Friday, May 13, 2011

Food - Why so much waste when there is so much need and why no business is working on stopping this?

Per these reports(here is a more detailed report) we waste a huge amount of food every year. Any waste is bad especially when we cannot feed good quality food to everyone in the world. Leave aside the people from poor countries, even many families in economically advanced countries such as USA can’t have healthy food everyday(they consume cheap quality fast food as healthy food is costly). Food Inc. suggests that this cheap fast food culture can become very costly in the long term considering the high cost healthcare impacts(Obesity, Diabetes etc.). So this is a huge problem – social, health, economic - from all perspectives. Now any problem is an opportunity for new business – then why we haven’t seen any successful business effort to solve this problem. To answer this let’s think through the problem and see if some solution emerges.

Pre-consumption food waste due to perishable nature of food products:

This is the waste which happens during Production-Processing-Distribution stage. It is primarily supply-chain management and storage management problem. As soon as the food is produced it needs to be either taken to market or stored in Cold storage. Primarily a problem with Developing countries.

Consumer Food waste:

This happens after the consumer has purchased the food. Primarily a Problem of Plenty – Purchase more food than they can consume before it gets wasted. Sometimes this is a problem with lifestyle in wealthy countries.

What are the Possible Solutions and Business Opportunities:

Supply Chain and Food Storage Management:

There is a huge infrastructure gap(especially in poor developing countries) for quickly processing food, storing food in cold storage(warehouses) at right temperature and then managing the supply chain using FIFO or appropriate algorithm. In many developing countries 30-40% of food wastage can be avoided if these are taken care of. There are problems of politics and local power play as well impacting the scaling up of these systems. Instead of these issues I think there is a huge opportunity of supply chain and Food storage management business(especially in the developing countries).

Demand dependent Supply management:

Storage of Perishable food is a big challenge and this add to the cost of the food (also has Greenhouse impacts due to Cooling requirement). This problem can be avoided if Supply cycles can be matched closely with the demand cycles. For example a company can provide intelligence to the local producers based on the typical historical consumption/sales data. Just in Time(JIT) Production from local Producers can really help in minimizing the waste.

When producing corps farmers can divide their field in 12 small sections and target the harvest in each month. This way we can minimize the need of food storage and also produce a uniform distribution of food. This will also help farmers to streamline their revenue-cost cycles and reduce the risk of waste/lower cost of produce.

Waste of Food in Restaurants:

Two ideas – Restaurants should have capability to offer Real time deals (similar to what Groupon is going to offer) when they see they cannot sell their food at standard price.

Also in case they cannot sell the food there should be some collection agency collecting the food from restaurants which can be offered to the poor people on food stamps. The Restaurants should be given some Tax breaks as a motivation. A social Business(NGO/Government sponsored agency) can offer the service of collecting the food and distributing to the poor people. Great if these agencies can have intelligence on the demand-supply needs and expiry date of the collected foods to make intelligent decisions etc. This will allow these agencies to transfer the non-perishable food to poor countries as well.

Waste of Food in Households

Again we will love to have an intelligence on our future food needs and have suggestions on when to buy at what quality. A portal can provide this intelligence – I will enter what all I plan to eat in next few days and based on my availability of grocery in my freeze it will suggest what else I need to buy in my next supermarket visit.


Anonymous said...

Anonymous said...

Organizations such as Waste Not already exist. The challenge is that most restaurants and caterers do not want to pay for the extra people required to effectively package and collect food to be picked up. The tax break doesn't offset the cost of personnel. Picture a large resort, and you can start to understand the logistical challenges. - Lisa