Food Waste Solutions

Financing

Effective action against food waste requires a smart matching of the correct type of capital with the appropriate opportunity, and in many cases, multiple types of capital are required to fund food waste reduction solutions from conception to adoption.

• Significant Involvement by the Ultimate Solution Adopter - Adopting solutions will require food businesses, such as retailers, food service operators, restaurants, manufacturers, distributors, and producers, to contribute financial and human capital, as well as overall behavioral change. Many food waste solutions have an expected return on investment that can meet return thresholds of these entities; they just need to understand the direct, measurable, and tangible benefit to the business in order to devote organizational bandwidth to these opportunities. Corporate investment decisions largely occur because many solutions are simply good business decisions. Many food waste prevention solutions can positively impact corporate operations, thereby requiring the use of Corporate Finance and Spending. Certain solution providers or technology companies whose customers are food businesses may be viewed as strategic targets for acquisition.

• The Power of Catalytic Capital to De-Risk Innovation and Adoption - Catalytic Capital tends to be the first money in, thereby having a multiplier effect that stimulates larger amounts of future funding and overcomes system-level barriers. For example, many food waste solutions with valuable social and environmental benefits are not financed due to marginal profitability or the lack of proven, market-based, revenue generating business models. Catalytic Capital (including Government Grants, Non-Government Grants, and Impact-First Investments) can uniquely shift the economics of these projects above the necessary hurdle rate to attract market-rate financing.

• Still Plenty of Opportunities for Alpha Among Private Investors, Including Venture Capital - There is still growing recognition of the significant profit-boosting potential for food companies in an already tight margin business. Private investors, especially venture capitalists, have an important role to play in scaling and firmly establishing food waste as an investment category. Particularly, this form of capital can continue to fund cutting-edge innovation (especially as technology and reducing food waste often go hand-in-hand, including hardware- and software-driven solutions) and disruptive business models with a large potential total addressable market. We have seen new market-based innovations continuing to emerge, as well as several early stage food waste solution providers beginning to become household names, challenging existing legacy brands and services.

• Building Infrastructure with Commercial and Government Project Finance - Project Finance is necessary to cover the sheer size of the financial commitment for the build-out of facilities, equipment, and transportation, which are required to collect edible food for donations and sustainably dispose of food that was originally going to landfill. In a low interest rate environment, Project Finance can come at a historically lower cost. Enabling equipment and technologies, such as grinders for Centralized Composting and depackagers for Centralized Anaerobic Digestion, are not necessarily products that get the most attention but are vital for these processes. Local and regional capital in the form of philanthropy can also be useful in funding gaps in financing or higher-risk opportunities.

Policy

Legislative and regulatory actions can ease or enable the implementation of food waste reduction solutions. Policy and regulation are especially effective in overcoming challenges where there are 1) misaligned incentives between who is funding a solution and who is receiving the benefit; and 2) the necessity for pre-competitive business standards (e.g., food safety regulations). Additionally, federal policy plays an important role when differing state policies can make solutions implementation difficult (e.g., by standardizing conflicting data labeling requirements).

• Disincentivize, Limit, or Ban Food from Landfills – [State, Local; Legislative., Regulatory] Organic waste bans prohibit food waste from being sent to landfills, which in turn compels any business or other organization subject to the law (there are sometimes thresholds) to reduce their food waste. Organic waste bans are one of the most powerful ways to not only require recovery or recycling, but also incentivize preventive measures and food donations while also enabling measurement. Nine states currently have laws of this nature, as do several localities. Alternatively, while not as strong, increasing landfill tipping fees can achieve some of the same results by disincentivizing waste overall.

• Incentivize Innovations that Reduce Food Waste - [Federal, State, Local; Legislative/Regulatory] Rebates, tax deductions, or other incentives to spur adoption of existing technologies and encourage innovation of new ones could be granted to businesses that employ technologies that demonstrate an ability to reduce food waste by at least 10%. 

• Help Consumers Waste Less - [Federal, State, Local; Legislative, Regulatory] Households are the biggest source of food waste in the U.S., yet American consumers perceive themselves as wasting little, with nearly three-quarters reporting that they discard less food than the average American. Given this lack of awareness and high price of food, education campaigns on food waste are critical. Rather than creating multiple campaigns, the federal government could create a single campaign that can be used by state and local governments, businesses, and community organizations so that consumers receive the same message from multiple channels." and then add a fourth bullet w/ the date label language from other places.

