Food Industry Needs to Improve Efficiency and Consider Social Impacts

Inefficiencies in the food industry were highlighted by Robert van Otterdijk from the Food & Agriculture Organisation of the United Nations. His research showed that 1.3 billion tonnes of food – about a third of all food produced for human consumption - is lost or wasted.

26 June 2012 --- The food industry needs to improve supply chain efficiency and address social impacts; these were two of the major outcomes from the sixth edition of the Sustainable Foods Summit (which brought together over 140 senior executives from the food industry in Amsterdam at the start of June.

Inefficiencies in the food industry were highlighted by Robert van Otterdijk from the Food & Agriculture Organisation of the United Nations. His research showed that 1.3 billion tonnes of food – about a third of all food produced for human consumption - is lost or wasted. Large volumes of food is lost after harvest in developing countries, however European and North American consumers are most responsible for food waste. Mr. Otterdijk called for strategies for loss and waste reduction because of their link to food inflation (reducing prices), food security (more accessible) and health (nutrition and obesity).

The role of packaging in waste reduction was discussed by Angelika Christ from the European Federation of Corrugated Board Manufacturers. Ms. Christ highlighted the importance of packaging to protect and preserve food products. Although packaging has a role, she believes a change in consumer mindsets was required to make a major difference in food losses. In the panel discussion, participants questioned the role of retailers in changing consumer behaviour. One speaker commented, ‘retailer promotions to increase sales are sometimes in conflict with consumers wanting to spend less on food products and reduce waste’.

Other papers in the Sustainability Initiatives session covered sustainable agricultural partnerships, biodiversity & benefit sharing, and the growing complexity of the sustainability challenge. Ryan Brightwell from The Co-operative, UK’s leading ethical retailer, gave some insights into how it is meeting the ecological and societal challenges. The retail group plans to half its carbon emissions by 2020 and reduce its water footprint by a third by 2014. The Co-operative has set up an enterprise hub to finance co-operatives; it is already the largest retailer of fair trade products in the UK.

Several speakers in the second session (Sustainable Commodities) discussed the social impact of food products. Lee Byers from Fairtrade International highlighted the positive contribution of fair trade. Citing statistics that small agricultural producers comprise about a third of the population and represent 85% of global farms, fair trade can have a direct impact on alleviating poverty by raising producer incomes. About 1.2 million agricultural producers were now certified fair trade, generating over US $72 million in additional income. In a case study about fair trade products, Henk Jan Beltman said his company - Tony’s Chocolonely - was formed to protest against the poor conditions of African cocoa growers.

Growing demand for sustainable commodities was discussed by Christopher Wunderlich from the United Nations Forum on Sustainability Standards. According to Wunderlich, 20% of all bananas were now grown according to organic, fair trade, or Rainforest Alliance methods. The market share for sustainable coffee is projected to reach 18% in the coming years. He believes the market share of other food commodities have similar growth potential. In a paper on sustainable oils, IOI Loders Croklaan linked the high efficiency of palm oil to the growing number of plantations and subsequent environmental damage in South-East Asia. Although there is high interest in sustainable oils, supply-demand imbalances result in 45% of RSPO palm oil to go into the conventional market.

Food authenticity was featured in the second day of the summit. In the opening paper, Genetic ID emphasised the scale of the problem: ‘it is estimated that about 5% of all food products in Europe are affected by fraud’. According to Dr. Adrian Charlton from FERA UK, the melamine scandal has shown how fraud can create major food safety issues. The growing prominence of food authenticity has led to a greater understanding of supply chains and a rise in testing and inspection methods. Proceeding papers looked at the use of novel fingerprinting methods, advances in certification methods, mass spectrometry and isotope analysis.

The opening paper by AgroFair in the Marketing & Distribution Innovations session emphasised the importance of co-operatives in the food industry. The Dutch company has financed many grower co-operatives to convert to fair trade practices. In a retail case study, Coop Denmark stated that organic products now comprise 22% of all food sales in its Irma retailers. Its Anglamark private label is highly successful, recognised by 80% of Danish consumers. The retailer states it actively encourages third party eco-labels because they build consumer confidence.

Eric Zweserijn from Sodexo gave some insights into the potential of sustainable foods in the hotel, restaurant & catering channel; the foodservice company serves 50 million meals a day, with the market share of eco-labelled food products reaching 12%. A major concern however, is the rising number of eco-labels in the food industry. Research by Organic Monitor showed that the food industry has over 400 eco-labels, resulting in multiple certification and consumer confusion. With a growing number of green brands, a major question is whether these brands will compete with or complement existing eco-labels.

The sixth edition of the Sustainable Foods Summit raised many other questions about sustainability in the food industry: What impact will greater efficiency in the supply chain have on the needs of a growing global population? What are the implications to food security and food inflation? How can food distributors and retailers tackle the issue of food waste, whilst maintaining or raising product sales? With rising material costs, how can food companies reduce their packaging without improvising product quality and shelf-lives? Although the market share of sustainable ingredients continues to rise, what can companies do to prevent supply-demand imbalances, as has happened with RSPO palm oil? How can food and ingredient companies create positive social impacts? With rising certification and inspection costs, how can the integrity of sustainable foods be maintained without increasing product prices? What impact will the proliferation in eco-labels have on consumer confidence? The next editions of the Sustainable Foods Summit aim to address such questions.