Uncovering the staggering cost of food waste

Garreth Hanley:
This is INTHEBLACK, a leadership, strategy, and business podcast, brought to you by CPA Australia. Welcome to INTHEBLACK, today we are talking with Terence Jeyaretnam about the costs of food waste. Terence is an environmental engineer and partner at EY, where he leads their Asia Pacific climate change and sustainability services.

In 2006, Terence founded Net Balance, Australia's largest standalone sustainability and climate change advisory service. Net Balance was rated by Business Review Weekly as one of their Fast 100 growth companies in Australia twice before it was acquired by EY in 2014. Terrance is on the Australian Auditing and Assurance Standards Board and serves on the boards of Amnesty International Australia, Global Citizen Australia, the Australian Conservation Foundation, Food Frontier, and Fairtrade Australia & New Zealand.

He's an adjunct professor at University of Southern Queensland and a fellow of the Institute of Engineers, Australia. Welcome to INTHEBLACK, Terence.

Terence Jeyaretnam:
Thank you, Garreth. Great to be on board and I'm a follower of your podcast, so thanks for inviting me.

Garreth Hanley:
Thanks for being here. Now, before we get onto the details of food waste, I'm interested in your path from engineer to sustainability and climate change leader to being a member of the Auditing and Assurance Standards Board. What drew you towards sustainability, Terence, and how did it lead you to the auditing profession?

Terence Jeyaretnam:
Yeah, it's an interesting question. I think Oscar Wilde said something along the lines of most people are sum people. In the context of most people are the sum of the people that they follow, or they look up to or they interact with. And they make their opinions based on most people that they're with. And typically you form your early childhood personalities from your parents. I've tried not to be most people all the way through and environmental engineering was introduced for the first time in Australia when I was doing engineering. And I thought, well, this'll be really interesting and I like environments and I like animals, so I'm going to try and do this. So that's been my sort of constant all the way through my career. And partway through, I got really interested in corporate reporting and corporate accountability around environmental and climate issues.

That was in the late '90s. And I did a bit of research around corporate reporting, which led to some of the early assurance statements in Australia, which I had to make up as I went in those days when the standards weren't there. But they were called verification statements. And I remember one of the first ones that I did was with Body Shop Australia, on their environmental performance report in the late '90s. And I've since been citing a lot of assurance statements that have included BHP Billiton and Rio Tinto and West Farmers and so on. And it's eventually led me to the Auditing and Assurance Standards Board as the board is now working on a sustainability Australian standard.

Garreth Hanley:
Interesting, Body Shop was one of the first.

Terence Jeyaretnam:
Yeah, it was one of the first reports in Australia, some mining companies and Body Shop.

Garreth Hanley:
So the numbers around food waste really are quite staggering. There's various numbers for worldwide loss and costs, but in Australia we throw away 312 kilograms of food per person per year. And it's estimated that households spend around $2,500 a year on food that ends up being wasted and most of it ends up in landfill. Now, it might seem like an obvious question after hearing that, but does food waste increase the cost of living and doing business in Australia and do we just have to accept food waste?

Terence Jeyaretnam:
Yeah, food waste is such a staggering problem, particularly in the Western countries and developed countries that we find that I think when you take a global view of food waste, I think the number is along the lines of 30% of all food that's created does not get eaten, and that's lost along the way from the farm through to the plate. And in Australia, as you said, 312 kilograms of food per person per year is a staggering amount. It's roughly three times or four times my weight in food that you throw away and that you've paid good money for. Often it's thrown away because it's gone past a due date or it's not cooked in time or there's too much food. And that's one thing that I guess we've come to grapple with as a society. We've got lifestyle diseases now overtaken infectious diseases, and part of the reason is the obesity epidemic that we have and what's causing that too much food.

And when you have too much food, you end up throwing some of it away. I think ABC found that there's some UBS research that prices at major supermarkets rose by about 9.5% in the last financial year, and it rose at a higher rate than the CPI, which rose at 7.5%. So you've got a cost of living concern in Australia, with prices rising and people not being able to afford things and afford to pay their mortgages. But at the same time, we are throwing away quite a bit of waste in food waste where you're spending about 200 bucks per week if you've got a normal household and you're throwing up to a third of that away without being eaten. So if you work out the numbers, it's throwing away about two and a half grand a year, as you said, which adds up very quickly. So one thing that people really should think about is not just buying the right amount of food. I think there's still a part of the brain that acts like, as you said, the lizard part of the brain.

