An Environmentally and Socially Conscious Food Supply: Our Investment in Agricycle
Ever have that moment when you realize your yogurt in the fridge has expired and feel bad that you have to throw it out? Or maybe it’s the strawberries you bought a week ago, or the chicken that somehow found its way to the back of the shelf. Whatever it is, chances are that many other people have the same problem.
Across the globe, there is one pound of food lost or wasted for every two pounds that makes its journey all the way through the supply chain and the digestive tracts of consumers. That’s right, one-third of all the food produced in the world fails to fulfill its nutritional destiny. That’s 2.8 trillion pounds each year. All that unconsumed food also accounts for vast amounts of carbon emissions from wasted production resources, adding up to around 6% of total global emissions. But the problem is much more complicated than, say, a few slices of pepperoni falling off of each slice of pizza you pick up.
Clean Energy Trust’s investment in Agricycle is part of our push to help solve this problem. But first, more on why there is a problem in the first place.
Food Loss and Food Waste: The Production/Consumption Problem
Problems with (not) saving food are rampant across the supply chain and exist in different forms. First of all, food loss and food waste are two distinct issues:
Food loss is chronologically the first piece, and refers to any degradation that occurs from harvest up to, but not including, retail sale. So if a farmer’s crops spoil from drought or pests, or if a tanker truck crashes and spills thousands of gallons of milk on the highway, that’s food loss.
Food waste is everything that happens after retailers or food service businesses get a hold of the product. The expired stuff in your fridge? Food waste. Drop a burrito in the Chipotle parking lot? Also food waste. Even when grocery stores overstock and are forced to dump unsold expired produce, that’s food waste.
However, globally, food loss is the overwhelmingly bigger issue. In industrialized regions of North America and Europe, it’s roughly a 2 to 1 ratio of loss to waste. However, in the vast majority of the rest of the world, it’s closer to 10 to 1. And in particularly poverty-stricken regions like parts of Sub-Saharan Africa, there is an even greater difference.
Emissions-wise, food loss is also the much bigger issue. Of the 6% of total global emissions comprised of food loss and waste, loss accounts for two-thirds, or 4% of total emissions. Much of this is due to inefficiencies in the supply chain, in particular spoilage resulting from improper storage and lack of preservation technologies.
Extreme Poverty and Hunger: The Social Problem
Globally, around 10% of the population, more than 700 million people, lives in extreme poverty today and struggles to get access to basic necessities. Much of this population is concentrated in rural areas, where the poverty rate is 17.2%, more than three times that of urban areas. More than half of those in extreme poverty live in Sub-Saharan Africa.
Among the many well-documented effects of extreme poverty is the problem of undernourishment from lack of access to quality food. While the global population of undernourished people had steadily decreased from the mid-2000s to the mid-2010s, progress plateaued through 2019. And, in 2020, with the advent of the COVID-19 pandemic, undernourishment shot up 20% to nearly 800 million people, all the way back to 2005–2006 levels. What’s more, substantially all (99%) of these undernourished people live in Asia, Africa, or Latin American and the Caribbean.
This is just the tip of the iceberg. Food insecurity–a perhaps less acute but more long-term problematic issue–affects nearly a third of the global population and is especially prevalent in Africa (59.6% of the population affected) and Latin America and the Caribbean (40.9% of the population affected). Going forward as the global population continues to climb, billions and billions more people will be impacted–all in a world where one-third of food produced is lost or wasted each year.
Smallholder Farmers: The Intersection
Smallholder farmers lie squarely in the middle of these prevailing issues. They produce around a third of the world’s food supply and are at the bottom of the economic pyramid in most geographies. Eighty percent of the global population in extreme poverty lives in rural areas where agriculture is the primary driver of economic activity and income.
Despite their minority capacity as food producers, smallholder farmers account for the majority of food loss globally. This is especially true in developing economies, where most smallholder farmers regularly lose half of their crop to spoilage and pests. In contrast, large-scale farming operations equipped with preservation technologies and modern agricultural inputs are able to reduce their losses to around just 2%.
The discrepancy comes from the fact that it is incredibly difficult to disseminate modern equipment to these smallholder farmers. Eighty-four percent of the world’s farms are smallholder plots, and most of them are scattered across remote, rural regions that are far away from ports and other trade hubs. Farmers who attempt to seek out and purchase preservation technologies and other equipment also face financial obstacles, as rural populations around the world are often underbanked. Given the relatively low population density in these areas, financial institutions are unincentivized to open branches. For example, in rural Nigeria, 62% of farmers live more than 5 kilometers away from a bank, and as a result only 20% have a bank account.
