Price Volatility is Greatest Factor in Food Waste

WASHINGTON, DC – USDA estimates that annually, over $161 billion of food at the retail and consumer stage of the supply chain goes uneaten. Food loss also occurs on farms and in the pre-retail distribution channels. The United Nations (UN) Food and Agricultural Organization (FAO) estimates 30 percent of losses in fruits and vegetables occur in these earlier stages. Recently, USDA’s Economic Research Service (ERS) examined the substantial role than expected costs, revenues, and risks play in food loss at the pre-retail level. One factor influencing food loss is price volatility. When prices fall below the cost of production, it becomes unprofitable for growers to advance produce through the supply chain. Alternatively, when prices rise, growers harvest more intensively, and may have the incentive to send the lower-cosmetic-quality product to market, which can then be subject to increased loss further down the supply chain. Other economic factors that influence the level of food loss include labor cost and availability, availability of cold-chain infrastructure, aesthetic standards, consumer preferences, contract requirements, and policies related to the harvest and marketing of fresh produce.