Already the market for surplus or residual stock is worth £3bn in the UK, says Graham Fisher, MD of resale company Surplus Food Times. “It’s amazing how enormous the surplus food market is in the UK,” says Fisher.
The problem is that nobody feels particularly comfortable about the fact this market exists, he says. That’s understandable, given the fact that brand credibility is at stake. However, as Fisher points out, it is big business. His company deals with 5,000 producers across Europe, including many household names, and supplies reworked products to retailers, wholesalers, public institutions and the foodservice sector.
There are all sorts of reasons why there is so much product available to the likes of Fisher. Suppliers may have to over-produce for retail customers - particularly when running promotions - to cope with spikes in demand. On top of that, suppliers can be trying to find a home for end-of-promotion stock, production trials, underweight packs, products that flop, wrongly packaged goods and products past best-before dates.
We’ve heard the stories about peas being rejected by supermarket buyers because they are not round enough or cucumbers because they are too bent. The flipside of that fussiness is a food industry generating the second highest waste level of any UK industrial sector.
It sends seven to eight million tonnes to landfill a year, just behind the metals sector’s 10 million tonnes. Biodegradable and non-biodegradable waste - anything from production surpluses or trimmings to out-of-date tins - are mixed together and sent off.
Soon, however, the food industry won’t be able to bury its waste problem any more. The cost of landfill is set to more than double in the next 10 years. So what exactly does the legislation entail and if waste can’t be buried, what are the alternatives?
The Landfill Regulations 2002 have been introduced to cut waste with stiff financial penalties. Commercial landfill tax is £14 a tonne but will go up £3 a tonne a year from 2005-06 to a target of £35 a tonne by 2012.
The tax rises are being introduced bit by bit to give UK industry time to adapt, but the stark prognosis is that by 2012 the overall food waste disposal bill will hit £385m.
And from 2005, the industry will have an additional burden - it will have to segregate animal and non-animal waste under the Animal By Products Regulations 2003.
The order outlaws sending waste food of animal origin to landfill and is being introduced to control BSE. Instead, former foodstuffs will have to be disposed of by approved methods such as rendering, composting or treatment with biogas.
To put that in context, the Composting Association estimates retailers sent 100,000 tonnes of biodegradable green waste to be composted last year. The Animal By Products Regulations cover an estimated 750,000 tonnes of animal waste.
Food companies will need to consider dealing with biodegradable and animal waste on site by installing composting facilities, says a spokesman for the Composting Association. At the moment, the problem is capacity. There are only 200 composting plants in the UK. None are licensed to deal with animal waste. And that means another massive - and hugely expensive - headache for retailers, wholesalers, caterers and food suppliers.
So given that such potentially huge bills are coming their way, what can be done by retailers and manufacturers?
Well, it’s fair to say the industry isn’t sitting back and doing nothing to reduce the amount it sends to landfill.
As we said earlier, retailers are already sending 100,000 tonnes of waste fruit and vegetables for composting. Sainsbury, for instance, has been trialling composting for eight years. And recycling manager James McKechnie says one scheme in London backed by Mayor Ken Livingstone and called London Remade is now breaking even. Another is being evaluated, and a third is to be set up. The chain claims it has more stores sending waste for composting than any other retailer - with 40 stores having composted 1,098 tonnes last year.
But composting can only be a small part of the overall solution. So the industry - particularly manufacturers - will have to take a hard look at others ways of cutting down the volumes they send to landfill. And that means doing more to ensure surplus stock does not become waste stock.
There’s nothing new in manufacturers trying to manage their surplus stock, usually by selling it on through secondary channels. But in the past the focus has been on trying to recover production costs - in future, it may become a vital tool for manufacturers looking to minimise their landfill bills.
He usually buys for a quarter of the recommended retail price of a particular product. It is then reworked at one of a network of sub-contracting factories and then sold on for half its original price. It’s not a solution that can be applied to every
product due to the costs of the reclaiming process, which can be very labour-intensive. Recently Fisher turned down a warehouse full of out of date mineral water due to the costs involved in reclaiming it. That left the supplier facing a £70,000 bill for disposal.
That last point may sound a bit odd. But as Fisher points out, best-before dates on ambient life are often arbitrary and don’t reflect the true life of the product. Short shelf lives may help with stock control, or they may meet a retailer’s product spec, but they inevitably create waste in the system.
This is where companies like Surplus Food Times can play a key role. It tests samples of products it receives under laboratory conditions before going to the manufacturer to ask for written dispensation to extend the best-before date. It is all legal, and an excellent way of ensuring products that are still in optimum condition don’t go to waste. But you can see why it is sensitive.
There is, however, one solution to the waste problem that everybody is happy to talk about - sending products to charities rather than putting them in skips
Retailers including the Co-operative Group and Sainsbury and suppliers like Nestlé and Kraft donate food surpluses to homeless people. FareShare distributes 1,500 tonnes a year supplied by retailers and manufacturers to homeless charities and plans to double the volumes it redistributes nationwide over the next three years.
It is also working on new ideas, such as a small pilot in partnership with Tesco. In this scheme FareShare is working with Wembley-based Tesco ready meals supplier Katsouris to pick up production surpluses that previously went to landfill. FareShare marketing and fundraising manager Alex Green says the charity is meeting other Tesco suppliers to talk about setting up similar systems. He says: “Everyone wins with our model. Hungry people get a meal and firms have a tried and tested model to enhance waste management strategies.”
But while the charity route provides the industry with another answer to the waste problem, experts say there is only one way to reduce growing landfill bills. As James Pike, manager for food and beverage at waste company Sita, says: “The obvious answer to the problem of food waste is to change processes so production is less wasteful.”
That’s a big ask as it requires the industry to rethink rubbish. Then again, there are millions at stake and time is running out.