the pandemic has only made matters worse.

While it can be difficult to wrap your mind around the enormity of the problem, few issues feel as immediate and intuitively problematic as food waste.

Starvation, malnutrition, food riots, and financial barriers to a well-rounded diet seem especially senseless, given that nearly half of all food will fail to make it to people’s mouths today. Taking action to mitigate food waste is a big step toward solving these issues—but the work doesn’t stop there.

Finding food waste solutions means rethinking supply chains, energy usage, public-private collaboration, regulation, behavioral economics, and so much more.

In dollar terms, closing the gap on food loss and waste could be worth $700 billion, but the effects on human and planetary wellness are just as pronounced.

Though often overlooked, the problem is as pressing as any that exists today. It’s no cliché to say that each of us can make a difference—and businesses are uniquely positioned to lead the way.

Sources

Action Against Hunger; The Bangladesh Development Studies; EU Fusions; Food and Agriculture Organization of the United Nations; Food Nation; The Global FoodBanking Network; Harvard University Center for Health Law and Policy Innovation; Love Food Hate Waste; New York State Department of Environmental Conservation; The New York Times; Ohio State University’s Food Innovation Center; ReFED; State of Green; UN; United Nations Environment Programme; World Resources Institute; WRAP.

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Closing the Food Waste Gap

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