Markets play a role in food waste and loss reduction, World Bank report says

WASHINGTON — Artificially low food prices that distort markets contribute to the 30% of food that is currently wasted and lost around the world, according to a new report from the World Bank. The report, “Addressing Food Loss and Waste: A Global Problem with Local Solutions,” notes that both producers and consumers avoid paying for the true cost of the environmental impact of agriculture. Government subsidies provided to both producers and consumers reduce the incentive for them to save food. “Effectively, the prices no longer are market prices, which means they are not really incorporating the actual cost of production, and the actual cost of production means using the scarce environmental resources. If they get artificially priced in a way that it just doesn’t make it worth saving, right, if the price is too low we don’t bother, it’s just not worth the cost,” said Geeta Sethi, adviser in World Bank’s agriculture and food global practice. “So it creates a very artificial market-clearing mechanism, and the outcome of that is this global bad, which [are these] 30% losses,” continued Sethi, who is the main author of the report. “The system is not really growing enough of the nutritious food. The market signals get distorted.” “COVID-19 is a great opportunity, because for the first time, food systems are now on the radar of heads of state and ministers of finance.” --— Geeta Sethi, adviser, World Bank’s agriculture and food global practice Growing food uses natural resources that generate pollution, while greenhouse gases are emitted by decomposing, unconsumed food. Eight percent of total global emissions are related to food waste and loss. Including the opportunity cost of natural resource consumption required by agriculture would initially make food more expensive, the report says, and would therefore make it more financially painful to waste food. In turn, that reduction in food loss and waste would make food cheaper for consumers because producers could sell more of the food that they are already producing, without the need for subsidies, and overall food supply would increase. Reducing food loss and waste can not only help meet Sustainable Development Goal 12.3 — halving per capita food waste at retail and consumer levels and reducing food loss throughout production and supply chains — but also other SDGs, Sethi said. “If one-third of production is being lost and agriculture is seen as the biggest driver of biodiversity losses and land use, then not being able to use everything we produce with the scarce resources makes it a big solution to some of these bigger problems,” Sethi said. “Whether it’s climate, environmental stress, biodiversity losses, and hunger — pretty much it is a solution to these challenges that we see. And with the diagnostics, we now know that addressing losses and waste, we actually do have a reduced carbon footprint, we … improve food and nutrition security and reduce environmental stress.” In research conducted before the coronavirus pandemic, the report examines case studies in Guatemala, Nigeria, Rwanda, and Vietnam, showcasing the food loss and waste challenges that are posed in different contexts. For example, Sethi said Guatemala currently loses about 38% of total food production, while 45% of the population is food insecure. Decreasing post-harvest losses could help ensure people have access to adequate nutritious food. “A 50% reduction [in tomato losses] at the farm stage, at the production level actually increases the affordability by close to 20%, which means that is going to have a big impact on nutrition security, not just food security in that country,” Sethi said of Guatemala. The case studies demonstrate the importance of having country- and context-specific data on rates of food loss and waste, Sethi said. One of the reasons the issue has lacked global attention is because it can be so difficult to measure — for example, knowing how many vegetables a consumer has in their refrigerator that rot before they can be consumed. The report notes that the food system has generally been behind on technology that could help solve this problem. Compared with other sectors, agriculture has far less investment and fewer startups that could help produce innovative solutions, it says. The report recommends two policy options for reducing food loss and waste: targeting the entire food system, such as by taxing farming, or targeting food loss directly by financing tools such as cold chains or storage systems to prevent it. Eliminating food loss will require “significant” public financing both internationally and nationally, as well as private capital. Sethi said that while images of food waste and loss during the COVID-19 pandemic — like crops rotting in a field or milk being dumped — were stark, it is unclear what impact the pandemic is having on wasted food overall. Because much of the world’s wasted food comes from the hospitality industry, people cooking more at home and the lack of large-scale events during lockdowns may actually be reducing food loss. Regardless of those metrics, the pandemic has finally brought attention to the food system. “COVID-19 is a great opportunity, because for the first time, food systems are now on the radar of heads of state and ministers of finance. Because it didn’t matter whether it was a high-income, middle-income, or low-income country — all got impacted in different ways,” Sethi said. “This is an agenda which is so core to the challenges we face on climate and hunger, and it needs all countries to move on this to be able to really have an impact.”