Supply chain inefficiency to blame for majority of wasted food

Gurjit Degun
27 January 2014

27 January 2014 | Gurjit Degun

Almost 95 per cent of food loss and waste stems from supply chain inefficiencies in poorer countries, according to the World Economic Forum (WEF).

A report by the WEF, in collaboration with Bain & Company, said that supply chain inefficiency contributes “significantly” to the 1.3 billion tons of lost food each year.

Enabling Trade: From Valuation to Action found overly strict product standards, poor transportation infrastructure, border delays, and poor business climates are the main supply chain barriers for agriculture.

The report said improvements in the supply chain can increase flexibility and cut losses. It added that better border management can “dramatically improve” supply chain efficiency. In Thailand and Kenya, process improvements have more than halved export times.

It said: “Lost or wasted food costs over $750 billion (£453 billion) per year. Yet, agriculture and consumer policy remains focused on production and retail improvements, with insufficient action on supply chain and trade connections.”

The study called for “deeper behind-the-door reform” to meet the world food demand. It also said there needs to be “urgent implementation” of the Bali trade agreement which aims to simplify procedures for trading across borders.

The report’s call for implementing supply chain reform builds upon earlier Enabling Trade findings, that reducing supply chain barriers could increase global GDP six times more than eliminating all tariffs.

“The report highlights an important new opportunity for trade liberalisation and economic growth, combining border and behind-the-border reforms to strengthen the competitiveness and job-creating potential of key economic sectors,” said Richard Samans, a managing director of the WEF.

“Such a strategy has the potential to help countries and regions translate the recent WTO agreement on trade facilitation into tangible economic gains.”

The WEF is also encouraging companies to focus on building “circular supply chains” because it believes it will help generate $1 trillion (£603 billion) a year by 2025.

Towards the Circular Economy, a separate report, said this would help increase the rate of recycling, reuse and remanufacture. “This would maximise the value of materials when products approach the end of their use,” the report said.

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