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    10,149.240
    -70.640
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  • OTVI.USA
    10,139.180
    -75.530
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  • TLT.USA
    2.500
    0.000
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    151.000
    5.000
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  • DATVF.ATLPHL
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    -0.3%
  • DATVF.CHIATL
    1.738
    0.070
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  • DATVF.DALLAX
    1.102
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  • DATVF.LAXDAL
    1.495
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  • DATVF.SEALAX
    0.835
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  • DATVF.PHLCHI
    0.975
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  • DATVF.LAXSEA
    2.250
    0.072
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  • DATVF.VEU
    1.503
    0.038
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  • DATVF.VNU
    1.448
    0.036
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  • DATVF.VSU
    1.299
    0.009
    0.7%
  • DATVF.VWU
    1.542
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  • ITVI.USA
    10,149.240
    -70.640
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  • OTRI.USA
    3.780
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  • OTVI.USA
    10,139.180
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  • TLT.USA
    2.500
    0.000
    0%
  • WAIT.USA
    151.000
    5.000
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Commentary: The challenges ahead for food supply chains

FreightWaves features Market Voices – a forum for voices with unique knowledge of numerous transportation/logistics/supply chain sectors, as well as other critical expertise.

Two weeks ago I returned home after walking 15 miles. I was starving. I was also excited at the prospect of eating two or maybe three bananas – we had bought a bunch from the grocery store just a few days earlier. To my dismay there were no bananas when I got home. They had all gone bad and had to be thrown away. I was pretty upset that we had let so many bananas go to waste. It didn’t help that I hadn’t eaten all day.

On Sunday, July 7, 2019, I was watching BBC World News on TV when a new series called Follow The Food came on. It is a multimedia series produced in collaboration with BBC Future. The series “investigates how farmers, researchers and innovators are working to secure a sustainable long-term future for the global food supply chain.”

In this article I will spend some time exploring the challenges faced by the world’s food supply chains. Quoting from Follow The Food: “These are urgent and unprecedented challenges. How will we produce enough food without further damaging the environment as the global population rises?”

Understanding the difference between food loss and food waste

I did not know this until I started spending more time thinking about this problem as The New York Supply Chain Meetup planned its April 2019 meetup on the theme Reducing Food Waste in The Supply Chain: Food Loss and Food Waste are two different things.

According to the United Nations’ Food and Agriculture Organization (FAO), “Food loss refers to any food that is lost in the supply chain between the producer and the market. Food waste, on the other hand, refers to the discarding or alternative (non-food) use of food that is safe and nutritious for human consumption.”

Food loss occurs when tomatoes, okra, onions, peppers and other crops cultivated by small-scale farmers in Navrongo in Ghana’s Upper East Region cannot readily get their produce to the big markets in Tamale, Kumasi and Accra. This can happen because existing supply chain logistics networks and infrastructure are inadequate. It can also happen because there’s a lack of transparent, relevant and timely information about supply and demand. The absence of adequate food storage and processing technology also contributes to the occurrence of food loss. This is a drastically simplified example of food loss, however; as you might imagine it’s a complicated phenomenon, with many contributing factors that differ from one region of the world to another.

The incident I described at the beginning of this article perfectly captures a microcosm of food waste. Food waste happens in homes and at food establishments, in grocery stores and markets – wherever people are interacting directly with food that is ready for consumption.

The numbers are staggering

According to the FAO:

  • One-third of all the food produced every year around the world is lost to food loss and food waste.
  • Food loss and food waste amounts to about $1 trillion annually split between $680 billion in the developed world and $310 billion in the developing world.
  • On a per capita basis, food waste in Europe and North America is more than 10 times the equivalent in Sub-Saharan Africa, south and southeastern Asia.

According to the World Food Programme, 821 million people – or one out of every nine people in the world –  go to bed hungry every night.

The United Nations’ population projections suggest that the world’s population will increase to approximately 8.5 billion, 9.7 billion and 11.2 billion people in 2030, 2050 and 2100 respectively. Most of the growth will occur in the developing world, with more than half of all this growth projected to take place in Africa. If things remain the way they are, the number of people who go to bed hungry every night will only continue to grow.


The conundrum: productivity and waste, loss and need

In studying the topic of problems in global food chains, the following conundrum presents itself. First, the most commercially developed and productive regions of the world in terms of food production also tend to be the parts of the world with the highest occurrence of food waste. Second, the least commercially developed and productive regions of the world in terms of food production also tend to be the parts of the world with the highest occurrence of food loss. In other words, in the developed world, food is mostly wasted after it has made it to retail establishments and to consumers. In the developing world, food is mostly lost before it even makes it to retail establishments and consumers.

In “Fixing the weak links,” an article about pharmaceutical supply chains in Sub-Saharan Africa, Roche – the Swiss pharmaceuticals giant, observed markups of between 40 percent and 700 percent as critical medications traversed the supply chain from producer to end consumer.

Areas of the world with the least developed and sophisticated supply chains also face the greatest occurrence of food loss. The example described by Roche illustrates the difficult nature of the problem posed by broken or non-existent supply chains in developing regions of the world – food loss is exacerbated by inadequate storage and processing facilities, and very fragile transportation infrastructure and networks. What food produce successfully makes it all the way to the end-consumer reflects significant markups resulting from the poor state of food supply chain logistics.

This is a complex problem that is difficult to solve

Solving the problems that lead to one-third of all the food that is produced in the world to be lost or wasted is an enormous challenge. Broadly speaking, it requires:

  • New methods of agronomy to increase overall agricultural efficiency and productivity in the poorest regions of the world.
  • Significant investments in building and maintaining the supply chain infrastructure that is required to enable the efficient movement of the food that is currently being produced in developing regions of the world from producers to end consumers. This includes investment in food storage and food processing technology. In the developed world, governments must invest in research into how the ongoing, accelerating and severe changes in climate will affect food supply chains and then enable organizations in the public and private sectors to implement the required changes.

There are other issues related to international trade agreements that govern the export and import of food around the world, but those would be too complicated for me to attempt to tackle in this article.

Another significant factor contributing to food waste that must change for the problem to be solved is consumer behavior. At home we buy more than we can store or eat within a reasonably short time. What we do not use goes to waste. In restaurants, we order more than we can eat in one sitting, and the inconvenience of carrying cooked food back home leads us to leave our leftovers behind – leading to more waste. Many restaurants serve portions that have more food than most people can reasonably be expected to consume in one sitting – this leads to significant waste. We each know the examples well. We are surrounded by them.

Producing food is a resource-intensive process. Food loss and food waste also mean that we are losing all the production inputs that go into producing that food in the first place.

There are big changes that must happen, changes that require innovation in food supply chains and new technology. At the same time, while we await those big changes, I am heading downstairs to see if there are any bananas in the kitchen. I could use a snack, and I do not want any more bananas to go to waste in our house.

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Brian Aoaeh

Brian Laung Aoaeh writes about the reinvention of global supply chains, from the perspective of an early-stage technology venture capitalist. He is the co-founder of REFASHIOND Ventures, an early stage venture capital fund that is being built to invest in startups creating innovations to refashion global supply chain networks. He is also the co-founder of The Worldwide Supply Chain Federation (The New York Supply Chain Meetup). His background covers the gamut from scientific research, data and statistical analysis, corporate development and investing for a single-family office, and then building an early stage venture fund from scratch - immediately prior to REFASHIOND. Brian holds an MBA in General Management, with a specialization in Financial Instruments and Markets, from NYU’s Stern School of Business. He also holds a Bachelor’s Degree in Mathematics & Physics from Connecticut College. Brian is a charter holding member of the CFA Institute.

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