Food Waste Management

Food waste refers to the edible parts of plants and animals that are produced for human consumption but are not consumed. Globally, an estimated one-third of all food produced is wasted rather than eaten - approximately 1.6 billion metric tons per year worth about USD 1.2 trillion. The Boston Consulting Group (BCG) calculates that the amount of food wasted is projected to reach 2.1 billion tons in 2030, the equivalent to 66 tons per second.

Despite the world producing more than enough food to feed its entire population, 783 million people still go hungry, as of 2024. Food loss and waste occurs throughout the entire food supply chain, including farms, processing and manufacturing facilities, transportation and distribution, retail and foodservice outlets, and households. This waste leads to missed opportunities to feed the growing world population, while also consuming scarce resources, such as land, water, and energy used in the food supply chain.

The environmental and socioeconomic impacts of this misuse of resources is emerging as a critical global issue. According to the UN, the production of uneaten food occupies close to 30% of the world’s agricultural land area. Moreover, global food loss and waste has a carbon footprint of 4.4 gigatons of CO2 equivalent per year, as of 2019. If it were a country, it would rank as the third top emitter after the United States and China. According to the WRI, it accounts for 8% of global greenhouse gas emissions. The cost of the food wastage carbon footprint in particular, based on the social cost of carbon, is estimated to total USD 394 billion per year.

The global population is projected to reach 9.3 billion by 2050, and to meet the increased demand, food production will need to rise by over 50% compared to 2010 levels. Therefore, reducing food waste can play a crucial role in feeding the world's growing population in a sustainable manner. By minimizing waste, it would be possible to reduce the need for additional food production, thereby helping address challenges like deforestation, biodiversity loss, greenhouse gas emissions, water pollution, and water scarcity.

Additionally, managing food waste is crucial for achieving SDG 12, which aims to ensure sustainable consumption and production patterns. This includes reducing per capita global food waste by 50% at the retail and consumer level, as well as minimizing food losses along food supply chains by 2030.

In summary, food waste reduction offers multiple benefits for both people and the planet. It improves food security, addresses climate change, saves money, and reduces pressures on land, water, biodiversity, and waste management systems. The food waste problem is not insurmountable; both labor-intensive and automated interventions have been developed and are being developed to significantly reduce waste, creating value throughout the food value chain.

The global food waste crisis presents not just an environmental and social challenge, but also an investment opportunity. Investors from diverse backgrounds – private and public entities, philanthropic foundations, corporations, impact investors, and large investment firms – are increasingly recognizing the vast potential of the food waste management sector.

In recognition of the issue's impact on both their sustainability goals and bottom lines, multiple large corporations, like Chobani, Kroger, and Tysons, are launching innovation labs to research and fund food waste prevention. In 2020, the World Resources Institute announced that many of the world's largest food retailers had pledged to cut food waste in half by 2030. These include AEON, Ahold Delhaize, Carrefour, IKEA Food, METRO AG, Pick n Pay, The Savola Group, Sodexo, and Walmart. Some multinational companies, such as Tesco, Kellogg's, and Grupo Bimbo, have already achieved reductions of over 30%.

Apeel Sciences, a groundbreaking startup, exemplifies the potential for investments in this area. The company utilizes plant-derived technology to preserve the freshness of produce from farm to table. By applying a microscopic layer of naturally occurring substances found on fruits and vegetables, Apeel has successfully prevented the wastage of 70 million pieces of produce. In 2021, the company achieved a valuation of USD 2 billion, becoming the first "food waste unicorn," starting with a USD 100,000 grant from the Bill & Melinda Gates Foundation in 2012.

According to ReFED, a total of USD 10.9 billion has been invested in food waste solutions over the past 11 years in the United States, including USD 1.24 billion invested in 2023 (Fig. 1). The global food waste management market size was estimated at USD 69.8 billion in 2022 and is anticipated to expand at a CAGR of 5.4% over the forecast period. Rapid industrialization and rising R&D activities into the development of efficient systems are expected to have a positive influence on growth.