• Expand Farm to Food Bank Programs – [Federal; Legislative] To reduce the financial barrier of farmers donating food, governments can set aside funds to cover the harvesting, processing, packaging, and transportation costs of donating agricultural products to food banks. Federally, Congress could continue the Farm to Food Bank Program (FTFB), authorized for $4 million/year in the 2018 Farm Bill as part of the Emergency Food Assistance Program (TEFAP), increase the funding for the program, and waive the state fund matching requirement. States can look to the Pennsylvania Agricultural Surplus System (PASS) as a model.

Engagement

Multi-stakeholder or systems-level communication, education, and training can facilitate the adoption of food waste reduction solutions. Because it’s a systemwide problem, reducing food waste often requires collaboration among different sectors within the food system—and between a variety of actors outside of it, including investors, policymakers, researchers, and more. Building and using cross-sector relationships can accelerate or even enable solutions to be implemented in the first place.

• Employee Training and Incentives - Staff participation and engagement in interactive employee training and waste reduction incentive programs can increase adherence to proper food safety, handling, and preparation protocols.

• Cross-System Information Sharing - Data-enabled coordination and transparency platforms in new and existing partnerships can address the current gaps in information and improve accountability across the supply chain.

• Pre-Competitive Collaboration - Pre-competitive collaboration, or the sharing of knowledge and resources between businesses, can drive greater efficiency in solutions adoption by breaking down existing market barriers and perceived competitive disadvantages.

• Cultural and Behavior Change - Collective efforts of industry coalitions and governments in culture and behavior change can catalyze a broader audience and emphasize improved food utilization, waste reduction, and food management skills through education.

• Engaging More Players - Outreach and education can increase adoption of food waste reduction measures with new businesses, policymakers, capital providers, researchers, and encourage community organizations to share practical learnings, inspire new innovations, and identify potential partnerships.

Innovation

The implementation of existing solutions can reduce a significant amount of food from going to waste across the supply chain. But there is still a need for new innovations to accelerate the adoption of these solutions and to develop new products, technologies, and business models to close the gaps where solutions either don’t exist or are struggling to adequately scale.

• AI & Predictive Analytics – AI-driven solutions can optimize supply chain efficiency, predict surplus before it occurs, and enable real-time decision-making based on inventory levels, demand forecasting, and dynamic pricing strategies. Machine learning models can also enhance food rescue by intelligently matching surplus food with recipients in need.

• Seamless Systems Integration – Technologies that easily integrate with existing operations, such as point-of-sale systems, inventory management platforms, and logistics software, can improve supply chain visibility, enable better tracking of product freshness, and streamline donation coordination to maximize food utilization.

• Automation for Efficiency & Waste Reduction – Automated solutions, from robotic harvesting and precision sorting to AI-powered food preparation and redistribution systems, can help reduce labor-intensive processes, improve efficiency, and ensure surplus food is effectively recovered and repurposed.

• Decontamination & Waste Diversion Technologies – Innovations that remove contaminants from food waste streams can expand the potential for recycling and upcycling, ensuring organic waste can be safely used for composting, anaerobic digestion, or alternative applications instead of being sent to landfills.

• Decentralized & Modular Waste Solutions – Compact, on-site digesters, small-scale composting units, and other decentralized technologies offer sustainable waste diversion options for areas with limited infrastructure, providing localized solutions to food waste challenges.

• Cost-Effective Tech & Solutions – Research and development efforts are needed to reduce the cost barriers of emerging waste reduction technologies, such as spoilage and pathogen detection sensors, smart food labels, home kitchen food management tools, and automated food rescue solutions, making them more accessible for widespread adoption.

• Innovative Business Models, Contracts, & Incentives – Reimagining traditional business models and contracting structures can help align incentives, distribute risk, and ensure financial sustainability. Examples include whole-crop purchasing agreements, outcome-based food waste reduction contracts, and revenue-generating models for nonprofits. Additionally, advanced purchase agreements between growers and buyers can optimize supply chains, reduce overproduction, and ensure more predictable product availability. Rebate programs can further incentivize waste diversion from landfills by encouraging the use of composting, anaerobic digestion, and other recycling solutions.

• Shared Platforms for Idle Assets, Surplus, & Byproducts – Digital platforms that facilitate the sharing of underutilized assets—such as cold storage, transportation, surplus food, and food byproducts—can improve efficiency, increase accessibility, and ensure that food and resources are directed to where they are needed most.