I don’t need to emphasize or explain the sustainability challenges that we’re facing. It’s really hitting through almost all possible angles. Climate change has been is almost inevitable (sorry but we’re really bad at trying to keep the increment of temperature below 2 degrees Celsius), plastic pollution is hitting the poorest places in the world and affecting the ocean ecosystems (which one of them produces around 80% of the worlds oxygen), and we can’t stop wanting to produce more stuff and exploiting our natural resources! We, as a human race, are addicted to consumption.
I don’t come here with a solution to all since it’s impossible because of the plethora of challenges we have. However, I want to discuss one idea that I find interesting to improve our management of natural resources, especially in agriculture, the creation of a On-Demand Food Supply (ODFS).
As background to the idea, currently we waste around 1/3 of the food produced in the world!
This amount is enough to feed sufficiently the poorest people in the world, however, we are just wasting it. If at the moment we maintain such an inefficient system, we will suffer when our population continues to increase to 9 billion or more.
There are many explanations and factors that explain the mismatch between supply and demand of the food chain. However, I believe one of the main problems comes to how we make our decision around production. Almost for every product that enjoys increasing economies of scale, there is a study and decision on how much quantity we need to produce to meet certain profit levels. This decision is a combination of many information such as market information, expected demand, and others which will return an estimation.
I just need to mention the times we have suffered economic crises, failed businesses, or our personal lives to defend the fact that humans suck at telling the future. What we do is gamble. This gamble, multiplied by all the actors involved in the food supply chain, is helping us produce 1/3 of food waste. Therefore, reducing this gamble or increasing the odds that it’s correct will help us reduce our waste.
How do we increase our odds on the gamble? We have to plan better what we eat, and promote people into this habit.
So how would it work?
There are 2 main ways I see that the odds can be reduced:
- We create an infrastructure and ecosystem whereas consumers will request a certain amount of food before its production and pay for it in advance.
- The optimization of the food supply chain leads to minimum waste.
On-Demand Food Supply
How can we be certain of what are people going to eat? Just ask them what they will eat.
In the current dominant consumer behavior, consumers don’t need to worry what they’ll eat next month (Given that they have economic security), they just need to worry what they’ll eat the next week. They’ll just plan their groceries maybe 1 or 2 days in advanced, or not even plan it.
What if we created a on-demand system for food supply where people would order their food for one month in advance (Maybe more!) of its consumption? The more people would use it, the better the odds to have a correct estimation of how much to produce! We would reduce one of the incentives for companies to over-produce. Furthermore it can bring fresher food to our tables and, under my believe, it could bring more stability to the volatility of prices in agriculture and its effect in the farmers (which most of the time suffer if high economic insecurity).
However, this is just one of the main factors of over-production. Increasing economies of scale is still a strong incentive to over-produce. What else can we do to minimize waste? Reflecting its cost in the price of food.
Taxing Over-Production
In my perspective, food waste is the price we pay for having cheaper food. As I mentioned before: the food industry and agriculture are industries that benefits from increasing economics of scale. Therefore, if a company wants to have a competitive price for its product and keep a good profit margin, it will prefer to create waste by taking advantage of the economies of scale.
I’m not saying that creating waste in a company is good, if a company could have 100% efficiency and a competitive price would be a gold mine. However, over-production is a given because it brings more benefits than costs.
We have to create an incentive structure that diminishes the benefits of over-production. I propose a Over-Production Tax (Wow with the name). The Over-Production tax would be added to food that is stored more than a certain time in a warehouse of the supply chain or on the shelves of the stores. The goal of the tax is to reduce the economic benefits of economies of scale by making food on shelves or stored too long more expensive than food that was asked in the on-demand system.
The coupling of an On-Demand Food Supply infrastructure and the Over-Production tax would provide the incentive to consumers to plan their consumption, and for companies to be reluctant of waste if they want to keep a competitive price and their profit margins.
What problems can it brings?
Of course it’s not a perfect system. It requires a well-planned and extensive transition period for consumers to change their behavior. Moreover, we need to discuss how it affects consumers with different incomes, since the system is based on certainty on consumption at least one month ahead. Sadly, most of our economies don’t provide that luxury.
Nonetheless, we start to tackle the problems of environmental sustainability not only with technology (as we have been trying so hard lately), but with strategies that will change consumer behavior and an economy that can thrive with it.