Garreth Hanley:
There's scarcity.

Terence Jeyaretnam:
Yeah, evolutionary concept of scarcity and people over buy food because of that notion and then overeat food. And one way to sort of tackle the health issue is to start thinking about, oh, let's buy less. If we really need to, we can go back and get some more food, and then throw away less.

Garreth Hanley:
We saw a lot of that through the pandemic, people buying so much food.

Terence Jeyaretnam:
Absolutely tins and tins and how much of that would've been thrown away?

Garreth Hanley:
So who is responsible for all this waste? Do we know where the waste occurs? Is it just in households?

Terence Jeyaretnam:
So waste in a sort of a system context with food occurs all the way through the value chain. So primary production where it's not the right size or it's been impacted by weather, you lose about 30%. So it's interesting that something that like food waste that causes climate change also then impacts production. So that costs about 30% of waste through the value chain. Manufacturing, about 24%. There's a little bit in wholesaling. Retail, where specifically you don't sell some things that are on the shelf and retail is a pretty good, they end up donating some of that just before it hits the due date. It's only 3% retail. You then lose most of the rest through the household level at about 30, 35%. So you are losing them all the way through, but primarily in the production phase at the farm gate and at the end, at the household level.

Garreth Hanley:
It seems that we spend a lot of time, effort, energy producing, packaging, transporting, distributing food, and then sink even more energy into sending it to landfill, it does seem crazy. Does food waste have an important role to play in carbon reduction goals? Is it maybe an overlooked opportunity in a lot of people's ESG planning?

Terence Jeyaretnam:
Absolutely. And I think if you talk about corporates, there's only certain corporates that are involved in food, those that are either manufacturing food or selling food. And then at the end there's the waste contractors who manage, these days we've gotten better at collecting food waste from households and composting those at composting facilities. So that's sort of the corporate landscape. But food waste has a significant impact on climate change. So if you think about gases that cause greenhouse emissions, everyone knows about CO2 and that's what comes out of the fossil fuel generating facilities. But one that's overlooked is methane, which is the next biggest contributor. And methane comes from composting food that's in landfills. And it also comes from cattle and animals that are domesticated because of the way they digest food. And methane's interesting gas. So methane's been put on the agenda most recently through the conference of parties on climate change as a significant gas that requires much more focus.

There's also some research done to say that Australia might not be accounting for all of its methane. It also comes out of fugitive emissions in fossil fuel production. And the counting might not be quite correct. So there was a new story around that. But going back to methane in Australia counts for 26% of our total greenhouse gas emissions, second only to carbon dioxide at 67%. So 26% of our total greenhouse gas emissions come from methane. A lot of it in the factory farming and quite a bit in food waste. And then the issue with methane is that it's 120 times more potent as a greenhouse gas emissions. So it's almost like every molecule of methane is equivalent to 120 molecules of CO2 in the first year that methane goes up and it degrades over time. So a tonne of emissions today will only have 84 times the effect of CO2 over 20 years and it drops to 28 times over 100 years. So for the first 100 years of a methane molecule, you've got a much higher global warming potential than CO2. And that's an interesting issue, right? Because if you think about extreme weather that's been caused by global warming, if you have the one thing that you might want to do straight away to impact extreme weather in the next 10 years, you'll cut out methane.

Garreth Hanley:
It seems like we're burning carbon to make methane in this instance. Terence, you just mentioned the factory farming of animals and methane production. Is there a difference between different types of food and the amount of emissions that different types of food production leads to?

