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Impact of E-Commerce, New Tools, Policies, and Measures
Moving the discussion from metrics to action, the next two panels included presenters who highlighted a range of innovations and changes, from new ways that companies are operating to reduce food loss and waste to the impact of technological tools. At the same time, several speakers observed that some solutions for developed countries may not be appropriate in developing or emerging economies. Alison Grantham, director of Blue Apron’s food systems research and development, moderated both panels and facilitated a series of questions following the presentations. The first panel included a global perspective, a national perspective, and the experience of a global private company. In the second panel, presenters included representatives from three private institutions, the Global Cold Chain Alliance, Spoiler Alert, and Toast Ale.
GLOBAL PERSPECTIVE
Ahmed Kablan, senior nutrition and public health research advisor at the U.S. Agency for International Development (USAID), discussed the agency’s work with smallholder farmers in Africa.1 In the countries where
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1 See Appendix D for descriptions of USAID activities related to reducing food loss and waste, including Feed the Future Innovation Lab for Food Processing and Post-harvest Handling (USAID and Purdue University) and Feed the Future Innovation Lab for the Reduction of Post-Harvest Loss (Kansas State University as the implementing partner, funded by USAID).
USAID works, the majority of food loss occurs in the field. Even a small loss for a subsistence farmer could mean reducing a family’s daily food consumption. Food losses significantly impact income and livelihood, and cause environmental damage.
Food safety is a related issue. In poor households all food is consumed out of economic necessity, even if it is not safe for human or animal consumption because of contamination. Poor management and lack of infrastructure hinders farmers’ and producers’ ability to sell at competitive prices. If they could store food, they could sell at higher prices at a later date.
Reducing post-harvest loss is one of the most effective and economic ways to increase production to meet the growing global demand for food. The costs of qualitative and quantitative post-harvest loss reduction techniques are generally much lower than the costs of increasing production. Post-harvest loss reduction technologies could include drying, moisture detection, and storage, both on and off the farm. These technologies could also provide employment and economic opportunities for youth and for women.
According to a recent report from the World Bank (2017), Malawi, Uganda, and Tanzania, in particular, have made progress toward reducing post-harvest losses.2 Everyone participating in the food chain should understand the impact of food loss or waste because, as Dr. Kablan said, “If you don’t really consider something as a loss or waste, you are not going to contribute in reducing this loss or waste.”
USDA PERSPECTIVES AND CONTRIBUTIONS
USDA Secretary of Agriculture Sonny Perdue has committed to prioritizing food waste solutions, said Elise Golan, director for sustainable development at the agency. She hosted a roundtable in May 2018 with Representatives Chellie Pingree (Maine) and David Young (Iowa),3 food industry leaders, and nonprofit groups to re-energize and jumpstart USDA food loss and waste efforts. Many people are working on the issue, but it is time to adopt a more holistic approach. In mid-October 2018, the USDA, the U.S. Environmental Protection Agency (EPA), and the Food and Drug Administration (FDA) co-hosted an event that included industry leaders
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2 See Agriculture in Africa: Telling Myths from Facts, http://www.worldbank.org/en/programs/africa-myths-and-facts.
3 In April 2018, Representatives Pingree and Young launched a bipartisan House Food Waste Caucus to examine opportunities to reduce food waste.
who have made commitments to halve food loss and waste in their operations by 2030.
The USDA, Cornell University, and the Food Marketing Institute developed a new FoodKeeper app that provides storage and cooking advice for nearly 600 foods and beverages, with the goal to reduce the amount of food thrown away and to ensure that it is prepared in ways that eliminate food-borne bacteria.4 For example, one of consumers’ main questions is whether food is safe after the date on the label has passed. The USDA and FDA have provided answers, with a one-page fact sheet in preparation. The goal is to reduce waste in homes, stores, and food banks. Dr. Golan noted that the U.S. government does not mandate food labeling (except for infant formula), but that the U.S. food industry is trying to make labeling more uniform.
