Food and Agri Industry is Turning Waste into Revenue – Instead of a Cost
Food and agribusiness companies are discovering innovative ways to create value from the waste that they produce, shifting the perception of ‘waste as a cost’ to ‘waste as a revenue’, according to a Rabobank report, Don’t Waste a Drop: Maximising the Value of F&A Waste Streams. This change has been enabled by the development of new technologies and the growing scale of food and agribusiness company operations.
Justin Sherrard, a renewable energy analyst at Rabobank, says: “More than 1 billion tonnes of organic waste is created in the food and agriculture sector each year, with almost 2,000 cubic km’s of water being used to produce this wasted food. While many F&A companies focus on minimising the amount of waste they produce and the associated costs, an increasing number of organisations are finding that waste can be a potential revenue stream, and are developing technologies to maximise this opportunity.”
Justin Sherrard adds: “There are now examples in all sectors and in all parts of the supply chain of waste being utilised to access new markets for energy and materials, and generate higher returns in the process. These range from animal feed and fertiliser to fuel for energy generation and the raw materials for bio-based materials such as plastics and chemicals.”
Rabobank’s report finds that:
* 20 of Nestlé’s 32 factories around the world get at least part of their energy from the 800,000 tonnes of coffee grounds the company produces as part of its processing operations. Nestlé now generates 3.5% of its energy production from this source.
* Starbucks is looking at the use of enzymes to break down food and coffee waste into materials that can be used to make a range of products including plastic.
* InScotland, Rothes Distillers produces heat and power from distillation of waste products that used to be sold as animal feed (when the market was there).
The renewed focus on food and agricultural waste is being driven by trends such as rising agricultural commodity prices, resource scarcity, growing regulatory pressure around waste disposal, company sustainability target opportunities and technological developments, all of which have combined to open up new opportunities along the entire supply chain.
Whilst there is no single path to success in creating wealth out of waste, Rabobank makes a number of recommendations:
* Ambition: getting the most out of your waste streams requires investment that may extend beyond operational budgets, so it is important that senior management are engaged, often through sustainability targets, is important.
* Understanding the resource: waste streams vary in quantity, quality, safety and other characteristics. Companies need to know the strengths and weaknesses of their waste streams – fibrous wastes are better suited for energy production, for example, while those high in proteins, sugar and starch can be used in bio-based products. Companies that lack scale can join forces to create new opportunities.
* Commercial maturity of technology: particularly important for separation and refining technologies.
* Co-location: partnerships are best managed close to the source of the waste, given the cost of transporting it. The nearer potential off-takers are to the waste, the lower the transport costs and the higher the margins. The higher the potential value of the waste stream, the less important this proximity is.
* Knowledge: companies that monitor waste management are usually better able to identify opportunities. Benchmarked sectors have an advantage here.
