Beyond Your Grocery Bill: Economy-Wide Benefits of Reducing Food Loss and Waste
If you’re on a tight budget, personal finance experts (and most parents) will tell you to make a budget, write a list before going to the grocery store, and increasingly, buy only what you intend to use and use all of what you buy without wasting any food. Yet globally, 30–40 percent of food produced is either lost or wasted throughout the food system from farmer to consumer.
The impacts of food loss and waste (FLW) extend beyond our refrigerators and wallets with global implications for the climate, economic development, job growth, food security, nutrition, and water security, sanitation and hygiene. The Sustainable Development Goal and target (SDG) 12.3 recognize the importance of addressing the extensive problem of FLW and aims to reduce it by half by 2030. A new USAID-funded IFPRI study reveals the economy-wide benefits of halving FLW in Bangladesh, Kenya, and Nigeria and offers valuable lessons for global efforts to eliminate hunger, end poverty and combat climate change.
What’s the Problem?
FLW negatively impacts countries’ economies, causing approximately 1 trillion dollars of lost revenue globally, with $4 billion of that lost annually in Sub-Saharan Africa alone. Many of USAID’s partner countries lose up to 35 percent of their food annually at multiple points along the value chain: in fields due to spoilage and pest damage; while being stored; in transit; and when it goes unused by consumers. When food rots, it emits methane, a powerful greenhouse gas with 84 times the warming potential of carbon dioxide over a 20-year period. As a result, FLW contributes approximately 8–10 percent of all greenhouse gas (GHG) emissions.
Reducing FLW can not only benefit the climate but can also improve nutrition and the economy, producing triple wins: putting more nutritious food on the table; generating greater income for farmers and more jobs along the value chain, especially for women and youth; and reducing methane emissions from food that would otherwise go to waste.
A Novel Country-Specific Model of Achieving SDG 12.3
FLW has been studied relatively well, but most existing studies measure losses within value chains independently from one another. This approach potentially underestimates the scale of the problem given the linkages across agrifood value chains. Therefore, IFPRI’s economy-wide study utilized equilibrium models to examine the impacts of halving FLW separately within and simultaneously across all stages of the food supply chain, mirroring the SDG 12.3 target of halving food waste at retail and consumer levels. Additionally, the study modeled country-specific impacts using equilibrium models that account for the unique structural features of the respective economies.
Reducing FLW Has Positive Impacts on GDP, Employment and Poverty
The IFPRI model that examined the implications of halving FLW across all stages of the food supply chain showed substantial economy-wide impacts on gross domestic product (GDP), employment and poverty reduction. Halving FLW in Bangladesh, Kenya and Nigeria increased GDP at market prices by 3.1–5.3 percent. The largest gains in GDP are recorded when FLW is reduced in the production stage. FLW reductions increased employment by 1.3–3.4 percent as labor demand expanded, particularly in the off-farm components of the agrifood system (e.g., food processing, food trade, and transport). Poverty decreased 2.5–4 percent, with the largest decreases occurring in rural areas.
Halving FLW Can Improve Diet Quality While Feeding Millions of Hungry People
Food loss is also a missed opportunity to deliver needed calories and nutrition to food-insecure populations. These losses equate to one out of every four food calories intended for human consumption being lost, enough to feed two billion people for two years. The IFPRI models demonstrated that halving FLW increased consumption by 4.7–7 percent as a result of lower consumer prices and increased producer incomes. Consumption increased more rapidly in poor households, as increased availability and lower prices of food will generally benefit poor households. Diet quality, measured by diet deprivation, improved 2.5–6.9 percent across the three countries, with the strongest effects occurring when FLW is reduced at the production and post-harvest stages. Lastly, halving FLW decreased undernourishment by 2.7–4.2 percent, particularly in rural populations in Nigeria and Kenya. In these three countries, halving FLW lifts over 14 million people above the calorie threshold, with over 60 percent of those people living in rural areas.
Additional Studies are Needed to Appreciate the Triple Wins of Reducing FLW
There are a few caveats to the study, and additional research is needed. The IFPRI study uses global FLW data, which may lack the accuracy of country-specific survey data. Second, the model is not equipped to measure the environmental or social benefits of halving FLW; therefore, the environmental impacts of achieving SDG 12.3 are understated. Lastly, the costs of policies or investments required to halve FLW are not included in the model. Obtaining more accurate FLW estimates, accounting for positive environmental externalities and costing the policy and investment options needed to reduce FLW are all important areas for future research.
Seize Triple Win Opportunities by Supporting Policies that Reduce FLW
Projections of increasing GDP by 3.1–5.3 percent, increasing employment by 1.3–3.4 percent and decreasing poverty by 2.5–4.4 percent, as modeled by the IFPRI study are huge development and economic wins that require the attention of Ministers of Finance. Ministers of Health and Agriculture have reason to be excited that reducing FLW in these countries could lift over 14 million people above the calorie threshold, increasing consumption by 4.7–7 percent, improving diet quality by 2.5–5.5 percent, and decreasing hunger by 2.7–4.2 percent.
While these projections are extremely exciting, halving FLW isn’t without its challenges, but considering its potential impacts to greatly reduce poverty, improve food security and nutrition, and mitigate climate change, it’s certainly worth the effort.
For specific ways to work programmatically on FLW, check out the USAID Kitchen Sink FLW Podcast. For the policymakers eager to see the increased jobs, GDP growth and decreased hunger, check out the “Target, Measure, Act” approach that sets up the right policy environment to tackle FLW. From our own wallets to national GDP, FLW is a costly mistake that is taking food off our tables and harming the planet as it rots in landfills. Let's tackle FLW, for the benefit of our wallets, our planet and our future.