March 24th, 2017
by Mark Hilton
Much of the UK’s efforts to address food waste have been directed towards retailers and householders. This focus is not without some justification: household food waste accounts for nearly half of the nearly 10m tonnes of post-farm gate food waste in the UK each year. However, that should not lead us to ignore the substantial amounts of waste arising from other parts of the food supply chain, where there are fewer individual actors to influence and perhaps greater scope for small, cost-effective changes that result in significant reductions in waste.
WRAP has estimated that food and drink manufacturing in the UK annually contributes around 1.7m tonnes to our food waste total. That excludes some 0.7m tonnes that goes to animal feed, and unknown but considerable losses to effluent. Around 0.9m tonnes, worth around £1.2bn, is thought to be avoidable.
While the total tonnage and costs are substantial, in food manufacturing, as in many other sectors, waste (from ingredients to finished product) is rarely the top priority. Many businesses will not have a clear idea of what they are wasting or how much that waste is ‘worth’. Unlike energy or water, waste is not clearly metered. Weight is rarely monitored accurately, still less the ‘true cost’ of waste.
Some food waste will yield an income as animal feed or anaerobic digestion feedstock, and this small income can deflect attention from the whole system costs of waste. Few businesses will measure the value-added cost of the raw materials, labour, energy, water and other inputs that are wrapped up in waste from their partially or wholly finished products.
Cake, for example, is typically worth £1,500 to £2,000 per tonne in value added terms; but a manufacturer may obtain as little as £80 if waste product is sold as animal feed. Protein-based wastes are worth far more. In general, the savings of food waste prevention are 10 to 30 times the cost of waste disposal. The carbon savings of prevention are also substantial, even where waste food is being composted or subjected to anaerobic digestion.
Profit and loss
When waste comes at such a high price, it seems surprising that it attracts so little emphasis. However, some losses are hard for producers to avoid: for example, factories that produce multiple product lines will have start-up and changeover losses. Other wastes are rather more controllable, whether through changes to procedures, investment in equipment or changes to supply chain management. Examples include:
- drop-off from the sides of conveyors;
- wash down losses to drain;
- out of specification products (e.g. above or below weight); and
- cancelled orders.
Losses to drain are particularly hard to quantify. In addition to the value lost through the waste, they increase the load on the manufacturer’s effluent treatment plant, resulting in unnecessary energy and chemicals use. Yet when I audited a large preserves site in 2015, they were focused on costly improvements to their effluent treatment plant rather than tackling the root causes of waste, such as old equipment and poor working practices.
A surprising amount of waste is less the responsibility of manufacturers themselves than of the disjointed supply chains that manufacturers reluctantly accept as ‘the way the world works’. They can operate at their most efficient and least wasteful when they can gear up for long production runs and follow predictable production patterns. However, some large retailers can work counter to this, with unpredictable ordering and short lead times. Manufacturers take a risk if they speculatively manufacture longer runs that may not then be required if retailer orders reduce. Even errors in artwork can cause whole batches of food products to become waste.
Despite these structural challenges, waste mapping, across the supply chain and down to the production line level, can identify ‘hotspots’ to address. At one site where I recently applied this approach, issues were found with ingredient control and handling, filling processes and product weight control. Addressing these led to annual savings of around 200 tonnes of material waste and product giveaway and ~£1.2m in costs. At another site, potential annual savings of £580K were identified, reducing waste by 4,270 tonnes – largely through low cost “quick wins”.
The key is always to undertake waste mapping and identify the true cost of waste at each stage. Without this clear financial case for waste prevention, businesses may not prioritise it.
While voluntary agreements (such as the Courtauld Commitment in its various stages, and the related subsidised consultancy support from organisations such as WRAP) are useful, they have limited reach. Environmental permitting is a driver for bigger manufacturers to reduce and dispose of waste responsibly, but prevention obligations are not generally well-enforced.
A more effective approach could be a producer responsibility instrument to reduce food and drink waste in manufacturing. Options to consider might include:
- An approach similar to the Climate Change Agreement/Levy, imposing a cost penalty if the company does not monitor and meet agreed sub-sector waste reduction targets; and
- Adding food embodied energy into the CCA by making it an instrument for all wasted carbon, whatever its origin.
As an alternative or supporting measure, regular waste prevention auditing, including waste mapping, true cost analysis and action planning, could also be mandated for larger waste producers, much as the Energy Savings Opportunity Scheme (ESOS) has been in relation to energy users.
As a third, interim measure, continued encouragement should be given, by WRAP for example, for larger companies to work collaboratively with their supply chains and help/require them to adopt strict resource efficiency standards. Leaders such as M&S and Unilever are acting and public bodies should also consider supply chain resource efficiency as part of their procurement processes.
There is a real opportunity to reduce waste in the food manufacturing chain, but one that the industry itself often finds difficult to seize due to internal resource shortages and chronic short-termism. Rather than being costly ‘red tape’, further policy approaches to address the problem of food waste would lead to savings for many food manufacturers, as well as substantial environmental benefits. If government cannot recognise this on its own, leaders in the food production and retailing sectors – alongside resource efficiency campaigners – should be making the case for measures that will help put an end to so much avoidable waste.