Finding the value in by-products, utilising excess products and minimising waste makes economic sense. However, there are a number of challenges, opportunities and best practices to consider when looking to transform the existing system of production and consumption patterns. 

Food loss and waste is a global issue, costing over AUD$1.75 trillion and contributing 1.3 billion tonnes to landfill annually1. Food waste in Australia alone is costing approximately AUD$20 billion and contributing 7.3 million tonnes annually – the equivalent of the Melbourne Cricket Ground (MCG) filled nine times over1. While these figures represent the scale of the problem, they also highlight a high growth opportunity for Australian food businesses.

At evokeAG 2020, a panel of food waste fighters from Natural Evolution, Yume and Woolworths joined KPMG Australia in a discussion on food waste and how to find value in by-products, use excess products and minimise waste. Companies such as these have adopted a circular economy approach to reduce, reuse and recycle food waste and capture the financial benefits from what is otherwise being wasted. Circular economy is an economic model that aims to avoid waste and preserve the value of resources (raw materials, energy and water) for as long as possible1. Products and materials are continuously (re)circulated – as opposed to a linear model in which they are discarded as waste after use1.

Despite the steps forward these companies are taking, there is a long way to go to shift mindsets from an expectation and acceptance of food waste, towards the optimisation of growth and value in what we produce to look after the planet.

It is more than getting it out of the paddock and into farmers’ bank accounts. In fighting food waste, we need to start with growing just enough, not with an expectation of 30 per cent of food produced being lost on its way from farm to plate.

Ben van Delden
KPMG Australia

Raising consumer awareness in sustainability

While modern day consumers have an increasing awareness of sustainability, the uncomfortable truth about food waste in Australia is that approximately 31 percent of it is happening at the primary producer level2 – before it even reaches the home. This equates to the equivalent of 560 semitrailers of food spilling over in Australia each day3. If this actually happened, it would be a national emergency. However, this on-farm waste goes unseen – and this is one area where it needs to be addressed.

It isn’t all due to bad practice on farm. The waste can largely be attributed to climate volatility such as extreme weather events such as cyclonic events which wipe out entire crops, or adverse frost conditions that disrupt growing patterns/timeframes and other unforeseeable circumstances.

Large retailers placing produce specifications on farmers creates further restrictions on their ability to reduce waste; a large proportion of wasted product is often that which doesn’t reach the specified requirements. While removing appearance specifications on fruit and vegetables may seem like an answer, this would merely shift the waste from a few farms to a lot of stores. It could also de-value the average selling price of produce for which millions of R&D and marketing dollars have been invested to create and position premium quality products. The focus here should be around placing these non-specification products on a platform for another use before harvest (i.e. a role that Yume has taken on).

Another solution for out-of-specification products could be driven by the government. Between prisons, aged care, defence and health care, the government is the largest procurer of food in Australia. If there is a prison in close proximity to a food production company, with surplus or out-of-specification products, the two institutions could be better connected. This closer connection would create less freight miles for the producer, generate an additional revenue stream for the production company, cost the taxpayer less, and have a positive impact on the environment as it takes food out of landfill.

Packaging’s part

Another significant aspect of the food waste issue is the packaging it’s placed in. In 2018 Australia established the 2025 National Packaging Targets to create a new sustainable pathway for the way we manage packaging in Australia4. The four targets, to be achieved by 2025, are:

  • 100 percent reusable, recyclable or compostable packaging
  • 70 percent of plastic packaging being recycled or composted
  • 30 percent of average recycled content used in packaging 
  • The phase out of problematic and unnecessary single-use plastics packaging.

Companies such as Woolworths are working toward these goals, however there are associated challenges that still need to be considered. Compostable, for example, is a challenge in Australia as we don’t yet have collection processes for disposing of all the compostable packaging. Woolworths are currently working with the government to develop this.

It must be considered whether we need some form of packaging in the future to help keep food safe and preserve it. In looking to achieve the set packaging goals we need to be working towards an innovative packaging solution that is not to the detriment of the products’ safety and/or shelf life – this only create more food waste.

Clean Energy – a solution and a problem

Energy remains one of the most volatile costs to the bottom line of regional food producers and processors so getting it right is important for a healthy industry. Renewable energy sources are exposing nearby processors to network power surges that are threatening sensitive manufacturing equipment. This is leading some of these affected businesses to take another step toward being more circular – by creating their own onsite waste to energy solutions and therefore avoiding network exposure.

The way forward

The core principles of circular economy require reducing how much is grown, reusing products, and recycling what is left over. There are a number of actions we can take in Australia to work through supply chains and regional business networks to optimise supply chains and find pathways to convert waste streams into value, and reimagine new processes to reduce waste of labour, capital, energy, water and inputs.

Shifting from linear (take, make, dispose) business models to circular (reduce, reuse, recycle) and the creation of new value streams with new partnerships will enable us to take advantage of the AUD$20 billion opportunity that the current food waste problem presents in Australia.

The fight to reduce food waste is a global movement that requires collaboration across each element of the supply chain. For consumers, it is important to buy products that have been rescued from landfill and support the companies that are actively trying to reduce food waste and adopt a circular economy. Whereas producers need to be focused on creating an avenue for wasted products before they are harvested. The government’s role in continuing this movement towards a more circular economy is crucial. It needs to step up as a unified government across the states to be a significant enabler for the reduction of food waste in Australia – having a consistent approach to packaging and recycling would be a great start.

It will be critical for a collaborative approach to make food production that has a positive benefit for the environment.

Read more about the Circular economy in the food industry.