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How can SMEs reduce food loss in agribusiness?

One of the biggest obstacles to achieving food security is food loss and waste. Each year, up to a third of the food produced in the world for human consumption is lost or wasted, according to the Food and Agriculture Organization of the United Nations (FAO).

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In Latin America and the Caribbean, annually, 11.6% of the produced food is lost from the production stage to processing, amounting to 220 million tons per year, according to the study "Food Losses in the Agribusiness Sector: The View of Companies in Latin America and the Caribbean," published by the IDB.

The reasons for food losses are varied. Among them, we can mention the use of inappropriate inputs in production activities, errors in planning during the harvest stage, inappropriate production, harvesting, and handling practices, deficiencies in storage conditions for perishable products.

Also, the lack or insufficiency of equipment, transportation, and storage capacity; poor organization, coordination, and communication among the actors in the food chain; insufficient infrastructure; lack of information and even the inability to anticipate market conditions.

Of course, there are systemic causes that are beyond the control of producers but impact food waste, such as institutional and regulatory frameworks, quality standards of buyers, emergency or crisis situations, natural disasters, climatic changes, and conflicts. And we must not forget the inappropriate behavior of consumers.

This diversity of causes for food loss or waste shows the complexity of addressing the problem. In addition, other variables must be taken into account when thinking about solutions, such as the fact that food waste also varies by sector, product, and even the country where it occurs.

However, there are basic lines of action that small and medium-sized enterprises (SMEs) can follow to reduce or avoid food loss in the production process and thus ensure greater availability. And, with this, contribute to reducing food insecurity.

A challenge with potential benefits

Food loss is a global problem and is related to another of the great challenges of today, which is to ensure sufficient and quality food for all people.

Small and medium-sized enterprises in the agri-food sector must face these challenges, so it is essential to design solutions according to their scope but also emphasizing the positive impacts that can bring.

Some reasons for SMEs to get involved in reducing or avoiding food loss are:

  1. Increases the availability of food and, therefore, makes it more affordable for consumers without increasing production or continuing to deplete natural resources.
  2. Contributes to reducing dependence on imports.
  3. Helps save money by reducing the use of inputs for food production.
  4. It is a common concern worldwide. Therefore, thinking about solutions is a topic that unites us.
  5. Reducing food loss in production and supply chains by 2030 is part of the Sustainable Development Goals.

Losses associated with production

Before discussing possible solutions, it is important to distinguish between food loss and waste. According to the FAO, it is considered a loss if it occurs in the production, post-harvest, storage, or transportation stages, while waste is associated with decisions to discard food that still has value; that is, they are usually related to the attitudes of sellers, food service, and end consumers.

So we will focus on talking about losses since they occur during production. In fact, more than 75% of these losses occur in the first three stages of the value chain: during production (39%), handling and storage (22%), and processing (15%), according to the IDB study.

It is essential to understand that food loss associated with production does not necessarily mean inefficiency in production processes. Removing this negative connotation from food loss is crucial for thinking about effective solutions.

How can SMEs avoid food loss?

Reviewing the internal processes of your business is the first step in implementing actions to reduce or avoid food loss, as it will allow you to identify practices or processes that are causing or could cause losses.

Here are some guidelines to start:

  1. Set goals and create an action plan to reduce food loss, oriented according to the magnitude of the loss and waste in your activities.
  2. Keep a record that facilitates planning, monitoring, and control of your operations.
  3. Incorporate strategies and best practices related to loss reduction into employee training programs and guidelines for clients.
  4. Handle products properly, avoiding roughness or carelessness, especially during packaging, transportation, loading, and unloading.
  5. Stay informed about issues that can anticipate losses, such as prices, markets, or weather forecasts.
  6. Avoid practices that may cause losses, such as last-minute order cancellations, unilateral or retroactive changes in contracts.
  7. If you export, understand the safety and quality specifications of your target market to know how to comply with them.

Solutions based on a circular model

While there are various proposals to reduce food loss, we will focus on those that promote solutions based on a circular economy approach, which proposes an alternative to the current linear model of production, following the logic of extract-produce-waste.

On the contrary, a circular model seeks to redefine economic growth by unlinking it from the infinite consumption of natural resources. In simple terms, the circular model is based on the use of renewable energies and materials.

The circular model is based on three principles. We will use these three principles as a parameter to explore solutions to reduce or avoid food loss in the agri-food value chain of SMEs.

Principle 1: Eliminate waste through a reparative and regenerative design of materials, products, systems, and business models.

What actions can you implement?

  1. Diversify crops or transition to crops with a lower environmental impact, for example, from animal proteins to plant proteins.
  2. Use technologies and packaging presentations that are effective in maintaining the safety and quality of products, prioritizing environmentally sustainable packaging materials.
  3. Develop alternative marketing channels, such as marketplaces and e-commerce, to link surplus or imperfect products with consumers seeking lower prices, such as distributors, institutional kitchens, or food banks.
  4. Develop vertical integration of production with processing so that you can produce processed foods, allowing you to expand markets. An example could be the dehydration of fruits and vegetables for the production of other products such as chips or purees.
  5. When possible, invest in R&D to optimize the use of products and alternative food production methods.

Principle 2: Keep products and materials in use

What actions can you implement?

  1. Use waste or by-products for other purposes, such as animal feed, as fertilizers, or to manufacture biologically based products. Two examples of this are the use of food peel as animal feed and the use of offal or bones to make new products or sell them without processing, even at a lower price.
  2. Seek industrial symbiosis, meaning that your waste or by-products can be used as raw materials in another industry.
  3. Reuse lower quality products to make new products or by-products, such as superfood ingredients or basic products like flours.
  4. Develop new materials from waste.

Principle 3: Regenerate natural systems

What actions can you implement?

  1. Generate bioenergy or compost with waste. This is an alternative to reduce losses associated with lower quality products or those left in the field.
  2. Raise awareness among consumers

Although we have focused on discussing actions that SMEs can take to reduce or avoid food loss, they can also influence consumer practices that lead to food waste.

Here are some proposals that SMEs can implement to raise awareness among consumers:

  1. Avoid promotions that encourage consumers to buy excessive amounts of food.
  2. Consider reducing the prices of packaged perishable products approaching their preferred consumption and expiration dates, or unpackaged items near the end of their commercial life.
  3. Encourage consumers to select products and adopt attitudes that reduce waste.
  4. Conduct campaigns to promote social acceptance of products that, although suitable for human consumption, are wasted due to the rejection of local consumers.
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