Oct 28, 2020
The Circular Economy and Food Waste in the Upstream Supply Chain
Utilising Industry 4.0 to strengthen the circular economy in addressing Europe’s food waste problem
Key Takeaways:
- 30% of total food waste occurs in the upstream stages of the food supply chain
- Current circularity initiatives and policy only focus on downstream stages of the food supply chain, overlooking upstream.
- Bringing about circularity in the upstream stages is hindered by a lack of data, lack of agreed food waste definitions and questionable circularity practices.
- Industry 4.0 technologies can overcome data issues and optimise resource management, thereby lengthening product lifecycles.
- However current applications could be expensive and questions surround its scalability.
- Innovate UK’s pilot model may provide a model for testing appropriate solutions.
What is the circular economy?
The circular economy is defined as all the activities aimed at reducing, reusing and recycling materials throughout the product value chain. However, to make this more relevant to the food supply chain I am going to use Vlajic’s definition of the circular supply chain as ‘a connected network of organisations involved in the design and management of value-adding processes and value recovery of a product, component or material’.
Where food waste occurs across the food supply chain
Almost 30% of food produced globally is lost or wasted at some point along the food supply chain. Not only does this come at a huge global economic cost of $750bn, but for every 1 tonne of food that is wasted, 1.9 tonnes of CO2 is produced.
In Europe food waste across the supply-chain is dealt with cross-sector directives and circular economy recommendations. I argue that these are skewed towards the downstream food supply chain and that the lack of data and questionable circularity practices mean upstream food waste is not being properly addressed.
At the moment a lot of innovation is aimed at tackling household food waste several government food waste guides as well as a wealth of startups like Too Good to Go, Olio and Winnow Vision. Because of the lack of digital innovation aimed at the upstream stages of the food supply chain I’m going to look at the potential for Industry 4.0 technological solutions and the use of the Innovate UK accelerator model to test the technologies scalability.
Tackling food waste in Europe, and related problems
The types of waste in the upstream stages of the food supply chain are myriad. This could be due to:
- Complying with corporate marketing standards at the processing stage
- Pests destroying crops or overproduction of produce
- Or by-products from the creation of food products.
Currently food waste in Europe is being tackled through a mixture of policy and corporate programmes. Throughout Europe there have been a series of directives, the French ban on food waste, the EU Waste Legislation and most importantly the EU’s Closing the Loop action plan.
Corporations are also waking up to the importance of the problem with 60% of the worlds largest food companies drawing up food waste reduction programs. However, there are two issues with current approaches in Europe:
1. Policy formulation that promotes the circular economy to address food waste is flawed.
The main policy formulation has been the EU’s Closing the loop — An Action Plan for the Circular Economy which was introduced in 2015. A particular edition to the most recent EU policy were its amendments to waste and landfills, with food waste a priority. However these policies were flawed for two reasons:
- Firstly these policies mainly focus on waste in the retail and household stages, overlooking upstream stages due to the lack of data. Recently the EU Fusions project, in their assessment of food supply chains across EU member states, revealed the ‘lack of data was particularly acute for the processing sector and primary production sector — there are few measurements of waste and wide differences in the definition of food waste in these sectors’.
- Secondly, because of the diversity of food waste at these stages, and due to the lack of data, all-encompassing cross-sector policy and government instruments (tax, subsidies & regulation) don’t bring about the desired outcomes of reduced food waste through a circular methodology. This is compounded by the fact that information on food waste & surplus management is highly sensitive within the corporate arena.
Therefore there is currently a disconnect between the EU and governments setting cross-sector waste targets for communities and businesses, whilst not being completely clear as to the current levels of food waste in the system. This could be problematic as targets set may not be able to be met by upstream stages to the specific nature of operations.
2. Not all the circular solutions put forward in the EU’s Closing the Loop strategy are entirely circular.
This initiative put emphasis on the ‘waste-to-energy’ strategy. However, whilst a sustainable option, this is following a linear mode of production by converting wheat into biofuel, for example, which is then burnt to produce energy. In doing so it destroys the original nutritional value of that wheat. Fundamentally the circular economy emphasises keeping product value within the flow, as you’d expect burning destroys value.