Another issue is that, because agriculture is the primary economic activity in these regions, local markets are extremely oversaturated. Only a lucky few are able to sell all of their product on a given day, and coupled with the fact that many of these sellers walk many miles just to get to the nearest market, much of the produce that is delivered to market and is unsold at the end of the day simply gets thrown out or left to rot. This is a huge loss of economic potential, as this produce is often among the freshest organic fruits and vegetables in the world and would fetch huge price premiums in most international markets.
Domestic and foreign aid is certainly available, but most existing programs do not address the root of this issue. Of the over $7B in aid the United States sent to Africa in 2019, less than 10% went towards agriculture and economic growth. Many food aid programs are also focused on just shipping food products to recipient populations. While this may be effective in the short term, it is only efficient for large, concentrated populations. It would be much better to educate farmers and open up pathways for them to access modern preservation technologies and bring their operations into the 21st century.
Agricycle: The Optimal Solution
Started in 2015 as a freshman year college project by founder and CEO Josh Shefner, Agricycle provides an elegant, sophisticated solution that fills each of these gaps. Agricycle has developed low-cost preservation technologies and a global supply chain for smallholder farmers in impoverished areas across the world to drastically reduce post-harvest food loss, uplifted local economies, and introduced sustainable food products and ingredients into the global food economy.
Agricycle primarily targets smallholder farmers in the 5–50 tree range, who are most critically affected and most widely spread out geographically, and also provides pathways for their families to be a part of the process through women- and youth-led processing cooperatives.
The first piece of the solution is Agricycle’s passive solar dehydrator technology. Beginning with some prototypes Josh developed while still in school, Agricycle has engineered a very low-cost, low-tech, highly efficient passive solar dehydrator that is easy to use, easy to clean, and easy to store. To make it even easier for farmers to afford these dehydrators, the company has partnered with local financial institutions in each of its markets to structure microloans that cater to their individual needs and means. Agricycle estimates that over 90% of the produce that goes through the dehydrators of the farmers in its network would otherwise have been lost; through these dehydrators, Agricycle was able to prevent 354,509 pounds of food loss in 2020.
Logistically, the company hires local truck drivers to pick up the produce from its network of over 44,000 farmers and deliver heavily discounted agricultural inputs like seeds, feeds, and fertilizers on the way. Regional processing cooperatives prepare and package the products to stringent international food safety standards, and Agricycle ultimately distributes the products through three brands: Jali Fruit Co (all-natural sun-dried fruit), Tropicoal Ignition (better-performing, sustainable charcoal made from coconut husks and palm kernels that would otherwise be considered waste), and Field Better Ingredients (nutrient-dense, organic food ingredients for commercial food manufacturers).
To maximize the operational efficiency of its platform and keep the whole process lightweight, Agricycle handles training, mobile payments, and communications with its members primarily through a bulk SMS network. The company is also even developing a blockchain-enabled QR code traceability system for customers to learn about exactly where their products came from.
What’s great about Agricycle’s platform is that it is a hub-and-spoke model easily set up in any of the company’s target geographies. Rural smallholder farmers across the world are facing many of the same problems, and Agricycle can deliver the same value wherever they are. With operations already running in Kenya, Tanzania, and Uganda, Agricycle has its sights set on expansion to other countries in Sub-Saharan Africa, Latin America, and beyond.
One Team, One Dream, One Mission
Agricycle is operated by a rockstar team spread throughout the US and each of its international markets. Led by Josh Shefner, who has fulfilled the dream of all entrepreneurs and turned his passion into his profession, the Agricycle crew is, as Josh would put it, delivering on a moral obligation to create positive impact simply because they have the ability to do so. Driven by a mission to eradicate extreme rural poverty, Agricycle is scaling a solution for both a social and an environmental crisis.
At Clean Energy Trust, we seek out the best and brightest entrepreneurs building solutions for a brighter climate future. Not only is Agricycle delivering a highly scalable way of tackling the global food loss problem, it is doing it while uplifting some of the most climate-vulnerable populations. Environmental good and social good are one and the same for Agricycle, and Josh and his team are creating pathways to better lives while creating pathways to a better future.
Learn more about Clean Energy Trust’s portfolio companies at https://www.cleanenergytrust.org/portfolio
