This chapter summarizes the final session of the workshop. The session began with a presentation by Harry de Gorter (Cornell University) about the economic framework for evaluating the implications of food loss and waste, followed by an open discussion with the audience. To close, Mary Muth (RTI International and chair of the steering committee) provided a summary of the lessons she said she learned from the workshop. Finally, Jean Buzby, chief of the Diet, Safety, and Health Economics Branch of the Economic Research Service (ERS), described some possible future actions for ERS that she said she gleaned from workshop discussions.
STATEMENT OF HARRY DE GORTER ECONOMIC FRAMEWORK FOR EVALUATING THE IMPLICATIONS OF FOOD LOSS AND WASTE
De Gorter identified three economic reasons for food loss and waste in a very broad general context. First, it would not pay to have zero food waste. Food waste is a result of optimizing agents on both the supply and demand sides. More importantly, he said, for many agents in the food chain, the cost of having too little food is much greater than the cost of having too much food. Referring to the earlier example of unharvested acres (see Chapter 4), de Gorter said these unharvested crops could be described as waste, but, as noted earlier, most farmers’ decisions are based on sound economic reasons. Likewise, he noted, decisions along
the food chain are often based on sound economic reasons. For example, if unharvested acres were taxed, the result would be a reduction in the amount of planted acres, which would reduce the number of harvested acres. De Gorter commented that this reduction would hurt farmers, as well as everyone else, including consumers. Thus, he said, if the reason for unharvested acres is low prices at harvest, this suggests credit constraints, but if unharvested acres were caused by labor problems or pests, then there may be other policy solutions. If a farmer has contracts to fill downstream, he/she plants more than he/she expects to harvest. He reiterated his view that taxing unharvested acres would be suboptimal for society.
The second economic reason for food loss or waste is market failure, he said. Farmers and entities along the supply chain are optimizing and maximizing their own welfare and profits, but they have imperfect information. There are credit constraints and economies of coordination along the supply chain, especially in developing countries, where policies might help correct market failures. In contrast to an extensive literature on the economics and environmental issues related to curbside fees and on taxing businesses for waste, including emissions, he observed that the literature on the cost of having too much or too little food is underdeveloped.
De Gorter said the third economic reason is nonoptimizing agents, where behavioral economics is important. Everyone is subject to psychological, sociological, and cultural biases, and different types of policies are needed. De Gorter referred to Wansink (2006) as an example of a behavioral economist’s work on food. He stated that he is not as optimistic about what might be accomplished via policies in this area as are some experts in the field.
De Gorter noted that the three economic reasons for food loss and waste have implications for the definitions for food loss and waste. He stated that no definition makes sense to an economist. Food loss is typically viewed as unintended on the supply side, so it mainly occurs during production or postharvest processing. In contrast, food waste is typically viewed as intended on the demand side, such as waste in restaurants and by consumers due to negligence or conscious decisions to throw food away. The problem is that if there are intentional losses at the farm level and unintentional waste by the consumer, the economics do not relate to the standard definition of food waste. Moreover, there are intentional losses at the farm level and unintentional waste by consumers. As discussed earlier (see Chapter 5), there are also issues related to the definitions of edible versus nonedible food and avoidable versus nonavoidable waste.
He cited his paper (de Gorter, 2014) for the logic behind his discussion, noting that he will revise the document based on discussions and presentations at the workshop. He said the paper considers three parts
to the food chain: farm gate (preharvest to first point of sale), middlemen, and final consumers. Looking at each part for economic outcomes reveals that from an economic view, reducing spoilage at the farm gate is a win-win strategy as producer revenues increase and consumer prices decline. This would happen because reducing spoilage contracts the margin between farm and wholesale or farm and retail. In addition, reducing loss at the farm level could reduce farm prices. While this would always help consumers, he said, the net outcome to producers is not clear.
He said waste at the farm gate is of greatest importance to developing countries. It is more important for policies to focus on problems of infrastructure to promote agricultural development and productivity improvement than to focus on waste. He said nothing in economic theory suggests policy should focus on waste, per se.
