Unlocking the Value of Agrifood Waste Streams

After harvesting bananas, almost 60% of what is left of the plant is considered waste, but this can be turned into high-value goods, such as fabric and bioethanol. Photo credit: ADB.

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Published: 01 September 2022

Shifting to circular approaches can deliver economic gains while helping address food security and promote sustainable production and consumption.

Introduction

The agrifood industry generates significant by-products that mostly end up in a landfill or get incinerated. Repurposing these by-products can bring new revenue streams and solutions to environmental and social challenges. Turning banana stems into clothing and making plant-based protein from brewers’ spent grain are among the several ways of extracting maximum value from side streams of agrifood production.

In Southeast Asia, which comprise many agrarian-based economies, there is scope to look into the prospects of circularity in agricultural and food waste systems. Shifting from a linear to circular approach in the agrifood industry can deliver economic gains while helping address food security and promote sustainable production and consumption. 

This policy brief is adapted from a presentation by Vandana Dhaul of Singapore-based venture capital company ID Capital(link is external) at the 19th Policy Actions for COVID-19 Economic Recovery (PACER) Dialogue, Transitioning from a Linear to Circular Economy(link is external), organized by the Asian Development Bank.

Wasted Opportunity

According to the United Nations, food waste is a global issue costing over $2.6 trillion per year, and Southeast Asia is a major contributor. The enormous costs come with a large carbon footprint from methane emitted by rotting food, crop residues, and agricultural by-products.

Wastage occurs at various stages of the food chain—at production, harvest, sorting, shipping, processing, packaging, wholesale and retail distribution, and consumption. In developed countries like the Republic of Korea and Japan, a significant volume of food is wasted at consumption. In developing economies, food loss happens because of inadequate transportation and storage facilities.

Amid all these challenges, recent disruptive trends highlight several ways to apply circularity in the supply chain. At the agro-industrial level—where most of the opportunities lie for Southeast Asian economies—there is great potential for scaling up circular economy approaches given the relative ease of collecting, storing, and processing of agro-industrial waste, which is relatively homogenous compared with household or retail waste. There is low risk of contamination, making it easy to ensure food safety. However, the valorization of food wastes or converting them into new food products, agricultural inputs, or new materials would depend on local context and demand. 

The value potential of side streams can be better understood and analyzed using Buhler’s value pyramid (Figure 1). At the bottom of the hierarchy, large volumes of food waste can be minimized through prevention and reduction measures, but the value potential for food producers is limited. In contrast, there are more value creation opportunities at the higher end of the pyramid, showing a strong business case for insects as feed and food, and the reuse of waste streams for other new products.

Figure 1. Side Stream Valorization Opportunities

Source: ID Capital Pte Ltd. 2022. Waste-to-Value: A White Paper on the Future of Food Upcycling in Asia. Published in partnership with Agency for Science, Technology and Research, Bühler Group, and Dole Sunshine Company as part of the Future Food Asia 2022 Conference. 7 June.

Other important considerations for applying circular economy concepts in agrifood wastes and by-products include availability of supplies, which may be affected by the seasonality of crops, as well as quality, which can be influenced by climatic conditions and other factors.

Nurturing Circularity in Agrifood

There are several options for reducing waste both upstream and downstream in the agrifood value chain.

Provide tradable credits to encourage food waste reduction 

Policy makers can consider designing a carbon credit scheme that can incentivize food waste reduction and allow credits to be traded, the proceeds of which drive financing for similar initiatives. To effectively implement this, there should be a transparent and understandable methodology for measuring the carbon impact from food rescue.

Support circular initiatives through innovative financing instruments

In addition to tradable credits, sustainable financing solutions can support projects that fight food waste. For example, sustainability-linked bonds are conditional on meeting targets, such as reducing food waste and other indicators to lower the environmental footprint. Another example is the World Bank’s issuance of sustainable development bonds that mobilized the support of banks, asset managers, insurance companies and pension funds globally while raising awareness on the need to solve food loss and waste problems.

Promote insect farming for feed and food production

Given the rising feed and food demands across the region, it is imperative to find sustainable ways to nourish growing populations. Insect farming shows an inherent ability to convert local organic wastes into useful resources while using minimal resources. This means it is a practical solution that be applied in low-resource countries in the region. In addition, investments in insects-as-feed solutions as well as the expansion of the edible insects market can address hunger and nutrition challenges. 

