Industries in Depth

4 ways to reduce food waste in South-East Asia

This article is published in collaboration with McKinsey & Company
According to the FAO, post-harvest losses account for approximately one-third of the world’s food production.

Post-harvest losses account for approximately one-third of the world’s food production, says FAO. Image: Pexels/Hartono Subagio

Avinash Goyal
Senior Partner, McKinsey & Company
Ed Lock
Partner, McKinsey & Company
Deepak Moorthy
Associate Partner, McKinsey & Company
Ranali Perera
Analyst, McKinsey & Company
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Agriculture, Food and Beverage

  • South-East Asia faces a growing food security challenge as its population grows and climate change intensifies.
  • The region must take steps to increase agricultural productivity, reduce post-harvest losses, improve access to markets and build resilience to climate change.
  • These steps will require a coordinated effort by governments, businesses and farmers.

The population in Southeast Asia is expected to swell by 12 percent by 2035, from 670 million in 2020 to 750 million. This rapid growth in population, alongside the region’s climate volatility, will push up demand for food by 40 percent by 2050. Despite increasing pressures on food supply, about one-third of the total amount of food produced for human consumption is wasted globally. In Asia, more than 40 percent of this loss occurs throughout commodity supply chains at the post-harvest level—between harvest and the consumer.

Post-harvest loss can either be quantitative or qualitative loss. Quantitative losses occur when the amount of food reduces over time, while qualitative losses encompass those that affect nutrient composition, viability or visual and aesthetic appeal, contamination of a given food product, or breakage. Post-harvest comprises activities carried out from the time of harvesting through to the rest of the value chain, from handling to storage, processing, packaging, transportation, and marketing and retail.

Globally, reducing post-harvest loss could lead to gaining land virtually equivalent to three times the crop-land area of France. In Southeast Asia, we believe this represents an opportunity to unlock 4.71 million hectares (64 times the size of Singapore).

In this article, we discuss the extent of post-harvest losses in Southeast Asia, the role they play in worsening food insecurity in the region, propose steps stakeholders could take to reduce waste, and highlight various key examples.

Sizing the crop losses

A devastating amount of food is lost in the region every year by farmers to retailers. This is because post-harvest losses affect all major crops, including fruit, vegetables, and pulses. However, losses in rice, wheat, and other cereal grains—which account for 70 percent of all calories consumed—are particularly striking. In Thailand, for example, an estimated 19 percent of cereal grain is lost, with the largest fraction of wastage occurring during handling and storage. The severity of losses varies across different stages after harvesting, so a key factor to reducing post-harvest loss is to adopt a unified approach toward stemming these losses (see sidebar “Crops suffer significant post-harvest losses across the value chain”).

Crops suffer significant post-harvest losses across the value chain
Crops suffer significant post-harvest losses across the value chain Image: McKinsey & Company

How post-harvest crop loss contributes to food insecurity

According to the Food and Agriculture Organization (FAO), post-harvest losses account for approximately one-third of the world’s food production, making it one of the leading causes of food insecurity for millions of families across the world. In Southeast Asia, close to 17 percent of total food available is lost or wasted. A country like Indonesia loses 20 percent of its harvested crops each year, while the Philippines loses up to 50 percent.

Our in-depth examination of the farm-to-retailer food supply chain reveals that food loss— “food loss” happens at harvest or soon after, while “food waste” happens after the food reaches the retailer or consumer—is a result of inefficiencies, and its hidden costs are often equal to or greater than retailers’ net profit, even the best-performing ones.

The good news is that reducing food loss is immensely achievable. Food manufacturers and retailers, at the center of the food value chain, could cut food loss by 50 to 70 percent and are therefore uniquely positioned to lead efforts in this area. Two-thirds of the food recouped could be redirected to human consumption, while the remaining one-third could be used for alternative products such as bio-based materials or animal feed.

How to tackle and prevent post-harvest crop losses

Reducing post-harvest crop losses can have tremendous impact. For instance, reducing these losses in Southeast Asia by 40 percent is equivalent to gaining the food output from 1.8 million hectares of land, which is roughly 22 percent of Malaysia’s agricultural land. This potential gain in land can be achieved by approaches and technologies—both traditional and more advanced—that address why losses occur in the first place (see sidebar “Different waste-reduction technologies have been successful at different value chain stages”).

Different waste-reduction technologies have been successful at different value chain stages
Different waste-reduction technologies have been successful at different value chain stages Image: McKinsey & Company

The long-term adoption of these technologies may depend on a range of external, social, economic, and institutional factors, but here are four fundamental steps that businesses can take:

Develop and validate a clear baseline: Collect data on the losses experienced at the relevant stages in the value chain by weighing or counting, as determining the percentage of crops lost at each stage can establish a baseline. This can be validated by conducting further research through field trials or focus groups to understand the root causes and to test hypotheses.

Identify patterns in the value chain and determine how and where to intervene: Look for areas within the value chain that have the largest inefficiencies and earmark potential solutions that could address them. And then map these against existing capabilities to see where synergies lie for a higher chance of success. For example, in Vietnam, 5 percent of maize was lost during drying largely due to damage caused by birds, rats, and other animals, and improper drying techniques.

Have you read?

Get buy-in from stakeholders across the value chain: Many solutions today require an ecosystem approach to gain higher value. This involves bringing on board stakeholders from across the entire value chain—farmers to processors; input players such as fertilizer, crop protection, and seed vendors; and retailers and enablers like telco and logistical partners. Understanding the pain points of different stakeholders and whether the solutions proposed can work for them will go a long way to addressing the post-harvest crop losses.

Mobilize resources to implement one’s plan: In Southeast Asia, the food and agriculture industry needs rejuvenating. Technology adoption lags and investing in this area could therefore be particularly impactful. It would likely take a lot of education to convince farmers and those in the food processing sector to accept technology, and there may no way to do this other than to mobilize boots on the ground. Government agencies and technology providers might be best placed to do this—significant effort would be required on their part. If successful though, a younger, savvier workforce could be attracted to this industry.

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Industries in DepthSupply Chains and TransportationFood and Water
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