Food waste is an issue of enormous scale, with over 30% of all food produced globally ending up as waste. This amounts to over 1.3 billion tons per year (1). With its outsized carbon footprint and implications for food security and sustainability, food waste presents both a significant challenge and opportunity for innovation.
This article explores the current state of food waste business concepts that can turn this waste into value, what it takes to start a food waste business, and real-world examples of such enterprises driving change.
Defining Food Waste and its Impacts
Before diving into solutions, it is important to align on what constitutes food waste and why it matters. The Food and Agriculture Organization of the United Nations defines food waste as:
“The removal of food from the food supply chain which is or was at some point fit for human consumption, or which has spoiled or expired, mainly caused by economic behaviour, poor stock management or neglect.” (2)
Food waste occurs across the supply chain, from initial agricultural production all the way to the consumer level. It has major detrimental impacts, including:
- Economic Impacts: Globally, food waste carries a price tag of over $940 billion per year. Food is wasted even as food insecurity affects millions. (1)
- Environmental Impacts: Rotting food waste releases methane, a potent greenhouse gas. Overall, food waste accounts for 8-10% of global greenhouse gas emissions. (3)
- Social Impacts: With ongoing issues of hunger and malnutrition globally despite adequate food capacity, curbing food waste presents an opportunity for improving food security.
Tackling the complex issue requires innovation across sectors, technologies, and business approaches. The rest of this article spotlights opportunities for entrepreneurs, small food waste businesses, and intrapreneurs (innovators within existing companies) to drive this change.
The Scale of the Food Waste Problem
To grasp the scale of the opportunity around mitigating food waste, it is essential to understand how much is wasted globally and where it occurs.
Global Food Waste by the Numbers
- Over 30% or 1.3 billion tons of food produced for consumption is lost or wasted annually. (1)
- Fruits, vegetables, roots and tubers have the highest waste rates of any food type, representing 44% of global food waste. (4)
- Over 50% of food waste occurs at the household consumption level. (5)
- Food services and restaurants represent 12% of waste in developed countries and 23% globally. (6)
- Initial agricultural production and post-harvest handling accounts for around 15% of total waste in developed nations and over 40% in developing countries. (7)
Table 1 provides further context on waste levels across global income levels:
Table 1: Per Capita Food Waste by Country Income Level
| Income Level | Per Capita Food Waste (Kilograms/Year) |
|---|---|
| Low Income | 6-11 kg |
| Lower Middle Income | 6-11 kg |
| Upper Middle Income | 39-40 kg |
| High Income | 79-115 kg |
Drivers and Stakeholders of Food Waste
Solving the complex food waste crisis requires understanding its root causes across the system:
- At the Agriculture & Production level, waste occurs from damage during harvest, overproduction relative to demand, and failure to meet aesthetic standards.
- In Storage & Distribution, challenges with storage infrastructure, cold chains, and transportation lead to spoilage.
- At the Retail level, overstocking, confusion around labels like ‘Use By’ vs ‘Best Before’, and last-minute promotions drive waste.
- In Food Service channels waste stems from large serving sizes, ingrained behaviors to provide overflowing displays of food, and health regulations preventing donation after food preparation.
- At the Consumer level, behaviors like over-buying, misunderstanding labels, and simply buying more than can be consumed contribute to waste.
While the problem has many sources, it also requires combined efforts across agricultural producers, distributors, retailers, restaurants, consumers, non-profits, and policy-makers to address it.
Food Waste Business Concepts Diverting Waste into Value
Entrepreneurs across the supply chain have stepped up with creative solutions to the food waste dilemma. The concepts transforming trash into treasure fall into three main categories:
A. Food Waste Recycling
The most direct approach to tackling food waste involves actually collecting and recycling it. Possible outputs range from animal feed to nutrient-rich agricultural inputs. Specific food waste business approaches include:
- Commercial Compost & Worm Farms: Worms and proper composting can rapidly decompose organic waste into nutritious outputs. Entrepreneurs can collect discarded food from households and businesses to feed worms at scale in urban areas. The resulting vermicompost has value as a soil amendment, nourishing plants while reducing the need for chemical fertilizers.
