Food waste drives up grocery prices. Two Aussie start-ups have a solution

Many Australian households are stretching their budgets to afford weekly groceries amidst a cost-of-living crisis. However, they may be unaware that, aside from inflation, food waste in the supply chain is a leading cause of rising prices.Two Australian organisations tackling the country’s food waste problem are Farmers Pick and Yume.Farmers Pick, founded by Joshua Ball and Josh Brooks-Duncan in 2020, works directly with farmers and producers to rescue and purchase produce that would otherwise go to waste for its vegetable box delivery business.Yume, founded by Katy Barfield in 2016, is a food redistribution platform that helps prevent food waste by connecting surplus food from manufacturers, to other businesses and charities that can use it.While they have different approaches to connecting discarded food with hungry mouths, both Farmers Pick and Yume are committed to reducing the size of Australia’s 7.6 million tonne per annum food waste problem.The scope of the problemThe size of Australia’s food waste crisis can’t be understated. “If you look at a standard pallet holding half a ton at about 1.2 metres tall, the amount of food waste in Australia would actually reach the International Space Station every year, 45 times over,” Barfield, told Inside Retail.“When you just try and think about that, it is an insane amount of pallets of food that we throw away every single year – we do that year in, year out, and that’s just Australia,” she added.Surprisingly, ‘beauty standards’ play a role in food waste, especially when it comes to fruit and vegetables. The supplier agreements and product specifications imposed on farmers outline the accessible aesthetics of produce that can be sold. According to Farmers Pick, 50 per cent of citrus gets rejected for not meeting size criteria or having minor blemishes.“If you really zoom out, the knock-on effect is ultimately that consumers pay more for whatever produce they buy across the entire supply chain,” explained Ball.“If 30 per cent, 40 per cent or 50 per cent of food is not even leaving the farm, the farm still has to recoup that cost [and it gets] built into their margins,” he added.An estimated 30 per cent of Australia’s food waste is from the horticulture industry – where 2.4 billion kilograms of food never leaves the farm.Food insecurity raising pricesAustralia’s food surplus is a macroeconomic inefficiency according to Ball whose work at Farmer’s Pick uncovered that “​​prices are artificially inflated to make up for the wastage.”Food waste is not only an environmental loss but a financial loss for everyone in the supply chain from the farmer to the consumer. Someone has to pay the price for the surplus of unsold food, regardless of whether it’s due to a manufacturing error, a supply chain delay, a looming used-by date, or simply, damaged packaging.“When product goes to waste, it actually creates cost implications elsewhere in the system, but ultimately those costs need to be passed on somewhere,” revealed Barfield.“I think that’s one of the areas that we’re seeing, is that the input costs of food to the manufacturers have also increased rapidly,” she added.Inversely, cost-of-living pressures are driving food waste as households have to revisit what’s a necessity and what’s a splurge.“The cost-of-living pressures driving people to see cheaper alternatives mean the brands actually have more surplus at times, and that creates price increases elsewhere because they’ve got to stay in business,” concluded Barfield.“I think that all of these compounding factors are leading to what seems a nonsensical outcome.”