Rabobank study examines why more companies view waste as revenue
© Copyright Agri-Pulse Communications, Inc.
ST. LOUIS, Oct. 10, 2012 - The food, agriculture and agribusiness industries are transitioning from viewing organic waste as a cost to a viewing it as a potential revenue source, according to a Rabobank report published today.
In the report, titled “Don't Waste a Drop!”, the bank's Food & Agribusiness Research and Advisory (FAR) group looks at factors behind the industries' increasing interest in generating value from waste, and examines how some companies are investing in waste valorization.
“Organic wastes generated in the food and agriculture (F&A) sectors were once seen as a problem, but leading companies are successfully shifting these wastes from the cost to the revenue side of the ledger,” said Paul Bosch and Justin Sherrard, Rabobank analysts who authored the report.
According to the report, F&A companies around the world generate more than one billion tons of waste. The analysts said more companies are using waste to access new markets for energy and materials, while generating higher returns in the process.
Rising agricultural commodity costs, resource scarcity concerns and sustainability goals are some of the factors Rabobank identifies as driving the renewed focus on waste. It also notes growing regulatory pressures around waste disposal and technological developments as additional factors.
The report recognizes Heineken, Friesland Campina, Coca-Cola, Mars Food, Heinz, Starbucks and Walmart as leading companies with waste and sustainability commitments. For example, Mars Food's goal by 2015 is to have zero waste, 100% CO2 reduction, 100% renewable energy and 25% water reduction.
Companies choosing to use their waste in available energy and materials markets struggle to decide which methods best suit their needs, according to Rabobank. These methods include:
Discharge - using external parties to treat/clean waste
Waste reduction - improving process management and efficiency
Composting - using waste as organic fertilizer
Feed - livestock farmers using protein-rich waste to enrich animal feed
Onsite energy generation - either combustion or anaerobic digestion, with a higher value than discharged waste that gets incinerated by third parties
“While there are different business models and success criteria that apply, we believe that more F&A companies will follow because the drivers behind this shift are too important to ignore,” Rabobank analysts said. “Leader and early adopters are most likely to get the best returns.”
Global dairy companies, including Nestle and Friesland Campina, introduced programs to support farmers to install biogas plants and convert their own waste into electricity and heat, the report notes.
Further examples in the report include Nestle producing energy from coffee grounds in 20 of its 32 global factories. According to report, Nestle has 800,000 tons of coffee ground left over from processing each year, which is used to produce 3.5 percent of its energy consumption.
Rabobank analysts conclude that “now is the time” for F&A companies to address food waste as a way to generate value, because as the trend accelerates, risk will decrease and “as a result, first mover advantages and the associated returns could come under pressure.”
To request a copy of the entire report, contact Lisa Verbeck, Rabo AgriFinance Senior Communications Manager, at Lisa.Verbeck@RaboAg.com.
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