- Anaerobic Digestion Facilities: Anaerobic digesters provide an alternate pathway to extract value from food waste via breakdown by microorganisms in oxygen-limited environments. This yields biogas for heating and electricity generation along with a digestate output to fertilize soils.
- Upcycled Fertilizer & Animal Feed Production: Food waste carries ample intrinsic nutrition. This can be mechanically processed along with other agricultural residues into animal feeds as well as organic foliar sprays and fertilizers ideal for regenerative agriculture.
B. Technology to Enable Waste Prevention
In addition to recycling waste after it occurs, innovations in analytics, software, and inventory tracking can prevent its occurrence in the first place. Relevant solutions include:
- Demand Forecasting Analytics: Machine learning algorithms can now accurately predict demand across dishes, inventory levels, and fresh produce to minimize over-ordering and dramatically reduce waste from food services.
- Dynamic Pricing Engines: Perishable items like breads, meats, and ripe produce often get marked down or discarded instead of sold. AI-powered pricing engines tweak prices of items close to expiring automatically to ensure sale.
- Computer Vision Sensors: Camera sensors paired with AI can track fresh inventory levels, detect spoilage, know when shelves need restocking, and predict volumes to reduce waste.
- Supply Chain Tracking: Blockchain and IoT innovations better connect partners across the farm to table supply chain. This allows for understanding pinch points leading to waste and identifying solutions across storage, packaging, and logistics.
C. Innovative Food Waste Startups
In addition to recycling food waste directly or preventing its occurrence in the first place, some startups create value from the waste stream via creative upcycling. Concepts that turn trash into treasure include:
- Upcycled Food Production: Startups like Rise Products rescue so-called ugly produce and surplus ingredients to produce nutrient-rich chips, crackers, and cookies. This simultaneously mitigates waste and provides affordable access to healthy snacks.
- Food Waste-Powered Eco Solutions: Bio-bean, Skytree, and other firms have engineered systems running on waste fats and oils to power city lighting, heating, and transportation networks. This provides cleaner decentralized renewable energy alternatives from a surprising medium.
- Community Compost Hubs: Startups like Compost Pedallers provide streamlined organic waste recycling solutions to households and businesses with bicycles hauling compost to urban farms. This builds local circular economy ecosystems returning nutrients to soils.
- Innovative Animal Feed: Insects require far less land and water than traditional livestock. Startups like AgriProtein and Protix breed insects like black soldier fly larvae to consume food waste and become nutritious feeds for fish and poultry. This advances the principles of the circular economy.
While still nascent, such creative solutions provide glimpses into the future where waste from one stream provides abundant inputs to another to close resource loops locally and globally.
Starting a Food Waste Business
Turning concern for the nearly one-third of food never consumed into an impact-driven food waste business opportunity requires grit, creativity, and proper planning. Those hoping to launch their own food waste enterprise should consider several key factors:
1. Regulations & Legal Considerations
As food waste recycling intersect policy areas including waste management, agriculture, food processing, and land use, navigating local regulations is essential early on. Relevant legal considerations include:
- Waste Handling Permits: Transporting and handling food waste and agricultural residues requires approvals from municipal and state-level environment agencies.
- Land Access: Siting compost piles, waste processing facilities, and digesters requires navigating zoning laws and ordinarily requires sufficient buffer distance from residences.
- Food Safety Compliance: Generating animal feeds, soil amendments, or anything contacting the food supply from waste input requires strict oversight on feedstock inputs and process controls to ensure food grade safety.
2. Funding & Financing
Like any business venture, assessing options to finance operations and growth applies to food waste enterprises. Especially for recycling businesses requiring specialized vehicles, processing equipment, and facilities, sufficient capital is essential. Beyond tapping personal savings, common options include:
- Bootstrapping: Many food waste entrepreneurs start small via bootstrapping- funding businesses from cash flows of small-scale operations before pursuing outside financing for growth.
- Crowdfunding Platforms: Raising small early stage capital from many backers to launch concept pilots applies well to mission-driven sustainable food startups.
- Angel & Venture Capital: For innovative tech-centric food waste solutions, early equity financing may support scaling software, sensor networks, analytics, and logistics systems.
