Addressing food waste in America

Fresh Food In Garbage Can To Illustrate WasteMatt Dusi, Wells Fargo Sector Manager, Fresh and Frozen Fruits and Vegetables

Believe it or not, food represents the single largest component, by weight, of municipal solid waste reaching landfills and incinerators in the U.S. Bottom line, the U.S. is wasting up to 40% of the food produced in the country. How, exactly, did we reach a point where the U.S. annually sends more food to the landfill than total annual food quantities consumed by many nations?

The conversation around food waste in the U.S. is recurring more often than in the past, and is resonating with consumers, government agencies, food companies, and farms. Whether measured by number of published articles, pronouncements by the USDA and EPA, or announcements by major food companies, the topic of food waste is gathering steam on a global scale. This article provides a quick look at the current state of food waste in the U.S., the major contributors to food waste, and how the issue is being addressed. It further identifies opportunities for both companies and consumers to actively participate in the solution.

Again, restating that up to 40% of the total food products grown in the U.S. is being wasted each year, this is a staggering amount of food and translates to the following metrics:

  • 63 million tons of food — 52 million tons taken to landfills and 10 million tons left in the field unharvested
  • 400 pounds of wasted food per person in the U.S. per year
  • 1,250 calories per person living in the U.S. per day
  • $218 Billion spent to grow, process, transport, and dispose of this wasted food

Today, the average American is spending the lowest amount on food as a percent of disposable income in the history of the U.S., as shown in the chart below. Because a large percentage of food has become relatively inexpensive, both consumers and companies can afford to throw away product instead of using it.

Food Spending Chart

So, where in the food system is this waste occurring?

Farms — 16% of waste — 10 million tons

Losses at the farm level can come in many forms as a result of pest damage, disease, adverse weather, excess acreage planting above demand level, speculation, or low market prices prompting unharvested fields. Further, once a product is grown and harvested, only the best products are used for fresh consumption. Since American consumers have become accustomed to “near perfect” products on the store shelves, those with even the slightest flaw — odd size, odd shape, blemishes, too ripe or not ripe enough, too firm or not firm enough — are sorted out and not even shipped to the processor or retailer.

Reduction of waste at the farm level goes hand in hand with maximizing profits, thus incenting farmers to maximize the percentage of their crop sold. So, farmers are addressing waste in several ways. First, farms are increasingly moving towards contracted production instead of speculation, therefore reducing wasted production left in the field. Advancements in field spray applications are ensuring longer shelf life, and fungicides, pesticides, and herbicides are becoming more environment friendly, helping farmers harvest a greater percentage of high-quality product. Finally, enhanced seed technology, breeding, and precision farming have each resulted in more uniform crops and harvest schedules planned to minimize loss in the field.

Processing — 2% of waste — 1 million tons

Food processing is a general category that includes any post-harvest activity taking place in advance of product reaching the retailer’s shelf, and includes freezing, canning, drying, pre-cutting, etc. While the processing industry does a good job of reducing a portion of their food waste by sending unusable product to animal feeding operations, the majority of food waste at the processor level is experienced due to trimming of the raw product. Additional losses result from overproduction, product or packaging damage, packing damage or errors, or production malfunctions.

Minimizing losses at the processing level often times can be impacted by a processor’s marketing department. Innovative product development teams are finding more avenues to use product once considered “waste.” Examples include products such as cauliflower risotto, broccoli slaw, and avocado oil. Additionally, enhanced sorting and cutting equipment have decreased loss. With today’s equipment, an individual apple flowing through the packing shed is photographed and tested many times to measure crispiness, sugar content, color, and size, and then routed to a specific production line that best fits the products traits — be that export, fresh market, sliced, juice, or cull.

Distribution/Retail — 40% of waste — 25 million tons

Losses in the distribution and retail channel include grower/processor rejections, cold chain management malfunction, in-transit or shelf spoilage, age dating, and package damage. Fresh items such as produce, seafood, and ready-to-eat items represent the largest portion of waste in the retail space, and much of the problem is centered on the allure of the modern supermarket, where consumers demand a wide variety of fresh, unblemished, and ripe product at all times.

In order to meet customer expectations, store managers view a certain level of waste as a “the cost of doing business.” A former major retailer president once suggested that there is reason for concern if a regional grocery store is showing low waste, since low waste numbers can be a sign that the store is not maximizing stock levels, so the customer experience is likely being negatively impacted.

