Economics of food wastage

LAHORE: Pakistan faces food shortages which are less than the food that is wasted during harvesting, transportation, processing, storage, and consumption. Nation pays a heavy price for lack of efforts to eliminate this waste in shape of hunger and costly imports.

Food wastage is a global problem. Most of the developed economies produce more food than they consume. Wastages in developed economies are minimum at harvest and post-harvest level and at processing, transportation, and storage. But the wastage at consumption level is very high in developed economies. In developing economies, the wastages are high at pre- and post-harvest levels, during transportation, processing, and storage.

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

In dollar terms, closing the gap on food loss and waste is estimated at $700 billion. Reducing this gap could address global hunger problems to a large extent.

Most of the poor nations do not produce enough food and depend on imports. But Pakistan has a strong agricultural base and produces enough food for its population, still a large portion of its population suffers from hunger and malnutrition. The reasons for this exclusion include high food wastages and flawed food distribution because of hoarding and manipulation by middlemen in the agriculture sector. However, if food wastages that range from 30-40 percent are controlled the hoarders would become ineffective.

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. The impact and routes of food wastages have been explained by BCG citing the example of apples. It estimates that approximately one-third of all apples drop out of the value chain annually.

About 13 percent of apples are lost at production level, 6 percent could be lost at storage, handling, and transportation stages. Another 1 percent is lost in processing and packaging, while 6 percent is lost at distribution and retail stages. And a staggering 8 percent are wasted from farm to table.

Government alone cannot control the food wastage. The state needs cooperation of NGOs, individuals, and consumers to reduce wastage of food.

The prevailing global issues like Covid-19, climate change, internal unrest in Pakistan, and income inequality have made the task of controlling food wastages difficult.

We waste more than 50 percent of the fish harvested at high seas through non-refrigerated trawlers. More than 35 percent of fruits and vegetables are wasted at different stages from harvest to consumption.

We also waste over 25 percent of the milk we produce due to absence of cold chains in remote regions. The wastage of grains is also substantial as most crops are harvested manually. There are few mechanical harvesters in the country.

Food waste is death by a thousand cuts. 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.

First is the lack of public awareness. A huge amount of food is lost because it goes bad before it can get to markets and consumers due to inadequate supply chain infrastructure. Supply chain efficiency is also important.

A lack of coordination among players across the value chain, particularly between raw material producers and processors, contributes significantly to inefficiency, loss, and waste. Disposing food is cheap and easy. Generally, regulatory and tax policies do not penalise companies and consumers for the waste they create.