Foster collaboration between companies and farmers

With the infrastructure gaps and prevalence of post-harvest losses in Southeast Asia’s developing countries, the private sector has a critical role to support agro-processing at the farm level. This collaboration can strengthen market linkages, enabling the agro-processing industry to secure a more stable supply of materials.  For farmers, near-farm processing would incentivize the collection, storage, and productive use of agricultural residue and by-products, which have the potential to boost their incomes.

Introduce programs to reduce food waste at the consumer level

Behavior change campaigns and policy incentives are crucial to curb wasteful habits of consumers. In the Republic of Korea, for instance, compulsory food waste recycling using special biodegradable bags have encouraged composting. The fee for these bags covers 60% of the cost of running the scheme, which has increased the amount of food waste recycled (World Economic Forum, 2019). Bins are also equipped with Radio Frequency Identification to weigh and charge residents for their waste using an ID card, helping the government save on collection costs. In Japan, national programs were rolled out to retune the next generation’s attitude toward food waste. Additionally, a national food bank organization rescues and reallocates still edible food from grocery stores and other retailers to people in need.

Invest in research and development to explore other valorization opportunities

Governments need to collaborate with universities and institutions and pursue public–private partnerships to conduct research on food waste valorization as well as uncover solutions and develop technologies. Singapore is positioning itself as a research and development testing bed for Southeast Asia, a springboard for piloting and then exporting new industrial agrifood waste upcycling technologies and business models. In Thailand, public–private partnerships are central to its promotion of a bioeconomy that focuses on the sugarcane and cassava sectors.

Waste to Wealth

There are several initiatives and opportunities to produce high-value products from agrifood wastes in Southeast Asia.

In the Philippines, Dole Sunshine Company has partnered with social enterprise Musa Fabric to extract fibers from banana waste. Yarn is woven into fabric and developed into garments. Preventing 4.4 million pieces of banana stems from reaching landfills can reduce approximately 258,720 tons of carbon dioxide equivalent (CO2e) emissions. Banana waste is instead used to create fashion products worth over $50 million, benefiting the livelihoods of more than a hundred people (Dole Sunshine Company, 2022).

Indonesia’s palm oil mill effluent—or the liquid waste from palm oil production—can be converted into biogas, which is a source of renewable energy. This could pave the way not only for providing energy to remote rural areas but also for reducing carbon emissions. The country also produces huge volumes of what are known as empty fruit bunches. These are valuable palm oil mill waste by-products that could be used to produce multiple forms of heat, energy, chemicals, feedstocks, and other materials.

Recommendations

The following policy actions are recommended to increase the uptake of circular approaches in the agrifood sector: 

Improve data availability on food loss and waste

Sound interventions are hinged on robust data on food loss and waste. It is important to know the sources of food wastes along with their volume and composition to design appropriate measures at each stage of the value chain. This will also help identify food waste streams and strategies for waste recovery.

Raise awareness to increase food valorization initiatives

Many profitable opportunities exist in the conversion of agrifood waste into high-value products that go untapped because of lack of awareness on valorization strategies and investment costs. Bringing together industries, governments, and solution providers through knowledge sharing events will help disseminate the technologies available and valorization options.

Collaborate on circular solutions

Increasing food loss and waste are costing all actors along the food supply chain, including consumers. Therefore, this complex issue requires collaboration at all levels. Farmers, processors, and retailers must work together to counter the factors that lead to losses, such as poor harvesting and processing techniques. At the downstream level, partnering with food rescue programs and working with consumers to influence their behaviors can help reduce waste. Scaling food waste valorization can benefit from public–private collaboration, which can be an effective way of discovering and delivering innovations. 

Resources

D. Broom. 2019. South Korea Once Recycled 2% of Its Food Waste. Now It Recycles 95%. World Economic Forum. 19 April.

Dole Sunshine Company. 2022. Dole Sunshine Company Turns Banana Waste into Fibres of Purpose with Musa Fabric.

ID Capital. 2022. Waste-to-Value: Future of Food Upcycling in Asia. Singapore.

M.T. Aung. 2021. Bioeconomy in Thailand. Bangkok: Stockholm Environment Institute (SEI) Asia. 

V. Dhaul. 2022. Agrifood Upcycling Opportunities in Asia–Pacific. Presented at the Policy Actions for COVID-19 Economic Recovery Dialogues of the Asian Development Bank. 27 July.

Vandana Dhaul
Chief Operating Officer, ID Capital Pte. Ltd.

Vandana brings experience in entrepreneurship, innovation, investment, and agrifood tech accelerator management. She is a chartered financial analyst. She holds a certificate in Agriculture Technology and has completed a strategy program at INSEAD.

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