For the middlemen, the second part in the chain, whether to tax waste or coordinate supply is particularly an issue in developing countries. As an example, he said, Massachusetts has banned food waste,1 but economists tend to think it is better to tax it. Taxing food waste would result in increased efficiencies and would reduce waste, he asserted. There would be more food donations, secondary markets would develop, and more food would be used for animal feed, anaerobic digesters, and compost. De Gorter noted the economic literature on the benefit of taxing environmental externalities.
Lastly, for final consumers, there are transactions costs, imperfect information, and behavioral issues, where public awareness campaigns or “nudge policy” might be useful. He cited Thaler and Sunstein (2008) for their work in nudge policy, a new area of interest among economists. As an example, he said if the goal is to change consumers’ decision making, they might receive a green garbage bag in which to put all their food waste. After a while people realize how much food they are wasting, and they may change their decision making.
De Gorter described a study by behavioral economists of food waste in the United States that will be modeled on a study just completed in Brazil (Porpino and Parente, 2014). In Brazil, the study involved a group of households just above the poverty line—poor, but at an income gradient where they do not get welfare payments. The study found poor consumers prefer to go to nonlocal supermarkets to save money, but they end up buying much more food to have on hand and to serve in large quantities. However, they waste a lot of food, according to the study.
This use of food is partially cultural, the study found. The households had a desire to signal wealth, make sure their children were well fed, and
1For information, see http://www.mass.gov/eea/agencies/massdep/recycle/solid/massachusetts-waste-disposal-bans.html [July 2014].
show hospitality, even though they had limited resources. A new study will look at food waste in similar income families in the United States to see if the same patterns hold. He thinks the pattern might well hold, noting that this would not have been true in the 1950s and 1960s.
De Gorter described the five elements of the United Nations’ Zero Hunger Challenge2 (ZHC): (1) zero stunted children less than 2 years of age; (2) 100 percent access to adequate food year round; (3) all food systems sustainable; (4) 100 percent increase in smallholder productivity and income; and (5) zero loss or waste of food. He repeated that the last element, zero loss or waste of food, is not economical, because costs increase sharply as waste is reduced. He stated it might be better to use resources elsewhere to reduce hunger and malnutrition, but acknowledged one motivation for focusing on zero food waste is because it is large and highly visible. He stated that if 32 percent of food is wasted, there is a moral issue associated with hunger. There are large future food needs to 2050, and, as discussed at this workshop, there are resource degradation and greenhouse gas emissions. Zero food waste sounds like a triple-dividend policy to reduce hunger, save resources, and save the environment, he commented. However, he suggested it would be more economical to direct policies toward natural resource use and the environment, regardless of waste, and focus other policies on overall food security and agricultural development.
He questioned whether a broader perspective on food waste might be useful, for example, evaluating whether some uses of food are inefficient. Examples might include food fed to livestock, food converted to products with fewer nutrients, food diverted to biofuels, and food consumed beyond 2,000 calories per day.
According to de Gorter, it is better if policies directed to food waste relate to the environment or natural resources policy. He said that there would be synergetic effects on food waste if policy dealt with market failures and improving infrastructure (transportation and cold storage for developing countries). Sometimes, he said, not harvesting makes sense. There is a question about how responsive consumers would be to waste reduction initiatives, for example, the tradeoff between convenience and food safety. He stated that there may be useful policy initiatives that increase food waste, such as by supporting research and development for productivity improvements and developing high-value agriculture. He said that there have been a number of examples where food agricultural products in developing countries have participated in high-value chains for fruits, vegetables, and horticultural crops, and they have been very
successful. They result in higher amounts of waste, he commented, but maybe that is good.
De Gorter noted most food loss occurs on the farm in developing countries, while most food loss is at the consumer level in developed countries. He asked how reducing waste in developed countries would help poor countries. He observed that the five elements of the ZHC are interdependent. Putting more emphasis on the first four elements will reduce food waste if those first four are achieved. He noted the need to reform some current policies related to agriculture. For example, in India, he said, interregional trade is blocked and there is government pricing and stockholding. De Gorter suggested that a review of current policies for food and agriculture with an assessment of how they affect food waste would be useful. In other words, he suggested, “go to the root cause of problems rather than focus on food waste.” There are opportunity costs to focusing funds on food waste, he said, including rural development, food security, and agricultural development.
