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Food Waste in America Opportunities to Fight Hunger July 2011 Summary • Feeding America and A. T. Kearney collaborated to evaluate food waste and donation opportunities along the US food supply chain • This study evaluated all food channels with a focus on foodservice channels • Approximately 80 billion pounds of food is wasted annually, 50 billion pounds in foodservice channels • The common enemy of companies and Feeding America is landfill waste • Supply chain partnerships can ensure this waste is minimized and redirected to donation Feeding the Nation’s Hungry Feeding America’s mission is to feed America’s hungry through a nationwide network of 200+ member food banks and engage our country in the fight to end hunger Total Product Donations Increasing National Retailer donations are offsetting a decline from National Manufacturers 3500 Feeding America Annual Food Sourced (million lbs) 2,950 3000 2500 2000 1500 1000 500 0 2,600 2,100 National Donation Local Donation Purchase Federal 2007 Source: Feeding America 2,200 2008 2009 2010 4 Demand Outpacing Supply Worst Employment Recession Since WWII % Job Losses Relative to Peak Employment 50.2M Americans are Food Insecure Current Recessio n 0 Months after Peak Employment 47 Nearly 7 Million Unemployed for Over 26 Weeks Unemployed over 26 Weeks 1969 Source: calculatedriskblog.com; USDA Month/Yea r Current 5 US Food Production = 900B lbs Estimated US Food Supply Chain(1) (billions of lbs) Production Raw Inputs Farming (1,270) Agri-Processing (405) International Trade Manufacturing (710) Imports (82) Exports (94) Wholesaling (673) Note: (1) Industrial waste is not included; numbers may not balance Source: USDA: 2007 U.S. Census of Agriculture; 2007 U.S. Economic Census; National Restaurant Association; others Alternative Channels (519) Animal Feed Biofuels (311) (208) Primary Distribution (861) Grocery (396) Foodservice (465) Retail Restaurants (372) (407) Institutional (38) Convenience (14) Hospitality (17) Drug Stores Caterers (10) (2) Usage Consumed (664) Packaging Waste (138) Food Waste (78) Secondary Distribution (~19) Closeout Dollar Donation Stores (1) Stores (14) (3-5) 6 We are living in a Food Paradox The Food Paradox In 2009, the number of food insecure individuals rose to 50 million Obesity easily exceeds 30% in most age groups, including children Americans throw away tens of billions of pounds of food each year Waste A coordinated effort is needed across the industry to tackle these issues Source: USDA; CDC; A. T. Kearney analysis 7 Grocery Supply Chain Support Additional Donation Opportunity in Existing Programs (B pounds) Current Donations Opportunity 1.5 1.0 1.0 0.4 0.5 0.3 0.5 0.4 0.0 Produce Donation Program Source: Feeding America Manufacturing Donation Program 0.2 Retail Donation Program 8 US Food Waste = 78B lbs Annual US Food Waste Generation(1) (estimated, B lbs) Procurement All Other Sources(2) Uncooked food waste that occurs along the supply chain 12.0 27.0 50.8 Foodservice Preparation 4.9 33.9 Plate Waste that occurs at the site during preparation Waste of food that has already been served to consumers (1) Post-recycling (2) Consumers, grocery channels, etc. Source: EPA; www.zerowasteamerica.org; BioCycle; Industry interviews; ATK analysis 9 Evaluation Framework The Three P’s of Food Waste Food Waste Procurement Description Uncooked food waste that occurs along the supply chain Example • Excess Reasons for • Damage Waste • Test Source: A. T. Kearney analysis Preparation Plate Waste that occurs at the site during preparation (includes trimmings) Waste of food that has already been served to consumers • Process design • Lack of training • Quality requirements • Incentive to “push” food • Portion sizes • Lack of tracking 10 80% of food service waste from Restaurants Estimated Foodservice Waste by Industry (billions of lbs) Wholesaling (3.4 B) Procurement Preparation Preparation Procurement Procurement Institutional (4.2 B) Plate Preparation Hospitality (2.2 B) Restaurant (40.7 B) Procurement Plate Plate Solutions ‘out of the box’ Hotels: Companies donate part of food purchase