Wasteful supply chains cost European food industry £7bn a year
Companies in the European food and agriculture (F&A) industry could save more than £7bn by adopting new food-waste strategies.
That's according to a new report by Rabobank - a Dutch financial services firm - which says the industry loses £43bn (€60bn) of value each year due to food wastage in the supply chain.
Businesses that adopt the recommended innovations could gain also additional benefits to their supply chains beyond food waste reductions.
Rabobank said companies could invest in new machinery to harvest greater volumes whilst reducing bruising or damage to the crop. Better use of packaging could also protect against damage, whilst monitoring can give producers information about food freshness to optimise sales and availability.
Currently the meat, fruit and vegetable sectors produce the most wastage. Rabobank says innovation would be most effective when applied to harvesting and handling crops, packaging food and monitoring fresh produce.
However Rabobank expects many packagers and growers to see little incentive to reduce food waste as this may result in retailers buying less product.
"For example, if a food retailer wants to monitor freshness, the wholesaler, packager and perhaps even grower need to invest in the relevant technology," Rabobank F&A supply chain analyst Paul Bosch said. "The question is whether or not they are willing to invest, since a reduction in food waste may result in the retailer buying less."
The key for producers will be to find the business case for reducing waste, such as improved product consistency, enhanced inventory management and increased flexibility in logistics.
Using innovative technology will allow 'pioneers' to reposition themselves in the market, said the report. Food processors and retailers should start to select partners whose supply chains have the potential to benefit from reducing waste to form like-minded partnerships.
Bosch added: "Looking at the food chain from farm to fork, most wastage occurs within and between F&A companies during agricultural production, post-harvest handling and storage, processing and distribution. For almost every type of food, producers account for more than half the loss of value.
"In our experience, F&A companies that are re-configuring their supply chain partnerships find that the benefits extend beyond food waste reduction, such as improving product consistency, enhancing inventory management and increasing logistics flexibility.
Despite food producers accounting for two times the food wastage homes do, last month the Waste and Resources Action Plan (WRAP) said £600m could be saved by extending food shelf-life by just one day.
WRAP said this would prevent 250,000 tonnes of food waste each year, listing a guide of five ways this could be implemented.