- Impact Investing: Given alignment of food sustainability solutions with ESG mandates, dedicated impact investors may back growth stage food waste enterprises.
- Government Grants: From local waste diversion grants to federal SBIR funding pools, public sector subsidies provide non-dilutive capital supporting early R&D and pilot projects.
- Commercial Loans: As food waste management intersects growing business sectors like urban agriculture, green tech, and circular economies, traditional commercial loans help scale viable models.
3. Marketing & Messaging
Due to misperceptions about waste streams, clearly communicating food upcycling processes and safety adherence are musts. Marketing should educate on sourcing protocols ensuring feedstock safety while highlighting sustainability benefits.
Collaborative Approaches to Addressing Food Waste
While businesses large and small can make dents reducing waste via enterprise, broader coalitions are essential to tackle the nearly one third of food produced that gets trashed. Governments, international agencies, industry groups, non-governmental organizations (NGOs) and engaged citizens have partnered to address underlying drivers across sectors. Some collaborative initiatives include:
- Policy Action: France’s legal ban on grocery stores throwing away unsold food rewards donations to charities instead. This brings policy frameworks alongside solutions.
- Industry Commitments: Through the 10x20x30 initiative, food retailers, hospitality firms and producers pledged to halve food waste within respective sectors by 2030. This galvanizes big players, creating ripple effects.
- Innovation Partnerships: Via Challenges and joint R&D, partnerships between startups, academics, and large firms spur ag tech and supply chain advancements to curb waste.
- NGO Campaigns: From Feeding the 5000 events serving meals from waste streams to awareness campaigns led by groups like ReFED and WRAP, non-profits ignite grassroots engagement across neighborhoods, cities, and campuses worldwide.
Addressing complex, systemic issues like food waste requires collaboration across unusual allies – governments, corporations, activists, entrepreneurs, and citizens. While nuanced solutions must target hotspots locally, global coordination across sectors and borders helps proliferation of those solutions most effectively balancing people, planet and equitable prosperity.
Success Stories and Case Studies
While curbing food waste represents an enormous challenge globally, tangible examples demonstrate both impact and profit potential from interventions across supply chain points. Notable successes include:
Apeel Sciences
This food tech startup leverages plant-derived coating solutions to keep produce fresh for extended durations. Installed across avocado packing facilities, this approach saw massive reductions in waste from spoilage, increased grower margins, and additional social impact by expanding avocado volumes affordably reaching new geographies.
Walmart Food Waste Programs
The retail giant met aggressive produce waste reduction targets company-wide years ahead of schedule via enhanced tracking, discounts on short-dated items, and nudging shoppers and staff to curb thoughtless waste contributing behaviors. This also saved millions in operating costs through waste diversion efforts.
Too Good to Go
This mobile app connects customers to restaurants and grocers with extra food, allowing users to purchase surplus items at big discounts which would otherwise get discarded at closing time. This simple connection platform generated over $310 million in additional revenue for partners since inception while reducing waste.
RISER Foods
This startup assists smallholder farmers in East Africa via solar-powered cold storage units, expanding the shelf life and market reach of highly perishable crops. This intervention increased incomes 250% while minimizing post-harvest losses exceeding over 30% previously.
While challenges remain, these examples showcase financially self-sustaining approaches cutting waste via technology, infrastructure, access to markets, and changing purchasing preferences. The cases also illustrate opportunities for startups to collaborate with incumbents across the food supply chain in ways benefiting both bottom lines and the planet.
Conclusion
In a world producing ample nourishment for anticipated populations but failing to properly utilize or distribute that bounty, food waste carries heavy consequences morally, economically and environmentally. Curbing waste requires a multipronged approach. Policy, advanced technologies, awareness building, and innovative business models each play a role. Entrepreneurs can develop solutions transforming trash into treasure across food recycling methods, preventative inventory solutions, creative food re-use models, and technologies connecting surplus to hunger. But collaboration remains key – among startups, regulators, non-profits, and incumbents across agriculture, retail, hospitality and consumers worldwide. Blending business savvy, out-of-the-box thinking and moral vision represents the recipe for startups guiding markets to factor social and environmental costs into business equations – and creating systems allowing everyone to prosper mutually.
