The impact COVID–19 has on food waste

Lars Langhout Manager, PwC Netherlands 27/05/20

Global crises always bring us back to our primary needs and showcase the importance of our food value chain. Remember the panic buying from a few weeks ago and the resulting empty shelves? In such times, food waste is of more importance than ever before.

The lockdown causes a shift in consumption channels. Where in the Netherlands we consume on average one third of our food Out of Home (OOH), we now find ourselves eating at home every day, every meal. This has a two-sided effect on food waste:

Additional food waste from farm to plate

First, it magnifies the food waste through households. In the Netherlands for example, food waste per person in each household amounts to 90 kg of food and beverages which represents ~40% of the total foods waste in the chain. To put that in a perspective: that represents 10% of all food bought by consumers. Producers and supermarkets represent another 45% of food waste: it’s left unsold at the supermarket; it’s transport exceeds the planned time window for the delivery and unloading of the goods; it’s damaged during loading and unloading; it is dismissed as it does not meet our required uniform standards of size, shape, color and appearance; it’s gone to waste during the production process or it’s destroyed as it cannot be sold due to surplus production at the farms.

COVID-19 Surplus waste

A second effect of the channel shift due to the lockdown is that farmers and food producers are faced with an increased surplus production as they cannot sell their products to the OOH channel anymore. For example, in the Netherlands about 1 million tonnes of potatoes will go to waste, which is about 13% of the total potato production in the Netherlands. Growers/Farmers will be hit hard in the next few months. Firstly, they’re faced with lower prices due to the surplus. In the potato example, prices for non-contract potatoes have dropped dramatically. What makes it even worse is that these farmers had to already plant the seed potatoes for the 2020 harvest and will face similar price levels later this year leaving nothing but financial ruin. This is just one example of the food waste the channel shift is causing.

Solutions

Most people respond to these facts with sensible arguments. Why don’t they sell those potatoes to the supermarkets or directly to consumers? Why don’t they bring export these products elsewhere to countries where there’s famine?

If things were only as simple as that. The OOH channel products are sold in batch sizes that do not meet the criteria for supermarkets or D2C. You won’t buy a 25kg bag of potatoes, would you? Repackage you say? That’s not all that simple. The production lines in those factories are often not able to change the package sizes to other distribution channel’s standards. Exporting the surplus is not feasible either. The pandemic has spread globally, and prices have dropped everywhere, making exports loss-making.

This food waste is not limited to potatoes. On a large scale, around the globe, dairy, produce and even eggs are destroyed. It makes me sad to think about the food waste the COVID-19 crisis is creating, aside for the terrible loss of human lives.

What does this teach us? As consumers we can help by being more mindful of what we buy and perhaps even help out local farmers that cope with a surplus through platforms such as https://supportyourlocalsnl.nl/.

Companies on the other hand, can help following five strategies to reduce food waste:

1) Improve packaging

Through innovations (e.g. resealable solutions, bio-coating with plant-derived protection to the surface of fresh produce to slow water loss and oxidation), shelf life of products can be enhanced considerably

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2) Improve food handling

Food lost due to bad handling is an outright sin. Companies should train and educate their staff appropriately to reduce avoidable waste

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3) Implement the right ERP solutions

Fit for purpose ERP systems allow CPGs to monitor shelf life, prevent cross-contamination, avoid overstocking, accurate raw-material forecasting, maintain quality levels and data access in case of re-calls

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4) Re-assess delivery channel vulnerability

With sudden delivery channel disruptions, CPGs need to be able to quickly shift manufacturing lines to different pack sizes (i.e. from OOH channel pack sizes to retail pack sizes)

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5) Educate consumers

With user experience focused packaging, CPGs can reduce food waste at consumers. By clearer labeling and better instructions CPGs can educate consumers to reduce the amount of food they have to throw away every week

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Once the fog clears of the COVID-19 crisis, companies hopefully will include achieving the SDG goals as part of the ‘new normal’. Applying these five strategies will help them to do so.

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Lars Langhout

Lars Langhout

Manager, PwC Netherlands

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