Reducing the world’s second-largest food loss with a digitalised supply chain 

Food loss and waste (FLW) in Indonesia is among the highest in the world, according to The Economist Intelligence Unit.  

In 2017, Indonesia was reported to have the world’s second-largest food loss and waste, with an average of 300 kilograms of food waste per capita every year. And, according to data from the National Development Planning Agency (Bappenas), FLW in Indonesia ranged from 23 to 48 million tonnes per year from 2000 to 2019.  

The economic value lost from food waste can be staggering. In 2012, the loss due to food waste was estimated at US$936 billion, more than the combined GDP of Indonesia and the Netherlands, according to the United Nations Food and Agriculture Organization (FAO).   

Food loss and waste along the supply chain 

Food loss is measured across the supply chain, from production to distribution among retailers, buyers, household consumers, restaurants, markets, and others.

A Bappenas study found that FLW in Indonesia originates from five stages along the food supply chain, namely production, post-harvest and storage, processing and packaging, distribution and markets, and consumption.  

The tipping points of FLW along the supply chain differ between low-income and high-income countries.  

According to a 2011 FAO report titled “Global Food Loss and Waste Assessment” , food loss in developing countries generally occurs at the beginning of food production, where storage methods are inadequate for perishables such as fruit and vegetables.

Meanwhile, in developed countries, food waste generally occurs at the end of the supply chain, such as during distribution to retailers, or unconsumed food in the households. 

Dr Sahara, Head of the Department of Economics at the Faculty of Economics and Management, Bogor Agricultural University (IPB), underlines that food loss also occurs in the international trade process, for example in the case of tuna exports from Indonesia.  

She found that large amounts of tuna exported abroad in the period 2014 to 2020 were rejected; 113,888 cases were rejected by the United States; 21,919 cases by the European Union and 4,661 by Japan.  

These rejections were due to the exports not meeting international food safety standards, in aspects such as the lack of infrastructure facilities, post-harvest damage and lack of product sanitation.

At the same time, the rejections could also be attributed to opaque regulatory standards from tuna-importing countries and complicated export procedures. 

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Supply chain digitalisation can reduce food loss 

Accuracy in food loss monitoring plays an important role in the national economy, as a shortfall of food commodities, such as chillies and shallots, can lead to inflation.  

Digitalising the monitoring process in the food supply chain can be an efficient and effective way to improve the accuracy of data and prevent further food loss. 

Sari Intan Kailaku, a researcher at the Centre for Agroindustry at the National Research and Innovation Agency (BRIN) and at the Blockchain, Robotics, and AI Network (BRAIN) Cluster at IPB, explains that digital technologies such as AI can be used to control food quality. 

AI can identify patterns, predict the molecular structure of bioactive compounds and predict the expiration of a commodity. Machine learning can also be used to analyse food genomic and metabolic data to develop the required culinary recipes.   

Sari further explains that Internet of Things (IoT) sensors can be used to streamline food logistics by relaying data on transport, temperature, humidity or light during the distribution process in each supply chain.   

The utilisation of IoT sensors along the supply chain of fish and shrimp commodities by eFishery, an Indonesian unicorn start-up founded by Gibran Huzaifah El Farizy, may be the most visible and popular evidence of digital technology employed in food logistics in Indonesia.

eFishery aims to offer affordable aquaculture technology solutions to help farmers monitor their fish or shrimp stocks, as well as water levels and animal feed, so that operation costs can be optimised.  

According to Gibran, one of eFishery’s solutions, eFeeder, has optimised yield days and increased fish production by reducing time and labour costs, while increasing predictability. Other solutions include eFarm, a management software which provides operational insights for farmers and eFisheryku, an all-in-one platform for farmers and consumers.  

Digital technology applications tend to be capital-intensive, especially in the initial period, and this could stifle digital transformation and innovation.  

Indradi Soemardjan, a coffee exporter who considered applying blockchain to the commodities harvested in Gunung Tilu, West Java, said that such technology would cost more than IDR500 million  (USD32,000).  

Modern and traditional methods to reduce food waste 

Besides digitalising the supply chain, food waste can be reduced through various methods of processing. GovInsider visited Waste4Change organisation's Material Recovery House in East Bekasi, West Java, to observe the processing and recycling of organic and non-organic waste.  

Waste4Change, founded by Bijaksana Junerosano, processes food scraps using the larvae of the Black Soldier Fly, which are voracious maggots that can reduce organic waste. Placing organic waste such as food scraps, leaves and others into a maggot cultivation system helps to reduce the volume of waste disposed of in landfills.  

Food waste can also be repurposed by traditional methods. Eko Sulistyanto, owner of Warung Tuman in BSD City, once observed stale rice being dried in the sun at Yogyakarta's Zero Point area. 

“In Javanese villages, almost no food is wasted,” he says. “Everything can be recycled before being handed over to the final recipient (livestock); chickens or goats.” 

Another food product that is upcycled for human consumption is tempe gembus, a fermented soy product which is made from the soybean pulp derived as waste in the production of soymilk and tofu.  

These solutions show that throughout the food supply chain, innovative ideas and solutions, leveraging traditional methods and modern technology, can come together to reduce food loss and waste significantly. 

This article was originally published in Bahasa Indonesia.