Each year, ReFED scans the food waste landscape and predicts what might lie ahead for the food waste movement in the next 12 months. Here’s what we think you’ll see in 2023:
- Higher food prices and ongoing disruptions in global supply chains will continue to decrease the accessibility and availability of food – making it a natural and opportune moment to prioritize food waste reduction. Inflation is having a big impact on the food system, with food prices rising 12% since last year. At the same time, supply chains are still stuck in scramble mode, as external events continue to disrupt supply and demand patterns like never before, leaving corporations and consumers wondering where some of their favorite food items have gone. What does this mean for food waste? While higher food prices naturally incentivize consumers to waste less in their homes, restaurants may struggle to predict and adjust to changing consumer behaviors – like purchasing less because of higher prices – which could result in more surplus food. On the food banking side, the ongoing effects of inflation will keep the need for food assistance at levels similar to the pandemic, even as higher food prices also limit the amount that can be purchased by relief agencies. When will everything return to “normal”? We’re hearing it will take decades, not years.
- More businesses, governments, and funders will turn to food waste reduction as a methane solution. Food waste in landfills is a major source of methane, a greenhouse gas that’s 80 times more powerful than carbon dioxide. Research from the U.S. Environmental Protection Agency indicates that diverting food waste from landfill reduces the methane generation potential by 33%. Increased research and a stronger focus on methane from landfills in the coming year will naturally lead to more focus on food waste reduction as a key mitigation strategy.
- Along with continued state legislation, federal funding and Farm Bill negotiations will create new opportunities to scale food waste solutions. The EPA is currently accepting applications for $70+ million in Solid Waste Infrastructure for Recycling grants, allocating $32 billion to GHG mitigation efforts, and the USDA already allocated $90 million to food loss and waste. This means far more federal funding will be flowing into food waste reduction than ever before. Beyond that, there are great opportunities to incorporate more food waste reduction into the 2023 Farm Bill – an omnibus bill that every five years authorizes more than $400 billion in federal funding and is the primary legislation addressing all aspects of the American food system. The 2018 Farm Bill prioritized food waste reduction for the first time, and the 2023 Farm Bill is an opportunity for Congress to launch a national education and awareness campaign, increase funding support for food recovery infrastructure and post-harvest food recovery, support state and local policies that reduce food sent to landfill, and more. It also provides a much-needed opportunity to standardize and clarify date labels, which many UK stores have started to remove. At the state level, we expect the momentum of passing organics bans to continue, along with laws that encourage or mandate food rescue as California and New York demonstrate the success of their precedent-setting laws..
- ESG reporting will dominate business sustainability units, helping or hurting the food waste cause. Businesses are scrambling to meet the new SEC rule requiring disclosure of Scope 3 (indirect or value chain) GHG emissions for companies where they reflect a “material” component of overall emissions. This means businesses are hiring analysts, diving deep into ESG accounting, and establishing measurement methods. On the one hand, this is distracting from action, as some businesses may not feel they have bandwidth to focus on or adopt new food waste reduction solutions. Longer term, however, ESG reporting is building a foundation of measurement that will help internally illuminate the footprint of food waste – and ultimately justify taking action.
- Challenging macroeconomic conditions mean private and philanthropic funding for food waste solutions is expected to slow in 2023 – but the trend is not sector-specific. After a record year for U.S. private funding toward food waste in 2021, the total amount of investments in 2022 has seen a leveling off, primarily driven by the challenging macro environment. Most notably, the decline in venture capital activity relative to 2021 has made a dent, but it’s important to note that it is closer in line with historical averages. Private equity has followed a similar trajectory to VC, while mergers and acquisitions are down globally but not to the same degree. Particular attention is being paid to recycling solutions (anaerobic digestion, livestock feed, composting, waste-derived biomaterials), as platforms such as Atlas Organics (via Generate Capital) deploy capital, and changes in policy at the state and local levels are expanding opportunities. Companies turning food waste into animal feed – such as DoGood Foods, which has created a closed loop system where food waste from grocery stores is converted into feed for chickens that are then sold by grocers – are also seeing investor interest. Importantly, the need for grant funding for food rescue and food access may return to pandemic levels given the rise in food prices. Especially in an environment where funding is becoming difficult to come by, catalytic capital can fill in gaps while developing or aiding adoption of the next solutions for food waste – platforms like the ReFED Catalytic Grant Fund offer opportunities for investors to support organizations with funding that could unlock additional capital from other sources and advance impact.