She reminded the audience that there is no single baseline number of food loss and waste in the United States, as the EPA and the USDA have different definitions and objectives in measuring food loss and waste.5 The USDA Economic Research Service is instrumental in providing some of the baseline estimates in the United States, as described in Chapter 2. In addition to the federal measurements, World Wildlife Fund and many companies also have developed estimates and set targets. All of these measurements together will help provide evidence of impact in different ways.
E-commerce has the potential to reduce waste through the growth of integrated supply chain management. E-commerce represents a small share of grocery sales in the United States (about 23 percent, according to Nielsen estimates)6 but is expected to triple in the next 10 years, to about $177 billion. Inventory reductions through just-in-time ordering and fewer unplanned purchases may also help. The “meal-kitization” offered by home prep companies (several of which participated in the workshop) can also reduce excess inventories of food that is then discarded.
Dr. Golan concluded by explaining another online tool: Further with Food (http://furtherwithfood.org) is a public-private partnership to share
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4 See www.fsis.usda.gov/apps.
5 Also see Ellison, B., M. K. Muth, and E. Golan. 2019. Opportunities and challenges in conducting economic research on food loss and waste. Applied Economic Perspectives and Policy 41(1):1-19. Available at https://doi.org/10.1093/aepp/ppy035.
6 Nielsen. 2017. What’s in-store for online grocery shopping: Omnichannel strategies to reach crossover shoppers. Available at https://www.nielsen.com/content/dam/nielsenglobal/de/docs/Nielsen%20Global%20Connected%20Commerce%20Report%20January%202017.pdf.
resources and expand the geographic and demographic reach, efficiency, and effectiveness of those collective efforts to address food loss and waste in the United States.
PRIVATE SECTOR: SODEXO NORTH AMERICA
Nell Fry, senior manager of sustainability at Sodexo North America, described activities of the food services and facilities management company, which operates in 80 countries (including 7,950 sites), with 133,000 employees, and 3,100 clients in North America, while reaching 15 million customers on the continent. This size and reach makes them an “influencer” in addressing food loss and waste, Ms. Fry said. The board and chief executive officer consider reducing food loss and waste a part of the company’s strategic agenda. She helps on-site teams develop ways to deliver services in ways that are more sustainable and reduce food loss and waste.
A materiality matrix, an assessment of Sodexo’s stakeholder engagement, revealed that many external stakeholders consider reducing food loss and waste and improving food security as high priorities. Sodexo’s Better Tomorrow 2025 initiative used this assessment to look at what the company can do in its role as employer, service provider, and corporate citizen, as well as its impact on individuals, communities, and the environment. Examples include training chefs and cooks to properly trim vegetables, not using excessive portion sizes, and disposing of waste responsibly.
Sodexo has also committed to a 34 percent reduction in its carbon emissions, a commitment that requires changes in energy use and water use, as well as food waste. Sodexo is part of Champions 12.3 (see presentation by Bojana Bajzelj, Chapter 1), which the company uses to advocate for food loss and waste reductions in the countries where they operate. Sodexo is also an active participant in the EPA’s Food Recovery Challenge and encourages participation among its clients.
Sodexo identified waste as a top priority because it is an area in the supply chain where the company has more control. Sodexo uses a program called Waste Watch, a measurement and behavior-change tool powered by LeanPath, which helps the company identify causes and define action plans to prevent waste. The program is being integrated into Sodexo’s end-to-end food management system to inform purchasing and provide forecasting information. It measures and tracks both kitchen waste and plate waste caused by overproduction, spoilage, expiration, and behavior, as well as action plans implemented to reduce the waste. The tool helps to solve one
of Sodexo’s challenges: much of the data around its operations are owned by its clients, and not all of them are willing to share. Sites implementing WasteWatch have been shown to reduce food waste by up to 50 percent within 2 to 6 months.