Reduction of waste in the distribution and retail channel are a challenge, as retailers invest millions of advertising dollars to attract shoppers, and are reluctant to allow empty or sparse shelves. This channel could benefit greatly from technologies that lend themselves to advanced inventory management and dynamic pricing, thus allowing product to be tracked through the system, and incenting customers to purchase certain products as they move through their life cycle. A large percentage of waste could be cut if fresh meat and produce sections were not stocked to overflow, as is common in stores today. Further, standardization of date labels stands to have the most impact, and the industry is making strides towards using “Best if used by” language rather than an actual expiration date. In today’s regulatory environment, states often have labeling rules different than those of the USDA, and this leads to great confusion for both consumers and the industry.

Consumers — 43% of waste — 27 million tons

Consumer households are responsible for the largest portion of food waste in the chain, just above distribution and retailers. By the time the consumer takes possession of the product, it has already gone through harvest, transport, storage, and some amount of shelf life, so it may have short shelf life remaining, and is prone to spoilage. Cheap, convenient food has promoted consumer behaviors that undervalue full utilization of purchased food product, so unfortunately, food waste is not a significant concern for many Americans.

Education must be the first step for consumers to take notice of the issue. Most consumers are not aware of the sheer volume of food waste that is being diverted to landfills, and with food being relatively inexpensive, the issue is often overlooked. Education can flow from awareness to becoming part of the solution, and can start with the basics of correct interpretation of food date labels, proper storage for perishable products, portion control, and meal planning.

Government entities and actions

Government entities are stepping into the conversation in two distinct ways. First, monitoring and enforcement agencies (USDA, EPA, and FDA) have joined forces to help encourage companies within the food chain to work together proactively, without regulation, and are encouraging participation in the “Food Recovery Challenge” designed to prevent or divert 50% of food waste by 2030. The program has grown rapidly in a few short years, with more than 950 companies participating, and reporting positive results to date. In 2016, participants reported prevention of 740,000 tons of food waste from hitting landfills. Program participants, recognized as “Champions” include many of the largest food manufacturers and retailers in the country — Pepsi, Conagra, Yum! Brands, Ahold USA, General Mills, Walmart, and Unilever — to name a few. Government agencies are providing support for the cause, and promoting their “Food Recovery Hierarchy” guidelines on their websites and in published materials.

Food Recovery Hierarchy Chart
Source: EPA

In addition to voluntary programs and education, many states are reviewing and enacting various policies that will require commercial operations to reduce food waste. For example, in his proposed executive budget for FY2019, New York Governor Cuomo has reintroduced legislation for a commercial organics diversion mandate. Any New York commercial establishment that generates an average of two tons or more per week of excess food and food scraps would be required to arrange for recovery and recycling by January 2021. If this legislation passes, it would make New York the sixth state with a form of commercial organics recycling law, joining California, Massachusetts, Vermont, Connecticut, and Rhode Island.

Moving forward

Reduction of food waste in the U.S. is definitely not a fad. With many of the top food companies taking notice, and legislators adopting regulations, reduction of food waste will soon need to be addressed by an even larger number of commercial food operations. The conversation presents an opportunity for food industry producers, ag tech companies, packaging manufacturers, and retailers throughout the food value chain to find ways to reduce waste. Education, management, and technology combined can bridge today’s gap and lead to a sustainable tomorrow.

 

Matt DusiMatt Dusi is a vice president and sector manager focused on the Fresh and Frozen Fruits and Vegetable space. Matt joined Wells Fargo’s Food and Agribusiness Industry Advisors team in 2016 after working as the general manager of a mid-sized winery and vineyard operation in California, where he managed all aspects of a premium wine brand. Prior, Matt worked three years as a Wells Fargo relationship manager in San Luis Obispo. Matt began his career at Farm Credit West on the Central Coast of California, where he worked for 10 years and served diversified farming operations.

Matt holds a bachelor’s degree in business administration from California Polytechnic State University, majoring in marketing and finance. He is also a graduate of the Pacific Coast Banking School program held at the University of Washington.

Matt lives on the Central Coast of California with his wife and two children, where he is involved in producing wine grapes for premium wine production. He currently serves on the board of directors for the Paso Robles Wine Country Alliance, a non-profit, member-funded organization focused on marketing of the Paso Robles viticultural area.