This does not mean to say that policy is the wrong way for bringing about a circular economy, it is to say that the way it is currently being implemented is problematic. More informed evidence-based policy could be useful, however with the research into food waste in upstream stages of the supply chain being in its infancy this policies are difficult to formulate.
How Industry 4.0 has a role to play in reducing food waste in upstream supply chains
However Industry 4.0 technologies could play a big role in optimising upstream stages of the food supply chain. Particularly making farming and manufacturing ‘smarter’ through the introduction of Internet of Things (IoT), Data Analytics and Artificial Intelligence (Ai) businesses could be provided with predictive insights on operations, drive real-time operational decisions and redesign business models.
How could this be put in practice? One of the main issues in tackling food waste in the upstream supply chain was the lack of, or poor quality, data that's used to formulate policy. Through things like sensors and semi-autonomous machines these processes can become increasingly data-driven. For example the use of data analytics helps optimise the management of resources in farming through the efficient use of nutrients and water by proper dosing.
If we think about some of the problems that lead to food waste in the manufacturing stage there’s technical malfunctions, overproduction of food and inconsistency of manufacturing processes leading to product damage to name a few. Having semi-autonomous systems and smart machines could help predict malfunctions at early stages, optimise quantities of food needed for production and ensure consistency of the process to prevent any damages or waste.
I would argue that the optimisation of production and processing sectors Industry 4.0 technologies meet the criteria of the circular economy through:
- Optimisation and efficiency with resources will mean reduced waste produced from activity.
- Taking the earlier definition, these are value-adding processes, ensuring better quality early in the supply-chain can help extend the product life-cycle. For example, the detection of pests & disease in crops by drones, preventing the waste of these crops, thereby extending the life of the crop.
In principle Industry 4.0 technologies could aid the solving of current policy problems in relation to introducing circular concepts to tackling problems in food waste in upstream stages. Firstly, through data collection methods the problem of food waste in upstream stages could be better understood and therefore the lead to more informed policy relative to the specific food waste problems in upstream stages. Secondly, Industry 4.0 technologies present a viable circular model that businesses can adopt, maintaining closed-loop flows and lengthening the product lifecycle.
But there are always drawbacks…
Whilst heralded by many authors as a panacea to the problem of food waste there are issues with using Industry 4.0 technologies. Installing these technologies are very expensive and therefore questions around scalability should be raised. This also asks a deeper question of which farmers and manufacturers waste food? Is it smaller-scale farmers and processors or does the problem lie with bigger businesses? Understanding this could assist governments and corporates when deciding how to encourage technological adoption in these sectors.
There are other issues as well. Take big data and analytics for example — big data doesn’t always mean better data. There can be problems around its objectivity and accuracy meaning that it won’t always represent the truth. Thinking about the wider ramifications of digital adoption, autonomous systems and smart machines will threaten job security of the many who work in these industries. Will industry bodies and government be inclined to encourage the adoption of digital technology if it threatens thousands of jobs? Therefore there are wider socio-economic consequences as to why more circular techniques may not be incorporated.
Could the Innovate UK model provide some answers?
Taking inspiration from Innovate UK there are methods to test and experiment with potential solutions and their scalability in industries. Innovate UK run accelerators to address challenges within specific industries. They make a call for applications from startups to address the challenge set in conjunction with a company in the industry. After the rigorous applicant screening successful startups are then given funding from Innovate UK to pilot their solution in-situ with the company in the industry. This pilot will give an indication to the cost-effectiveness of the solution and market validation as its tested with a company in the industry.
Conclusion:
- EU policy in promoting the circular economy to prevent food waste in the upstream stages of the supply chain is problematic.
- This is because of the lack of data that food waste directives are set on, and the circular policy recommendations given do not promote entirely circular options.
- The adoption of technology could be very beneficial in bringing about circular practices to manage food waste in the upstream stages.
- The wide scale adoption of technology would be problematic because as it is very expensive (and therefore not scalable amongst all farmers & manufacturers)
- Data cannot always be trusted and further adoption could have negative socio-economic outcomes like job losses.
- An approach similar to the Innovate UK strategy, of government subsidies for technology, could be most appropriate.
- The rigorous screening and the live testing with a farm or food processor increases the likelihood of a scalable solution