Ms. Fry stated that no one-size-fits-all solution will work. It is a “huge lift” for on-site teams to develop the right solution; for example, a subject matter expert spent 40 hours with one client determining which disposable, compostable, or reusable food container products to use. Consumer education and other aspects also require work. Training helps the experts craft solutions for individual clients and locations.
In summary, Ms. Fry stated that preventing food waste is the single largest environmental action that Sodexo can take. The key driver of its waste strategy is prevention. This strategy includes collaborating, developing strategy, engaging with clients and customers, and doing measurement and public reporting, efforts for which Sodexo has received public recognition. Foregoing an across-the-board approach is more difficult, but, she said, is the way to make an impact.
DISCUSSION HIGHLIGHTS
The moderator, Dr. Grantham, asked the panelists a series of guided questions and then opened the session to wider discussion. First, she asked how emerging elements of the food system, such as e-commerce, affect their work. Ms. Fry said that Sodexo is mostly traditional retail but that new technology has greatly assisted with making data more available. Dr. Golan noted that e-commerce and other innovations may help “food deserts,” neighborhoods without easy access to grocery stores or other retail outlets that stock produce, fresh dairy, and other healthy food. A pilot program is allowing participants in the Supplemental Nutrition Assistance Program (SNAP) to use benefits via e-commerce. In addition, some large companies, such as Walmart, are using blockchain systems to manage food safety risks. Dr. Kablan discussed partnerships in which farmers have the ability to produce safe and nutritious food and sell extra quantities locally or internationally.
Dr. Grantham then asked about infrastructure needed to take advantage of new opportunities for reducing food loss and waste. Dr. Kablan said that a clear risk communication strategy and public education are needed, and referred to a case in Ethiopia in which the toxin aflatoxin M1 was found in cattle milk. The absence of effective communication led to a great deal
of waste and negative impacts on the livelihood of the producers. Regarding the need to reduce the perishability of fresh fruit and vegetables and other highly perishable commodities, Dr. Golan noted that one solution is low-impact and low-packaged processing; some USDA research initiatives are working on these ideas.
Dr. Grantham asked what policies might be considered for managing risk and mitigating waste. Ms. Fry suggested that there is a need for more data transparency, such as information related to recycling, composting, and landfills, to develop strategies to prevent food loss and waste. Dr. Kablan urged for better policies and implementation of policies that already exist in order to reduce post-harvest losses and food waste.
An audience participant asked about factoring in carbon emissions from transportation when talking about e-commerce and food delivery. Dr. Golan cautioned about the difficulties inherent in making comparisons around factors in transportation, packaging, and other aspects in any scenarios, since the emissions created by consumers driving to stores or markets are not known.
PRIVATE-SECTOR ENTERPRISES
Dr. Grantham introduced the next set of presentations as new and emerging private-sector approaches to tackling food loss and waste. She noted that meal kit companies such as Blue Apron, where she works, fit into this category as well. In this form of e-commerce, consumers order food online and bypass the traditional manufacture/retail supply chain structure. Blue Apron has food waste reduction as a core value and looks to fulfillment centers and operations where it has the most direct sphere of control. On the supplier side, the company works with Anthesis Consultancy on measurements at production sites. With these data, they look to sources in their supply chain that can minimize food loss and waste, such as those that offer different cuts of meat or sizes of fruits and vegetables. At the fulfillment centers, they can measure the mass coming in and what is going out to customers. Mass is translated into dollars, and they assess on a weekly basis, aiming to drive down the mass that is not used. At the largest fulfillment center, Blue Apron had 90 percent less loss in September 2018 than a year earlier. They need to ensure, however, that they are not pushing waste to suppliers or to customers. Instead, Dr. Grantham said they want to provide quantities to consumers that do not result in excess being put into the waste stream anywhere.
Cold Chain
Richard Tracy, vice president of international programs at Global Cold Chain Alliance, referred to cold chain as a sliver of the supply chain—a means of temperature control to avoid food loss and waste, improve food safety, and provide food security. As a trade association, the Global Cold Chain Alliance focuses on the storage and transportation of perishable products. He covered three topics: the use of cold chain to increase farmers’ productivity and efficiency, data, and e-commerce.