Figure 1: Investment in food waste solutions over the last years. Source: ReFED (2024)

Reducing food waste can have significant business benefits. ReFED's analysis estimates that a USD 18.4 billion investment by private, government and philanthropic sources could reduce food waste in the United States by 20% and create significant benefits. These include a four-to-one return, resulting in USD 78 billion in annual net financial gains, as well as notable environmental and social advancements. Specifically, this reduction in food waste could amount to 21 million tons per year, a decrease of 113 million metric tons of greenhouse gas emissions, savings of 6.2 trillion gallons of water, and the recovery of 4.2 billion meals for individuals in need. Additionally, this initiative has the potential to create around 60,000 job opportunities. There are several ways to achieve these benefits worldwide (Fig. 2):

Figure 2: Food Recovery Hierarchy: Source: United States Environmental Protection Agency (2021)

According to NRDC, waste tracking and analytics is a powerful source reduction tool that offers the highest return on investment. Accurately measuring the scale and causes of food waste can result in significant cost savings. Businesses that utilize online food donation marketplaces and mobile technologies for food recovery can benefit from robust data, which can help identify frequently wasted foods and inform future purchasing decisions to improve operational efficiency. Leanpath, a global tech firm specializing in automated food waste tracking and prevention solutions for commercial kitchens, raised USD 7M in 2019 from SaaS Capital in a debt financing round. Major companies like Sodexo and Ikea have implemented Leanpath's technologies to optimize food waste in their production operations.

Donating surplus food instead of sending it to landfills can also provide manufacturers, grocers, restaurants, and institutional food service providers with substantial tax breaks and reduced disposal costs. Additionally, it benefits local communities and generates goodwill. Notable companies that sell food that would otherwise go to waste at discounted prices include Too Good To Go (valued at USD 818 million as of 2021) and Imperfect Foods (valued at USD 700 million as of 2022).

According to the Global AgriFoodTech Investment Report 2023, 2021 experienced a record amount of private funding in the US towards food waste. However, in 2022, the total investments have leveled off, mainly due to the challenging macro environment (Fig. 3). The current private investment levels for food waste solutions in North America are approximately USD 1.7 billion, as of 2022.

Figure 3: Funding and deals in Food Waste: Source: AgFunder (2023)

ReFED’s landscape map shows the diversity and richness of the market (Fig. 4):

Figure 4: Food Waste Reduction Landscape: Source: AgFunder News (2021)

Some notable players in the sector include Afresh, an AI-powered inventory management platform for retailers, raised one of the top deals of the sector in 2022 with its USD 115 million Series B funding round led by Spark Capital. Additionally, Mori, a company specializing in shelf-life extension coatings, secured a notable USD 52 million in Series B1 funding. In addition to startups, established players like energy giant Enbridge invested USD 1 billion in Divert in 2023. Divert works with grocery retailers to process surplus food into renewable gas and aims to expand its food waste processing facilities across North America.

The sector is also witnessing strategic acquisitions. BlackRock's USD 700 million purchase of Vanguard Renewables in 2022 marks the largest M&A deal in the food waste industry, paving the way for wider adoption of renewable energy derived from organic waste. Similarly, Misfits Market's acquisition of Imperfect Foods consolidates the "ugly produce" market and showcases the company's growing consumer base. Additionally, private equity firm Paine Schwartz acquired AgroFresh, which offers both pre- and post-harvest food waste solutions, for USD 158 million.

These developments not only illustrate the maturing food waste ecosystem but also its diverse and impactful potential. This trend goes beyond private investments, as international communities are also taking action through innovative policies. For instance, South Korea has achieved an impressive 95% food waste recycling rate by implementing a mandatory system where households pay for waste collection based on weight. This approach encourages responsible disposal and has led to the development of efficient composting and biogas facilities. France has taken a different approach by enacting a significant ban on supermarkets discarding unsold food items. This legislation requires stores to donate edible food to charities.

These global responses, combined with the increase in M&A activity and investment, solidify the momentum behind food waste solutions.