Terence Jeyaretnam:
Absolutely. We find that the embedded carbon or embedded global warming potential in animals, particularly red meat animals like beef, is significantly higher than plant-based foods. So I think David Attenborough said in one of his documentaries that even if you decarbonize the whole world tomorrow, you would need to have our diets changed by 75% to vegetarian diets in order to stay on the 1.5 degrees. There's that much embedded carbon in meat. And so one of the things that we've got to start thinking about doing, and our transitioning economy needs to start to think about is how do we move from beef and lamb and dairy to plant-based foods and high value foods like almonds and nuts and so on that still has export potential but doesn't carry the greenhouse gas emissions. And at a consumer level, again, starting to think about if you buy a kilo of beef and meat goes bad quicker, it also like chicken and so on, carry salmonella. So you don't want to muck around with meat, you've got to waste it off it. So wasting a kilo of beef is a lot more carbon intensive than wasting some potatoes as an example. So multiple, 20, 30 times more intensive. And you'd want to think about how much meat you buy and then making sure that you consume it if you buy it.

Garreth Hanley:
And there's work around alternative sources of protein underway?

Terence Jeyaretnam:
Absolutely, and that's one of my board roles with Food Frontier. Food Frontier is a not-for-profit that essentially is looking at growing the economy around plant-based and alternative protein foods. So there's lots of options which are a lot less carbon intensive, a lot less water intensive. The other thing that's really interesting that's going on, and a USFDA approval's been given to this, is lab-based meat production. Now, that doesn't sound great when you think about it, but you don't get the contamination from faeces if you go a piece of chicken from a cell in a lab, and it's a lot less carbon intensive and a lot less water intensive to grow meat. And so that's the other sort of growth area. And for countries like Singapore and Israel where there's no space to have cattle, these are going to be future source of potential protein.

Garreth Hanley:
Potentially less emissions.

Terence Jeyaretnam:
Less emissions, and potentially less importing from countries like Australia. So we need to start thinking about, well, how do we look at these developments globally?

Garreth Hanley:
So Terrence, what role can accountants and auditors play in reducing food waste?

Terence Jeyaretnam:
Yeah, so I think one of the roles that we already do, developing an inventory around carbon emissions is to account for waste and account for types of waste. So I think we need to get better at accounting for food waste and methane emissions associated, particularly with industries that are close to the source with food waste. If we do, for example, a brewery or a milk producer, we're looking at wastewater emissions and emissions from some of the barley that's been used in brewing. So all of that's already in play.

As auditors, if there's a carbon neutral beer and I've worked on a couple of carbon neutral beers, we've got to audit the inventory, make sure that the waste out of that facility is being accounted for. And carbon neutrality with climate active, for example, requires you to have a reduction path to manage that food waste. So for example, sending some of those spent barley to another facility to do something else with it or to animal feed instead of going to landfill where it creates methane. So they're the opportunities I think for accountants and auditors to better help with measurement and assurance of food waste, particularly at a larger level.

Garreth Hanley:
It sounds like they're pretty key role in the process.

Terence Jeyaretnam:
Yeah, and I think our sort of paradigm that we've set for ourselves with the NGER’s Reporting Act is one of the best in the world. So we've got good methodology for measuring methane from food waste, as an example.

Garreth Hanley:
The Australian government, Terence has a national food waste strategy, which they released in 2017, and the plan is to halve out waste by 2030. Now seems quite bold, how is that going?

Terence Jeyaretnam:
Yeah, this is a role that I think governments can significantly help with, particularly in the cost of living crisis. So looking at better education around food waste. When have we ever seen any education around food waste, looking at policy that ensures that the system moves food if it's not used to another use and so on. So there are ways in which government can look at the value chain around food and start to minimise not just the direct cost for industry, but the direct cost for consumers as well as the potential social and environmental cost when food is wasted because no one really looks at the whole picture and they should, in the case of food waste, just given the scale of food waste.

Garreth Hanley:
And if we do manage to get to halving our waste by 2030, do we know what the financial impact will be?

Terence Jeyaretnam:
Overall benefit from halving food waste could include $53 billion, I think according to the strategy of operational cost reductions across the supply chain. Because you're then reducing labour costs and reducing packaging costs, as you said. About 3.2 billion from avoiding social costs by reducing carbon emissions. And about a billion dollars of avoiding costs of landfill. So there's quite a bit, and that's not even taking into account the impacts that you get, the downstream impacts of the social costs of carbon in other countries. So we are only looking at our own country. So there's a lot to be gained.

Garreth Hanley:
What else has been done to reduce the problem? Are there other things other than what has been planned by the government?

