Food Fight!

The Natural Resources Defense Council (NRDC) estimates that as much as 40% of the food produced in the U.S. ends up uneaten and discarded as waste.  That is an extraordinary hemorrhage from the country’s economy.  No oil and gas company would allow 40% of its product to leak out of the pipes and onto the ground. 

Why is the food industry seemingly so inefficient?  Importantly, not all food loss is at the farm ‘well-head’.  A good share of food is thrown away from restaurant tables and out of our own refrigerators.  Furthermore, the food production and processing industry is highly disaggregated with numerous small operators of many different types from large commercial agriculture operations to small organic farmers and to even smaller food product companies.  Food gets wasted at every step along the supply chain.

Few societies are as attuned to the problem of food waste than South Korea.  Traditional Korean meals feature numerous side dishes arrayed around the main course.  Called ‘banchen’, these taste treats are often left unfinished.  The country’s agriculture agency estimates South Koreans generate 130 kilograms (286 pounds) of food waste per capita each year.  Europeans seem downright sensible wasting only 95 kilograms (209 pounds) per person annually.

To deal with the food waste problem South Korea has taken drastic measures.  First, in 2005 landfill dumping of food was banned.  In 2013, food waste recycling was made compulsory using special compostable bags.  Automated bins collect and weigh the bagged food waste, charging an ID card equipped with radio frequency identification technology.  Bag sales cover about 60% of the cost of recycling.  These drastic measures increased food recycling to 95%, providing useful fertilizer and animal feed.

South Korean householders can avoid the cost of the bags and collection by putting their waste in a home composting system.  The Korean agriculture agency reports urban farming as increased dramatically since the food waste mandates were put into place. In Seoul, the nation’s capital, at many as 170 hectares (420 acres) of urban farms have been started up on tiny plots between buildings or on rooftops.

South Korea’s solution at the downstream end of the food chain may not work in other countries.  In the U.S. where the market economy if held nearly sacrosanct, it seems there should be a rush of capitalists who can see the opportunity in the food loss problem.  The complexity of the food industry should not be a deterrent to any entrepreneur with an idea and ambition.

The next few posts will take a look at food waste solutions. 

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.