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2 ASU projects aim to combat rising problem of food waste

USDA awards nearly $1 million to research from W. P. Carey School of Business looking at online marketplaces, scan-based trading

July 24, 2017

Researchers from Arizona State University’s W. P. Carey School of Business will explore solutions to food waste through two unique research projects funded by nearly $1 million from the USDA’s Agriculture and Food Research Initiative.

Online marketplaces to reduce waste

The first project will test online marketplaces and mobile apps. These emerging sharing-economy companies could help farmers, restaurants, retailers and households manage problems with day-to-day food waste. 

For example, if a farmer has a box of ugly fruits or tomatoes that won’t sell in the supermarket because they’re too big for the grocery-store display, he can use an online platform to let others know he has a surplus of food. Consumers then visit the app or website, select the items they want, and the app coordinates delivery logistics and payment for the farmer.

Lead investigator Tim Richards says the idea is making markets out of what would otherwise be waste. 

“In Arizona and around the country, 18 percent of landfills is food waste, according to the EPA — and that may be a conservative number,” says Richards, the Marvin and June Morrison Chair in Agribusiness at the W. P. Carey School. “If we can figure out a way to better utilize food that would otherwise be wasted, we can minimize what goes into our landfills and more importantly make better use of the water that’s used to irrigate plants, saving 25 percent of our freshwater supply each year.” 

Researchers at ASU are teaming up with Imperfect Foods, a startup delivery company based in San Francisco, to test market theories and demand conditions. In addition, the experiment will use 400 business students at Arizona State University and California Polytechnic State University to measure their use of food waste.

At the conclusion of the two-year research period, investigators hope to be able to answer the following:

  • How will these innovations impact farmers and consumer food prices?
  • How will knowledge and information impact demand uncertainty among food manufacturers, family meal planning and food waste?
  • Are stakeholders in the food supply chain receptive to dealing with collaborative enterprises?

Food Waste: A Market-Based Solution Using Commercial Peer-to-Peer Mutualization Systems won an Agriculture Economics and Rural Communities (AERC) grant totaling $496,589. 

A closer look at scan-based trading

A second ASU research project will put scan-based trading (SBT) under the microscope. SBT is a newer type of contract used by food suppliers and retailers such as Walmart and Target, where the supplier retains ownership of the inventory in stores until the product is scanned at the register for checkout.

Suppliers, such as dairy producers or bakery vendors, are responsible for keeping products in stock, while the retailer provides vendors with valuable shelf space and its employees manage that space. Any loss of product between delivery and checkout is typically the responsibility of the supplier, not the retailer. 

One major problem in SBT is “shrink,” the loss of product between delivery and checkout — anything from expired inventory and broken cartons to theft. This could mean a loss for the supplier under an SBT contract, who may decide to increase wholesale prices to cover its losses. The retailer could then pass that increase along to customers by raising prices, according to lead investigator Elliot Rabinovich.

“We hope to explore the causes of shrink and how to address it. Can suppliers do a better job at managing it? Or do retailers need to have greater sensitivity — regardless of whether they own the inventory or not,” said Rabinovich, a supply chain expert and the John G. and Barbara A. Bebbling Professor of Business at the W. P. Carey School. “It’s not finding out who’s at fault, it’s how do we work together.”

SBT contracts do have benefits, including giving suppliers access to real-time sales information from retail checkouts and the flexibility of replenishing stock in-store without having to go through a distribution center, which traditional contracts often require. 

At the conclusion of the two-year research period, investigators hope to be able to answer the following:

  • How can SBT contracts support the objectives for all involved — retailers, suppliers and the farmers who sell to them?
  • Is there potential to minimize food waste through the supply system by using SBT?
  • How does shrink at SBT stores and non-SBT stores impact wholesale and retail costs?

Scan-Based Trading: Opportunities for Enhancing Supply-Chain Efficiency won an AERC grant totaling $496,407. 

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