Global food loss and waste amount to one-third of total food production. According to the UN Food and Agriculture Organization (FAO), just the associated costs of food waste result in 4.4 gigatons of CO2 with a 250km3 water footprint and a spillage of $936 billion every year.
Solutions, however, do not come easily. Take for example the traditional approaches, such as waste collection measurements and questionnaires, to tackle consumer behaviour, one of the most important contributors to food waste. The dynamics among factors in the consumer decision-making process and gaps in understanding make it extremely difficult to assess root causes of behaviour. Similar challenges can be found throughout the entire food value chain.
Fundamentally, more needs to be done to ensure that the market reflects associated environmental impacts. Digital solutions open doors for food market transformation and to drive sustainability.
Emerging solutions in the digital era
The food consumption market is already embracing digital innovation. Today, consumers are making use of smartphone applications to record purchases, monitor their consumption patterns and plan meals with tailored recipes. By installing smart reusable sensors for food containers, people can also track food freshness. Other examples include smart cameras for food storage organization and smart bins for waste classifications.
One major benefit of digitalization is to make consumer waste traceable and measurable, thus allowing the problems to become visible. This in turn can help change behaviour. Together with artificial intelligence, producers and consumers alike would be equipped with information that far exceeds what traditional waste collection measurements and survey methods currently offer.
The resulting quantity and quality of data also enables a market that goes beyond the dimensions around buying and selling food, fuelling the participation of multiple players connected to each other by data. In this multi-sided market, aggregated records of consumer waste can provide a clear reference within the food supply chain on future consumer preference. This is useful for companies when it comes to adjusting their business strategies.
New business models based on such data have emerged, which in turn serve consumers. For instance, food takeout platforms have relied on food consumption data to come up with such solutions as designing smaller dish portions to tackle food waste, while bringing cost savings and satisfaction to both sides. In addition, personalized cooking recipes are incentivizing a content creation market.
By matching information of food surplus at businesses and home with charity schemes – such as food banks – food waste can be avoided, allowing more fairness in food distribution. Consumers can modify their behaviours for the promise of cost savings from better planning, attractive rewards, or improved purchasing experiences. Smart device or application developers can attract investment or profit by networking all stakeholders in the digital platform. Classifying waste one step closer to its source, the deployment of smart bins can bring life to waste management specialization, adding another dimension to the market.
Such win-win solutions rely on an exponential growth of data on consumer food waste, which in turn could reinforce those emerging business models.
Implications for the value chain
Digital applications at the consumption level can have a profound implication for the agri-food value chain by redefining the meaning of consumer preference. Often, the market relies on data of transactions, such as the price and quantity of purchase to evaluate consumer preference and predict the demand. Without taking into consideration consumer waste, the market signal is incomplete and delayed – retailers and farmers maximize the profit by overselling a product in the short term while risk losing customer loyalty and causing wrong production plans in the long term. Overall, wasted food represents resources that ultimately exit the food supply chain and the loss is borne across the entire supply chain.
Through real-time data collection – pooling of data from various dimensions such as the supply chain, transactions and domestic food waste – insights generated through artificial intelligence-fuelled algorithms can help uncover hidden behaviour patterns. This can redefine consumer preference with a new formula that sends timelier and more accurate signals to the market regarding demand.
The value of information of food consumption after its purchase is the disruption potential associated with better consumer predictability for the food industry. It provides an opportunity to alter the business model from simply producing more to producing wisely tailored to the demand. This model contributes to food waste avoidance at the full value chain level.
A call for more systemic and sustainable approaches
Despite the potential offer of digital innovations, business applications still seem to be fragmented. For any change to occur, it requires the capacity of players along the value chain to interpret the food waste information into consumer predictability, organize the production and processing business accordingly, and grow the multi-dimensional market. Systemic approaches are needed to scale up disruptive business models for a more sustainably conscious market.
The broader digital transformation taking place at different parts of the value chain further proves the necessity of systemic approaches. The emergence of precision agriculture and the development of smart cold chains provide an opportunity to deal with sustainability challenges beyond food waste, as faced by the agri-food sector. The uptake of those technologies further requires the set-up of a data-driven ecosystem.
The policy implication is that governments could perform as an infrastructure provider and as facilitators for meaningful innovations and their uptake. This includes strategic investment by governments at the cross-sector level to address digital readiness, particularly in sensors, cloud computing and data processing facilities, for data to flow as inputs for the market. Actions should be taken to fill the digital gap within the population to allow for a value capture in the digital economy in a fair manner, instead of benefiting only the groups that have access to digital technologies. Enabling policies would be needed for small and medium-sized players to have necessary data access and be equipped with data analysis capacities.
Additionally, governments must guide the market towards sustainable solutions and safeguard key values. Its investments should go hand in hand with measures to improve energy efficiency and circular economy performance of the ICT sector.
In opening up national data spaces and incentivizing business data sharing for environmental governance dealing with food waste, a clear differentiation needs to be made between the use of data for generating insights on the food value chain and for profiling consumers purely as marketing tactics, which essentially can be data abuse.
There is no one-size-fits-all answer. Innovations by all stakeholders must consider the specific social and economic roots of food waste in each society and segment of the market for effectively transforming the agri-food systems of the future.