Laurian Unnevehr said her personal perspective about the behavioral aspect referred to by de Gorter is that it is difficult to buy a reasonable portion at many restaurants. She noted that one-quarter of U.S. households are single-person households and the same may be true in Europe. Furthermore, she noted, as populations age, even in middle-income countries, the proportion of single-person households will increase. This intensifies issues related to purchasing only what will be eaten. She asked whether de Gorter’s behavioral colleagues might consider developing or evaluating shopping planning tools. She suggested what is needed are different interventions to get at the interface between what people buy, what they need to eat, and what they are going to cook.
Jensen asked de Gorter to elaborate on induced innovations that come when policies that may not necessarily be focused on a problem have a longer-term effect. As examples, she mentioned environmental issues—the innovations that have happened in seed technology that relate to reduced pesticide use, or policies to reduce overuse of fertilizer that come from increasing the tax on fertilizers.
De Gorter replied with an example. He said taxing greenhouse gas emissions at the consumer level or along the supply chain would induce technological innovations. He went on to say that if there were a market failure, then there would be public support for technologies because they are a public good. He said that if losses at the farm level in developing countries are due to market failure, then public good investment in transportation and cold storage would be a solution. Jensen added that there
are implications that come about with certain policies or changing relative prices by adding taxes. She noted research and development would have an effect in developing countries as well as in the United States.
De Gorter responded that he thought Jensen was going to comment on a sociological component of the current process. The current movement focused on food waste by nongovernmental organizations and international organizations heightens public awareness and shifts people’s mentality, which he referred to in a sense as an induced innovation.
FINAL THOUGHTS FROM MARY MUTH
Muth provided a few concluding comments, first focusing on the objectives outlined for the workshop in Chapter 1. She said she had heard expressions of interest from some participants in estimating food availability and food loss separately for food at home and away from home. She noted that some of the data sources mentioned during the workshop might be able to creatively accomplish this estimation.
She noted that some participants expressed a strong interest in reevaluating the conversion factors used at the processing level, particularly those that have remained fixed over time. She suggested a reevaluation of the factors, possibly collecting more information at the farm and manufacturing levels to try to improve the estimates. She expressed encouragement for innovations that could help keep the series up to date over time to better reflect changes due to technology.
Muth noted that many participants during the workshop discussed farm-level waste and whether it is waste when crops are left unharvested for economic reasons. She suggested it may be worth reviewing why waste occurs at the farm level to determine whether there are reasons for measuring such losses that are consistent with the objectives of the ERS for its Food Availability Data System (FADS).
She noted that a participant had observed that food loss estimates are point estimates, and that consideration of uncertainly levels, perhaps through simulation, would be useful to obtain a range of estimates of food loss or perhaps develop confidence intervals. She said she thinks this might be an area worth considering.
Muth noted that many participants discussed the definitions of waste, loss, and other elements of those definitions. She suggested ERS might consider waste and loss along the supply chain to evaluate what waste is and what it is not at each point. It also may be worthwhile, she suggested, for ERS to consider whether the loss-adjusted food availability (LAFA) data as they are constructed now are sufficient for the current uses of the data, and whether they are satisfying ERS objectives for providing the data.
Muth closed by saying these points stood out for her during the workshop, but there were other important ideas that might also be useful. She suggested evaluating ideas by considering how well they meet ERS objectives for FADS.
FINAL THOUGHTS FROM JEAN BUZBY
Buzby stated that every presentation provided her a lot of information and food for thought. She summarized some of the ideas she gleaned
- Doing more exploratory analysis of some of the data resources mentioned by Alanna Moshfegh (see Chapter 4), particularly trying to identify commodities associated with imports and exports of processed or multi-ingredient products and incorporating them into the FADS system.
- Estimating food at home versus food away from home using some of the data highlighted in Chapter 4.
- Getting a better assessment of the magnitude of food donations, rendering, and transfers to thrift stores.
- Using scanner or other types of data as a comparison with ERS estimates to see if improved estimates might be derived.
She closed by thanking the speakers and audience for an interesting and useful workshop.
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