Increased productivity and efficiencies on farms can be positive, but can also create greater post-harvest losses without ways to store food safely. He noted the possibility of temperature abuse in food cold chain and spoilage that create post-harvest losses. Policies and programs should address this risk. There is enough food worldwide, he said, but insufficient logistics to move it from where it is to where it needs to be.
Everyone wants data, he indicated, in business, government, and academia. Mr. Tracy suggested more communication with the third-party logistics industry so that data can be used to make business decisions and move forward. In addition, there is a challenge in making transparency positive rather than punitive. Industry is concerned that if too many data are shared, companies will get blamed for problems. There is excitement about data, but these issues need to be kept in mind, he said. The industry is looking at blockchain with skepticism about what it can really deliver, who will implement it, and who will bear the costs.
E-commerce is a changing landscape. The Global Cold Chain Alliance has members in 80 countries, and the situation is different in each country. The United States is not a leader in e-commerce, which has a more developed bricks-and-mortar, automobile-based infrastructure. In contrast, a younger clientele in China is using mobile phones and technology more regularly, allowing them to move perishable products in a more efficient manner.
Food Spoilage
Ricky Ashenfelter, chief executive officer, Spoiler Alert, explained how the Boston-based technology company helps food businesses manage unsold inventory more effectively. Founded out of the Massachusetts Institute of Technology in 2015, Spoiler Alert is backed by some of the nation’s leading food, supply chain, and technology investors. There is a
growing number of technology solutions available related to food recovery, materializing through different business models, industry verticals, service offerings, and places in the food system they target (Figure 3-1). Restaurant and grocery industries have had manageable growth, which makes demand forecasting and surplus inventory easier to plan for. E-commerce has experienced rapid growth, which will bring shifts in where waste in the supply chain will occur.
Many companies are adopting commitments to food loss reductions, with both absolute and normalized goals related to volume. For example, when Walmart states that it aims to achieve “zero waste by 2025,” this
SOURCE: Ricky Ashenfelter, Presentation, National Academies of Sciences, Engineering, and Medicine, October 17, 2018, Washington, DC.
would be considered an absolute metric. Alternatively, Ahold Delhaize is committed to reducing 20 percent of food waste in operations by 2020, measured as “tons of food waste per dollar of sales,” and this metric is normalized to food sales. Ultimately, companies need to establish goals that reflect their own growth rates and span of control, as not all goals are created equally. E-commerce and other new companies with high growth rates, for example, need to establish a culture of waste reduction early in their journeys.
Spoiler Alert focuses on connecting unsold finished goods, products fit for human consumption to feed people, and diverting organic byproducts or inedible parts from the landfill to recycling. The two key performance indicators are shrink rate and diversion rate. Shrink rate refers to the product that companies would like to sell but cannot because of overproduction, damage, or other reasons, even if the food itself is safe to eat. Diversion refers to the volume of product diverted from the landfill. When one looks at diversion rates across different industry verticals, excess product is still largely ending up in the landfill in retail (58 percent) and food service (84 percent). Additionally, not all outlets or diversion designations are equal, Mr. Ashenfelter said. For example, a company striving for a 90 percent landfill diversion rate can recycle or it can find ways, through discounts or donations, for people to eat the food. Companies can derive higher value through the incremental revenue from discounted sales, tax benefits from food donations, or reductions in waste-hauling fees.
Spoiler Alert created software-based tools and services to look at organizations’ “food waste footprint” and optimize as much as possible away from the landfill and toward human consumption. Most of the current work is at distribution centers or fulfillment centers, although the tools can be used anywhere there is bulk aggregation of finished products. They use a value-based dispositioning approach to find outlets for specific product circumstances, looking at measures of quality and safety. Networks are used to facilitate food donations and discounted sales. Data are generated and used in dashboards and key performance indicators, for example, in shrink analysis, employee engagement campaigns, and reporting around the food loss and waste standard.
