Food prices skyrocketed in 2021 - farmers, manufacturers, and retailers were all feeling the squeeze, and you probably noticed it yourself at the grocery store.
Last year, inflation reached the highest annual increase since 1982 - the Bureau of Labor Statistics reported that the overall consumer price index (CPI) hit a 7% increase over the last 12 months, with the food index individually rising 6.3%. Both the all items index and the food index peaked in November, but continued to increase in December as well.
Rising prices might not be too much of a concern, if incomes were increasing accordingly. However, although wages have risen in the last year, that increase has been outpaced by growing inflation.
There are a few factors that economists highlight to explain surging food prices:
- It was a rough year for production. Farmers and industry are still recovering from pandemic shutdowns in 2020, often not quickly enough to meet ballooning consumer demand that rebounded in 2021.
- On top of that, climate change-related extreme weather events (drought, heatwaves, ice storms) damaged crop yields and led to further shutdowns.
- Labor shortages and supply chain disruptions continue making it more time-consuming and more expensive to source and ship ingredients and packaging.
In this environment of uncertainty, scarcity, and higher prices, reducing food waste becomes even more critical, because it reduces costs and controls supply chain risks.
Consumers are responding to the price changes they experience when purchasing food. Higher food costs incentivize better food management practices, and since ReFED estimates that more than a third of all U.S. food waste occurs at the household level, this may prove to be an opportunity to significantly reduce waste from consumers. However, the social implications of rising prices are important to consider. Consumers see the increases as a sign of a weak economy, which has contributed to President Biden’s approval rating plummeting. And some households are already feeling threats to their food security and have had to make serious adjustments to their diets and cooking styles.
And it’s not only at the household level - in restaurants, at grocery stores, in processing centers and warehouses, and on the farm, workers and other stakeholders are increasingly feeling the pressure because not all costs can get passed on to the consumer. ReFED estimates that the value lost through surplus food across all sectors was $408 billion in 2019. As food prices and the cost of doing food business increase, this cost will only grow – so reducing food waste can significantly mitigate unnecessary expenditures.
In 2022, consumers are expecting to pay more at the grocery store, and manufacturers are expecting to raise prices as well. However, some major manufacturers and retailers, who wield the purchasing power to determine pricing, were found to have actually grown their profit margins over the last year, despite there being an opportunity for them to shoulder more of the anticipated costs, rather than passing them on – thus alleviating the burdens that are falling especially hard on laborers and consumers.
At the same time, some experts argue that we still aren’t paying enough for food to accurately reflect the true environmental and social costs of our diets. These costs include greenhouse gas emissions, diet-related diseases, and social welfare – and disproportionately impact certain members of society, particularly BIPOC communities.
Nevertheless, solutions to address food waste go beyond short-term cost savings and are an important investment in equitably supporting all communities in adapting to climate change. Without knowing with certainty what the future holds in terms of climate, logistics, and the economy, we need to drive progress towards a food system that’s sustainable, inclusive, and resilient - and this is a process that takes time.
To jumpstart progress this year, the Solutions Database in ReFED’s Insights Engine details the top solutions that stakeholders across the supply chain can implement to reduce wasted food, while also conserving precious resources and mitigating climate impact:
- For consumers:
- Think about portion sizes when preparing or ordering food to avoid waste at the end of a meal
- Plan ahead when shopping to avoid overbuying in the first place
- Learn more about what date labels mean and how to store and prepare food to avoid waste
- For food service:
- Implement waste tracking programs to identify where and why the most waste occurs
- Utilize markdown alerts to discount food that is nearing the end of its shelf life
- Pursue imperfect and surplus produce channels to generate revenue and avoid wasting edible but unattractive food products
- For retailers:
- Pursue enhanced demand planning to avoid over-ordering
- Decrease transit time and integrate intelligent routing to reduce spoilage during transport and storage and to maintain freshness
- For manufacturers:
- Upcycle scraps and byproducts to generate revenue while avoiding discards
- Promote sales of distressed or traditionally undesirable products
- Optimize manufacturing lines to reduce generation of waste material
- For producers:
- Pursue imperfect and surplus produce channels to generate revenue and avoid wasting fruit and vegetables
- Request expanded purchase specifications to reduce rejected shipments
- Decrease transit time to reduce spoilage during transport