Terence Jeyaretnam:
I think there's voluntary agreements in place to reduce food waste in Europe in particular, where signatories must take action to measure their impacts and report outcomes. That seems to be going well in Europe and in the UK. Other initiatives could include improved data and waste audits, as we've talked about. That's always less well done compared to other emissions, particularly electricity and so on. Consumer behaviour change, so starting to think about what consumers can do and how to nudge consumers around reducing their purchasing, that's going to be hard to do, isn't it? But also reducing the food waste or donating food. I think one of the things that I do as someone who I guess thinks about other avenues of reducing food waste is go to the markets because the markets often have the fruits and so on that are out of shape and they get wasted if they're not bought.

So if you can support the local farm markets or the larger markets that we have around the country that's going to benefit another industry altogether, but also use food waste. Improvements in tax credits, I think we could do a lot more in tax. GST is a really interesting mechanism. So GST when it was first conceived, wasn't on the food as you know. So food was left out of GST unless it was manufactured food. You could potentially tweak it a bit to include healthier food with potential tax reductions and unhealthier food with GST being introduced. So there are ways in which existing mechanisms could help. And broader acceptance status for imperfect food. As I said, if we can get that into stores, even Coles or Woollies could potentially have baskets with imperfect food at a lower price point. You get that with avocados already. So there are ways in which you can reduce it through the value chain.

Garreth Hanley:
What can we all do? I mean you mentioned some things there like going to markets, choice of foods. Is there anything else that stands out that people can do or that businesses can do to help reduce food waste?

Terence Jeyaretnam:
Yeah, I'd be thinking about all the things that we've talked through, Garreth, but there are other things you could do. For example, meal planning where you are planning what you need and just buying what you need. There are apps that let you do that. I have a Thermomix. So Thermomix, you can work out exactly what you want. You can send it to an app saying this is what I need. Leftovers and dealing with leftovers. And again, there are apps and websites where you can put in, I've got some extra broccoli, what can you do with it? And I just type in broccoli. It'll give me 18 recipes and you can work out what to do with the extra broccoli you have. So I think technology is starting to allow us to have reduced food waste. You can use all parts of the vegetable, for example, I've tried using, and this is because I'm plant-based, but I've tried using banana skin to make bacon and there's recipes to do that sort of thing.

Garreth Hanley:
Right. How'd you go with that?

Terence Jeyaretnam:
Not good. So I wouldn't try that one. But often people peel off potatoes and so on. There's no real need. There's a lot of nutrients in the skin of apples and potatoes that you're missing out if you peel them off. So you're not only wasting food, but you're actually missing out on the best part of the food itself. And then storing food in a smart way. Sometimes people put nuts outside in summer and they don't last well. So you might want to refrigerate your nuts and don't buy big quantities. And obviously growing your own and composting your own if you've got the space. So really great ways of being out in the sun, getting some vitamin D, but also you obviously regard your vegetables that you've grown at a much greater level than vegetables that are bought. So you look after them and great way of reducing food waste if you grow your own and compost your own.

Garreth Hanley:
Homegrown food does taste great.

Terence Jeyaretnam:
It does, it does.

Garreth Hanley:
It tastes great. I'm a keen fermentor. It's a little bit time consuming, but the food lasts and it uses those natural fermentation acids.

Terence Jeyaretnam:
Absolutely. And that's what our grandparents and so on used to do. And fermentation is not just reducing food waste, but it's greatly a microbiome. So it's got double the benefit. There's a saying that say, I think, if your grandma wouldn't recognise a particular ingredient, you probably shouldn't be buying it.

Garreth Hanley:
I'll leave information for further reading in the show notes. And did you have any suggestions for listeners?

Terence Jeyaretnam:
I think what I'd probably recommend is starting to understand food, health and environment and that nexus a bit better. I can't recommend any particular book, but I think there are lots of books out there which carry that nexus of looking at food environment and health and starting to think about, well, how do you sort of have a win-win win in the way you think about food? And that might be a great way of living right. Because you're going to eat food for 80, 90 years of your life, and if you're throwing away 300 kilos every year, that's a very large quantity of food that you're wasting.

Garreth Hanley:
Terence, that's all we have time for today. Thank you so much for your time.

Terence Jeyaretnam:
Thanks, Garreth. Thanks for having me.

Garreth Hanley:
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