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Global Forum on Food Security and Nutrition • FSN Forum

Re: Development of a Code of Conduct on Food Loss and Food Waste Prevention

Zoltan Kalman
Zoltan KalmanPermanent Representative of HungaryItaly

Dear Dr. Silvia Gaiani,

Dear Ms. Maryam Rezaei,

Congratulations for the work done so far. I wish to submit some remarks regarding the serious issue of food waste, prevalent in particular in the developed countries.

I have not seen comments related to the main drivers of food waste. If we want a significant improvement, it would be essential to address all these drivers. These are rather complex and would need a holistic approach and would require structural changes in our current food systems.

Let me mention just two of these drivers.

1. The impacts of low food prices on the consumers' behaviour, including their buying preferences. In particular, I wish to refer to the food prices which are kept artificially low. The situation of “low food prices” seem to be the result of competition among retailers and as such they are apparently positive and useful. In reality, the prices are frequently kept artificially low; they do not reflect the real costs of production. Food industry suppliers are often under serious pressure by the retailers, and consequently, many times they are constrained to bring their costs further down, also by lowering the quality of the food they produce.

These low food prices seem to favour the poor people, but in reality, the poor suffer the consequences of this low food price policy, because low food prices regularly linked to low quality of food. These low quality, ultra-processed (frequently junk) food have serious consequences on the nutrition status of the poor populations, many times leading to obesity and overweight.

The artificially low food prices do not reflect the actual costs of production, due to our broken food system. The indirect or “hidden cost” are not paid by those who produce the food, they are paid by the wide public, the consumers. These are the so-called environmental and social externalities and there are many studies available related to this issue. Among these studies, I can mention the one prepared by the KPMG international audit company: https://assets.kpmg/content/dam/kpmg/pdf/2014/10/a-new-vision-of-value-v1.pdf. The KPMG study itself is much broader than food systems. On page 10 there is a graph, showing that the cost of environmental externalities is about 224 (!!!) % of the profit of industrial food production. It is only the industrial food production where the value is higher than 100%... The social, and in particular the public health externalities mean an even more serious and much higher “hidden” costs, including costs of treating malnutrition, obesity, and diseases like diabetes, cardiovascular and other non-communicable diseases. In this regard the TEEB AgriFood (a UNEP institute) has prepared some studies, including a report here: http://teebweb.org/agrifood/home/scientific-and-economic-foundations-report/. Another article related to the topic: https://futureoffood.org/cheap-food-aide-memoir/. These studies confirm the need to involve health and finance ministers in shaping the national food policies...

It should also be mentioned that IPES Food has interesting and relevant studies on the industrial vs agroecological farming and food production: http://ow.ly/V4O730lBbmW or http://www.ipes-food.org/images/Reports/UniformityToDiversity_FullReport.pdf?platform=hootsuite.

FAO had some papers as well related to true cost accounting: http://www.fao.org/family-farming/detail/en/c/436356/. Unfortunately, more recently I have not seen any similar documents from FAO.

The general conclusions of these studies clearly demonstrate that true cost accounting does provide appropriate scientific evidence and guidance and this guidance should be duly taken into consideration while transforming our broken food system.

Finally, and most importantly, artificially distorted, low food prices have a strong impact on the consumers. If food is cheap, it conveys the message that it does not represent a real value. Therefore, consumers will care much less about throwing food away. Higher food prices (reflecting the true costs of food) would discourage consumers to buy more than they effectively need. Realistic prices of food do not imply generally high food prices. Only those (ultraprocessed, junk) food prices would go up which do not internalize the environmental and public health externalities. Prices of locally produced, fresh, healthy, unprocessed (whole) food would become more competitive. For the benefit of all the population. Obviously, necessary measures would include decent wage level as well, but the costs of these measures are much less than the benefits of saving great amounts of health care expenditure.

As Pope Francis said, “Wasting food shows a lack of concern for others”. He also said: “When financial speculation manipulates the price of food, treating it as just another commodity, millions of people suffer and die from hunger.”

2. The other issue I wish to mention comes from the question of “cui prodest”? We need to understand who are interested to prevent food waste and who benefit from wasting food. In our world where “money makes the world go round”, all stakeholders along the food supply chain are clearly interested to decrease food waste, with one exception. The big multinational food retail chains can maximize their profit through increasing their sales volumes. This is why these retail chains regularly apply large-scale sales promotions (discounts, pay 2 – get 3, etc.) strongly encouraging consumers to buy food products (because prices are attractive...) even if they do not really need those products, and buy big quantities, much more than they really need. Big retailers do not care about food waste. On the contrary, the more food is wasted by consumers, the higher of their volume of sale will be…

At the same time, we need to acknowledge that there are efforts by some of the big retail chains to exercise for example “corporate social responsibility” (although it is considered another form of promoting image to increase sales…). Some of the retailers are even involved in actions of donations of unsold food to the poor through food banks. Some others are making real efforts to decrease the quantities of unsold food, in collaboration with the national legislators, through the development of markets for substandard products, amending food labelling regulations and establishing policies and legislation to facilitate food donation. Some others again, as also suggested by the proposed outline, do capacity building in inventory management and waste audits and measurement, and use differentiated pricing for products near the use-by date.

By putting all the above in evidence I had no intention to point fingers on the retail chains as the only player responsible for the problems. I am just proposing to do appropriate analysis of the role of all involved stakeholders, including the retail chains.

Regarding the measures above I consider them extremely important, but I think they do not address the root causes of the problem. For real improvements, we would need deeper, more targeted measures. Including the Development of a Code of Conduct on Food Loss and Food Waste Prevention.

As far as the transformation of the food system is concerned, structural, systemic changes are required, based on the scientific evidence provided by true cost accounting. Respecting the principles of sustainability is essential, paying due attention to the (so far neglected) environmental and social dimensions. Obviously, the economic dimension should be considered as well. However, we should also keep in mind that economic sustainability is nothing else but the result of the national and international "economic environment", in particular the financial policy incentives. In this regard, national legislators have enormous responsibility in providing the appropriate policy incentives to those food systems which are really sustainable.

Best regards,

Zoltan Kalman

Permanent Representative of Hungary

to the Food and Agriculture UN Agencies in Rome