Institutional: Go “trayless” in cafeterias Caterers: Passengers donate value of their meal • There is excess food at banquets & conventions, which typically is discarded • Students at Northwestern University weighed their plate waste to quantify their waste stream • On average, 1-2 first class meals are thrown away at the end of each flight • Companies can prevent plate waste by reduce their food purchase (e.g. decrease menu options, smaller tray sizes, etc) • Trays were then eliminated trays at select cafeterias, limiting customers from taking excess food • Anecdotal evidence suggests that “going trayless” reduced plate waste by 30% Source: Industry interviews; A. T. Kearney analysis • Airlines could provide firstclass passengers the opportunity to refuse their complimentary meal in lieu of a donation to Feeding America • Monetary savings can be donated to FA to purchase food for the hungry 12 Partnership Strategies “Quantify” “Reduce” “Donate” Identify and Quantify the Waste Explore Ways to Reduce the Waste Recover and Donate the Remainder • Where is food waste occurring? • How can we reduce the amount of waste? • Is the waste edible? Can it be donated “as is”? • Why is there waste? • How much waste is there? • How much waste will remain? • Who owns the waste? • What kind of waste is it? • If not, are there steps that can be taken recover the waste? • What is the cost of these steps? Strategies for waste reduction and donation can live in harmony, as the common enemy is dumping and landfill waste Source: A. T. Kearney analysis 13 Goal: 0 Landfill Reduction Strategy (Quantify, Reduce, Donate) Desired Change in Waste Flow Identify Waste Decrease Product Losses Maximize Saleable Product Capture Edible “Waste” Reduce Inedible Waste Dumped Donated Maximize Donation Source: A. T. Kearney analysis Minimize Dumping Increasing Time 14 Need vs. Opportunity Secondary market is increasingly important revenue stream for manufacturers but impacts donations …and macro trend validated at donor levels through interviews Non-Produce National Pounds over time Our lean enterprise initiative is really taking hold Pounds (MM) 400 300 The business environment forced us to embrace secondary markets 200 We’re selling to secondary market 2x what we donate 100 Recession has driven us to tighter production plans and reduce new product introductions 2004 2005 2006 2007 2008 2009 2010 2011F 0 Fiscal Year 15 YTD FY11 June 1, 2011 Waste solution opportunities Through out the Supply Chain Dry, frozen, refrigerated Short-coded Past code with approved extensions Discontinued Mislabeled Unlabeled / brites Test product Promotional Items Private label/ licensed Packaging changes Line start up waste Reformulations Seasonal Items Overruns Customer returns Food service sizes Bulk Product Low weights/short fills Ingredients Boxes, Containers, Shelving & Equipment Benefits of Donating • • • • • • Waste reduction An inventory management solution Potential tax benefits Centralized donation process; local community support Security and integrity of brands Savings in storage and transportation • • • • Savings in dumping fees: $4,000 per truckload! Cost-free way to handle unsaleable product Sophisticated tracking, reporting and recall procedures Supports ‘green’ initiatives and corporate commitments to sustainability Join in the FIGHT Institute Corporate Donate do not Dump policy • Clear process for all employees • Early identification of unsaleables • Immediate action to donate • Extended code dates on consumables Engage locally with your community food bank • volunteer • event sponsorship 18 Thank you Steve, a former shipping and receiving associate, and his wife both worked two jobs to support their daughters. But that was five years ago. The couple now relies on unemployment benefits to feed 15-year-old Katie and 10-year-old Olivia. Until things turn around, they turn to their local food shelf for assistance. This agency of the Second Harvest Heartland food bank in St. Paul, Minn., provides them with the food the parents need to keep their family fed. There’s a Steve in your own community. www.feedingamerica.org to see how you can help.