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"Fighting losses is a technical-economic decision"

Those were the wise words of the scientific coordinator of Cepea, Geraldo Barros, in an interview for Hortifruti Brasil magazine, in August 2017, when the professor evaluated losses in the fruits and vegetables sector. “The extent of losses observed is a result of characteristics of the product, the technology used in trades and the economic calculation by players. Costs of zeroing losses are certainly prohibitive. Less effort in the loss control may be more economical”. Barros also affirmed that caution is needed when associating superficially the occurrence of losses to the inefficiency of the chain.

 

The chain inefficiency vision for loss combat is related to technical questions in production, post-harvest, difficulties of storage, inefficient packaging and poor trading structures. 

 

This vision is important, but it does not allow a more complete evaluation about losses. An interesting form to evaluate this subject is to treat it as a negative externality of the chain, which occurs when players interact in the market, harming external agents. Air pollution and waste are examples of negative externalities. Under this view, food losses in the food production chain result not even on higher prices to consumers and more limited supply, but also on increase of impacts on the environment, since there was the use of resources to produce a surplus that will not be consumed.

 

Professor Stuart Mounter, from University of New England (Australia), and other researchers in the same university use the concept of externality for food waste. In general, authors say that the producing sector has to produce more to cover all uncertainties, risks and requirements of the production chain. Without uncertainties, participants of the chain would have the perfect knowledge about how much of each type, degree and quality of food that would be demanded, reducing losses significantly.

 

The Australian authors, as well as Professor Geraldo Barros, show an important aspect about efforts to reduce food waste, which will have costs and benefits for players. Therefore, the solution to reduce waste will occur until benefits of these efforts are equal to costs. This fact takes us to the discussion that there is an optimum level of fighting losses in a private environment.

 

In a perspective of economic evaluation of combating losses, the innovation process is important against waste with economic technologies to producers and trading agents. Moreover, the integration between producer and the retail market and the balance of requirements in food quality/production, besides the higher information flow, are also important actions in favor of reducing losses/waste, because they reduce uncertainties and asymmetries in the trading process.

 

However, the private solution, through the economical view, cannot reduce all collateral effects of food waste, minimizing social costs; in other words, total costs for society in general. Public-private and/or governmental actions are important, since they do not increase costs significantly, reducing supply and increasing prices to consumers or economically invalidating the producing process, halting the production. Programs such as food bank, the promotion of non-standard fruits and vegetables, the standardization of food pattern and its producing process, among others, may reduce this “social cost” produced by waste. As a result, there will be an optimal volume of losses, which may be reduced as more information and technology are generated and available for players.

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