There is a strong link between food waste and biodiversity loss. According to the UN, the production of uneaten food occupies close to 30% of the world’s agricultural land area. This leads to habitat destruction and land use change, often resulting in deforestation. For example, the Amazon rainforest is under immense pressure due to cattle and soybean production. Reducing food waste, particularly meat consumption, could reduce the demand for soybeans (primarily used for animal feed) and meat, helping protect the rich biodiversity of the rainforest. According to the IPCC, reducing food waste could free up several million km2 of land, offering opportunities for habitat restoration and biodiversity conservation.

Water is necessary for healthy biomes, but is often diverted to agricultural uses. In the United States alone, food waste results in over USD 172 billion in wasted water, as of 2018.

Additionally, decomposing waste in landfills releases potent greenhouse gases, such as methane, a significant contributor to climate change. This, in turn, disrupts ecological processes and weakens ecosystem resilience, further impacting biodiversity. Improper disposal of food waste can contaminate water sources through leachate infiltration, harming aquatic life and disrupting the equilibrium of ecosystems. This pollution can have cascading effects, impacting entire food webs and jeopardizing the balance of natural systems.

Social Justice

Food waste management emerges as a critical tool for advancing environmental justice, serving as a multifaceted strategy to promote social and environmental equity at local, national, and global levels.

The geography of food waste reveals its deep connection to societal disparities. Low-income communities often bear the brunt of environmental burdens from landfills and polluting facilities, while simultaneously lacking access to nutritious food. As a result, residents in these areas face higher levels of air and water pollution, increased health risks, and a lower quality of life. In the United States, eight out of ten incinerators are located in communities that are either economically disadvantaged or have a lower proportion of white residents, exposing nearby residents to toxic air pollution resulting from waste incineration. Food waste reduction and redistribution initiatives could empower these communities, diverting resources away from harmful disposal practices and towards ensuring food security.

Additionally, food waste leads to a significant loss of edible resources that could otherwise be used to feed the 783 million people suffering from hunger worldwide. Implementing efficient harvesting, storage, and distribution systems could greatly reduce waste and make more food available for those in need.

Lastly, smallholder farmers play a crucial role in producing one-third of the world's food. For these farmers, any food that is not sold represents lost income. By reducing on-farm food loss, it would be possible to potentially increase incomes by up to 15% for 470 million smallholder farmers and 290 million individuals whose livelihoods depend on agriculture in developing countries, most of whom are food insecure.

Food production is responsible for approximately one-third of global greenhouse gas emissions, as of 2021. According to the IPCC, reducing food waste is considered a mitigation measure that can significantly lower emissions. It is estimated that this measure has a mitigation potential of 0.6 – 6.0 GtCO2-eq yr–1 in the food supply chain.

Globally, 24% of food emissions are attributed to food lost in supply chains or wasted by consumers. Out of this, nearly two-thirds (15% of food emissions) are caused by losses in the supply chain due to poor storage and handling techniques, lack of refrigeration, and spoilage during transport and processing. The remaining 9% comes from food discarded by retailers and consumers. Consequently, food wastage is responsible for approximately 4.4 gigatons of CO2 equivalent per year, which accounts for 8% of total anthropogenic greenhouse gas emissions as of 2019.

Furthermore, the transportation, processing, preservation, and cooking of food contribute to energy consumption and greenhouse gas (GHG) emissions. For example, after food is produced, processed, and delivered to people's homes, it needs to be refrigerated and cooked. Both of these activities require energy, primarily in the form of electricity, which adds to the generation of GHGs.

According to Project Drawdown, the implementation of Food Waste Management has the potential to reduce greenhouse gas emissions by up to 102.2 Gt CO2e by 2050. To maximize this potential, it is crucial to prioritize prevention over remediation, as it can significantly reduce CO2 emissions. NRDC states that prevention strategies offer the strongest opportunity for both cost savings and environmental benefits, with 420 metric tons of CO2e avoided per 100 tons of food wasted (Fig. 5). Furthermore, food waste prevention creates three times the societal net economic value of recovery (such as feeding people and animals) and recycling (such as industrial uses, composting, and anaerobic digestion) combined.

Figure 5: The power of food waste prevention to reduce lifecycle GHG emissions; Source: Natural Resources Defense Council (2017)