Don’t let it go to waste

Rescuing surplus edible food can be both a social and financial benefit, says report By Chris Daniels

When perfectly edible food is thrown out because it’s cosmetically imperfect or is past its best before date, it’s a big waste of the natural resources, labour and energy that went into producing and getting the product to shelf.

But that is not all that is being wasted.

An opportunity is also being thrown away that would strengthen the financials of the food industry, including retailers, while helping those facing issues of food insecurity in Canada and around the world.

That is the conclusion of Wasted Opportunity, the newest report in a collaboration between food rescue organization Second Harvest and Value Chain Management International (VCMI). The two organizations spent a year conducting research on the problem of food waste in the industry.

Their findings are shared across three reports. The first, The Avoidable Crisis of Food Waste, was released in 2019 and revealed the food industry to be responsible for almost nine of the 11.2 metric tons of food unnecessarily lost or wasted every year. It estimated the value of this food at $49 billion. The second report, Canada’s Invisible Network, was shared last year and counted the number of non-profits providing food to Canadians at more than 61,000—four times the number of grocery stores in the country. This illustrated the massive need for food to be provided at no or low cost to vulnerable populations.

Wasted Opportunity quantifies the gap between how much surplus food the industry donates and the human need. Of the edible product left as surplus by the food industry, only 4% of it gets donated and redistributed for human consumption. Meanwhile, an Angus Reid poll found almost 60% of families in Canada are struggling to put food on the table because of financial constraints. The poll was conducted in January 2022, as inflation was soaring.

Speaking about the disparity in April, Second Harvest CEO Lori Nikkel says it boils down to the industry’s perception of surplus food as being a “budget item,” or a necessary cost of doing business.

“The likelihood of waste occurs when there is no appreciable financial benefit,” she says. “Canada’s food industry makes profits from production, distribution and the sale of food. It is natural for industry stakeholders to view the donation of surplus food as less important to their commercial interests.”

To change that, Wasted Opportunity calls for the government to incentivize food donations with tax credits.

In the U.S., businesses, including retailers, can deduct up to 15% of their taxable income for food donations. The deduction is based on the lesser of either twice the value of the donated food, or the value of the donated food plus onehalf of the food’s expected profit margin.

But Canada has no such tax relief, which the study says would shift the industry’s perception of surplus food towards being a source of both societal and financial good.

During the height of the pandemic, the federal government created the Surplus Food Rescue program. It provided $50 million in funding for non-profits to purchase surplus food at wholesale cost or less from processors and producers (grocers were excluded, however). But the program was only a temporary measure.

“Businesses’ willingness to give changed immediately after the program ended, because they had no financial incentive to donate,” says Martin Gooch, CEO of VCMI.

Tax incentives, while simultaneously increasing disposal fees to landfill, would change the math.

There are additional financial benefits to keeping food out of landfill, given the rotting of it spews methane, a greenhouse gas that is 21 times more potent than carbon dioxide in trapping heat in the atmosphere.

Donations can boost “social capital,” not to mention financial market capital. That is because of the consumer and investor attention on what corporations are doing about climate change. As Wasted Opportunity points out, “reducing greenhouse gas emissions is a key element of corporate social responsibility metrics, which are important to institutional and private investors. In turn, this impacts share prices and consumer purchasing habits.”

Gooch says BMO Wealth Management has been measuring grocers Loblaw, Metro and Empire on their “ESG impacts.” And in a 2022 report shared with him, investors in Loblaw, for instance, ranked “food waste” as “very high” in importance, ahead of impacts like “local sourcing” (“high”) and “water“(“moderate”).

“It shows the importance of reducing food waste to investment decisions for the major grocers,” says Gooch. “They are now looking at their vendor base to meet their ESG commitments, making it both an issue for publicly-owned and private companies.”