Supply chain inefficiency contributes significantly to the 1.3 billion tonnes of food that is lost each year, according to a report by the World Economic Forum in collaboration with Bain and Company.
The study calls for urgent implementation of the Bali trade accords and deeper behind-the-border reform to meet world food demand, and foster industrial development.
Attacking these barriers would help improve the livelihoods of billions of the world’s poorest people, and cut emissions, energy and water use. Lost or wasted food costs over $750 billion per year, the report, Enabling Trade: From Valuation to Action, argues.
It points out that agriculture and consumer policy remains focused on production and retail improvements, with insufficient action on supply chain and trade connections.
In poorer regions, 94 per cent of food loss and waste stems from supply chain inefficiencies. Yet only 5 per cent of agricultural funding goes to postharvest improvements. Supply chain improvements increase flexibility and early-stage value for food – and cut loss. Overly strict product standards, poor transport infrastructure, border delays, and poor business climates are the main supply chain barriers for agriculture.
In manufacturing, it says, investments could be unlocked by accelerating cross-border connectivity. Overcoming deep competitive differences, automotive executives align around the trade priority of faster and simpler border crossing.
The report calculates that some US$ 6 billion is spent each year by the automotive industry on inventory-carrying costs at borders. If redirected into product development, this could pay for up to 6 new car launches every year.
“The report highlights an important new opportunity for trade liberalization and economic growth, combining border and behind-the-border reforms to strengthen the competitiveness and job-creating potential of key economic sectors,” said Richard Samans, a managing director of the World Economic Forum.
“Such a strategy has the potential to help countries and regions translate the recent WTO agreement on trade facilitation into tangible economic gains.”