1. business and industrial
2. business operations
3. management
4. business process

The Role of Sustainable Value
Chains in Reducing Food Waste
Martin Gooch PhD
April 18, 2015
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The Complexity of Food Waste
"For every complex problem, there is a solution
that is simple, neat, and wrong."
Henry L. Mencken
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Statistics*
• 1.3 billion tons of food/inputs wasted annually
» Global 2011/12 grain supply est. at 2.3 billion tons
• Canadian food waste estimated at CAD$31B
» US food waste estimated at US$165B
• Sufficient food produced to feed the world
» 1.2 billion overweight; 860 million malnourished
• Environmental impacts of wasted food
» 17.5% of freshwater consumed annually (US)
» Food in landfill emits equivalent 20 Mt of CO2 (UK)
• ~50% food waste relates to consumer behaviour
» Waste levels increased with fresh food trends
* Most statistics related to food waste are estimates
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Estimated Annual Food Waste in Canada: $31 Billion
Zooshare: Adapted from “$27 Billion
Revisited” VCM International (2014)
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Consumer Trends
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Canadian Food Waste (Kg Per Capita)
Total Fresh Fruits
100
Total Fruits
90
Total Fresh Vegetables
80
Total Vegetables
Total Dairy Products
70
Eggs (kg)
60
Red Meat Boneless Weight
50
Poultry Boneless Weight
40
Total Fish
30
Total Oil and Fats
2009
2006
2003
2000
1997
1994
1991
1988
1985
1982
1979
1976
Total Sugars and Syrups
1973
0
1970
Total Pulses and Nuts
1967
10
1964
Total Cereal Products
1961
20
Linear (Total Fresh Vegetables)
Abdulla, Martin & Gooch, 2012
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Price-Based Promotions
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Financial Implications
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True Cost of Food Waste
Processing:
$1,700 / tonne *
Retail
$4,100 / tonne**
$2,000+ / tonne *
Foodservice
$6,660 / tonne *
$7,200 /
tonne***
*WRAP
** INCPEN
*** STOP Food waste
Iceberg graphic c/o © Copyright Showeet.com
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“The world we see that seems so insane is the
result of a belief system that is not working.”
William James
Reducing feed conversion rate by 0.5
would annually save equivalent to…
• 1 million tonnes of grain
• 250,000 acres of land*
Beef Central
*~wheat and corn production of 4 tonnes per acre
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Peaches
Harvest
$$$?
Grow: 100
tonnes
$$$?
80% of production
70% of fruit received
Grade/pack
Distribute
$$$?
90% of fruit received
$$$?
$$$?
Retail
Consumers
75% of fruit purchased
Consumed: 38 tonnes
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Examples of VCMI Research
and Implementation
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Sustainable Innovative Chains
• Have a strong recognized leader and lieutenants
» Primarily respected for their capabilities and ethics, not
for their rank in the organization(s)
• Focus on managing determinants of quality
» Purposely do not focus on managing outcomes that are
symptoms of an often dysfunctional system
• View trust as outcome of connecting the chain
» Incentives, culture, roles, accountabilities
• View premiums as a bonus that must be earned
» Primary efforts focused on reducing costs, accessing
markets, creating ability to learn then adapt
• View technology as a tool /resource
» Its primary value relies on how it is applied
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Food Group
www.youtube.com/user/ValueChainMC?feature=mhee
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Background
• Formed in 2001
» In response to challenge posed by McDonald’s
» Surge in feed prices, reduction in subsidies
• Became UK’s largest veal and beef initiative
» Supply Tesco, Sainsbury’s, Fairfax Meadow, etc.
• Inconsistency primary cause of issues and costs
» Cannot manage unless adopt value chain approach
• Eating quality #1 for consumer satisfaction
» Tenderness measurable, outcome of many factors
Shear Force Test Variation on Standard beef = 2.1kg – 4.7kg
Blade Farming = 2.1kg – 2.9kg
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Target Performance
Rearing
Finishing
520kg
1kg
125kg
0.9kg
0.8kg
£117
395 days
98
days
50kg
84
days
493 Days
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How Blade Has Succeeded
• Considers every stage of production a process
» Inputs and outputs; cause and effects; key performance indicators
• Uses information to continually improve process
» Reduce costs, while simultaneously increasing revenue
• Manages root cause and determinants of quality
» Not outcomes of an often dysfunctional system
• Redesigned system to reflect models used in other industries
» Keiretsu: strategically aligned businesses with complementary capabilities
• Coordinates operations along entire food chain
» Resource utilization, margins vs. price, roles and responsibilities, CI program
• Incentivizes performance by providing farmers with price
commitment, forward contracts
» Finished animal essentially sold before conceived
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Transforming Potatoes into French Fries
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Overview
• Assumption that large potatoes produced long French fries
» Reflected in the processor’s pricing policy for fresh potatoes
• Large potatoes cost more to produce; financial and opportunity
costs
» Also have negative environmental impact
• Analysis of input, output and process established true
relationship
» Large potatoes produce great hashbrowns
• Further analysis identified the perfect potato for long French
fries
» Size of a coke can with high internal solids
• Incorporated changed requirements into producers’ pricing
model
» Producers benefit from higher revenues and reduced production costs
• Increased production of French fries for same volume of inputs
» Reduced costs: machinery maintenance, oil, energy
• New market opportunities and revenues for producers
» Able to plant fall crops
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Conclusions
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Conclusions
• Canada trails other jurisdictions in combating food waste
» Opportunity for Canada to secure a leadership position
» Action research, achieving proven results with industry leaders
• Food waste in Canada
» Greater than previously estimated
» True cost of food waste often twice the value of physical product
• Avoidable food waste has enormous implications
» Never occurs in isolation
» Significant impact on business profitability
• Ability to address food waste determined by
» Ability to manage the determinants of consumer-recognized value
» Partner with the right individuals / businesses on a common cause
• Successfully increasing margins and profitability rests on
» Separating assumptions from fact by measuring performance
» Determining roles, responsibilities, accountabilities, benefits
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Thank you.
Martin Gooch, PhD
Chief Executive Officer
VCM International
416-997-7779
[email protected]
@ValueChainsAg
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