As an example, Spoiler Alert worked with HelloFresh, a meal kit company. The goal was to help increase food access to food-insecure families in the communities where HelloFresh operated. Results included decreased landfill-bound organic waste by 65 percent, reduced waste-hauling pickups by 44 percent, nearly doubling of the percentage of unsold inventory
donated from 33 to 61 percent of total volume, and more than 1 million meals donated to local communities. Sysco also uses Spoiler Alert technology to track donations, benchmark performance, and share best practices across different facilities.
Innovative End Uses
Rob Wilson, chief toaster of Toast Ale, described how the company brews beer from surplus bread, which is a major contributor to food loss and waste. Profits are donated to the nonprofit Feedback.7 Toast Ale was started in the United Kingdom in 2016 by Tristram Stuart, an author, speaker, and expert on reducing the environmental impact of food waste across the globe. For hundreds of years, the concept of making beer from surplus bread has been a traditional brewing practice, and the company is reinventing a historic tradition. The business is based on four core principles: (1) produce a good-tasting product, (2) eliminate bread waste, (3) raise awareness about food waste in a fun, accessible way, and (4) donate profits to Feedback to find more systematic approaches, such as working with businesses, governments, and civil society, to develop innovative solutions.
The beer has won multiple international awards, and the company has open-sourced its recipe so that more people can use it. The recipe has been downloaded approximately 50,000 times. A forthcoming app will connect bakers with surplus bread with brewers, allowing these groups to address food waste issues together.
Toast Ale launched in the United States in 2017 and plans to grow to 30 countries either itself or in partnership with other brewers. The company is already operating in Brazil, South Africa, and Iceland through licenses. Mr. Wilson said that Toast Ale takes a light-hearted approach but is committed to becoming part of the solution to food loss and waste. Underpinning the work is its mission statement: “if you want to change the world, you have to throw a better party than the folks who want to destroy it.”
DISCUSSION HIGHLIGHTS
Dr. Grantham asked the panel about tools and strategies for reducing food loss and waste and whether there are creative ways to measure impacts beyond the financial side. Mr. Wilson said Toast Ale would like to measure
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7 For more information, see http://feedbackglobal.org.
awareness-raising and asked the group for suggestions. He also clarified that the company does not use bread that would otherwise be consumed by people. In the United Kingdom, 44 percent of bread baked goes to waste, but it is able to use only a small percentage in brewing operations. Therefore, a more systemic approach is still needed. Mr. Tracy said that the Global Cold Chain Alliance is working in emerging markets and is focusing on proven products. In fact, mechanized refrigeration is not always the best solution to reduce food loss and waste, and basic prevention like the use of shade after harvesting is all that is possible in many cases. Mr. Ashenfelter noted how different industries have different demand cycles, often as unpredictable as whether a sports team will play a game and create demand at a sports bar. Others, such as meal kit companies, are trying to forecast rapid growth and ensure that they have supplies on hand if a first-time customer goes online to purchase. In addition, distributors will not accept products that look damaged or bruised, even if edible. In the case of bread, Mr. Wilson said, retailers might place orders for very different quantities, which makes it difficult for bakeries to plan how much bread to have on hand.
Dr. Grantham raised the topic of food waste prevention, including diversion from landfills and increased food donations. Mr. Ashenfelter described how organizations have different goals, whether prioritizing landfill diversion or maximizing donations, and with profit margins of between 1 and 3 percent, most companies want to sell all their product or at least get some measurable value from it. An audience participant said that in the handling and transportation industry, one challenge is deciding what to do with damaged products. Some companies do not want their brand associated with, for example, damaged packaging or do not want to risk an incident that diminishes the brand. If a purchaser refuses to take possession of some goods, a truck driver often has to figure out what to do with it, as the truck needs to be quickly emptied to take its next load. Technological solutions can help, but not if the driver is under a time constraint or may otherwise be penalized. This is the reality, despite good intentions.
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