World Food Bank’s Trading Market Turns Would-be Waste Into an Asset

The World Food Bank works to address hunger and food waste at scale by leveraging a trading market model, with dried food as the commodity. Perfectly edible excess produce, often nearing its expiration date, is held in reserve and sold around the world at a reduced price, creating income for what might otherwise be lost, while producing high-quality dried fruit and vegetable products.

World Food Bank Chairman Richard Lackey had a chat with Waste360, pausing on the organization’s work to train and certify thousands of U.S. farmers in regenerative practices; its work to bring together waste management pros and grocery store chains to catalyze waste into upcycled foods. And he gives his take on what’s really fueling food waste and what it will take to begin to mend a broken food system.

Waste360: Who does World Food Bank work with and how?

Lackey: Private companies, development banks, and institutions join in regional partnerships created to finance agriculture and food-centered ecosystems.  They are designed to be profitable and to be dynamically hedged because of their ecosystem approach.

In the U.S. we are working with organizations in five states to train and certify thousands of farmers planting over one million acres with regenerative practices.  The partnership brings together companies that produce biochar, soil amendments, and manufacturers willing to pay a small premium for the higher quality grains and pulses produced. 

Now we are looking for partners to aggregate more #2 fruits and vegetables or those that grocers are wanting to sell quickly to upcycle into energy bars and smoothie mixes.

The World Food Bank is also working to upcycle ripe fruits and vegetables and more into fortified energy bars to be used in school feeding programs.

Waste360: What will it take to realize true impact from food upcycling initiatives?

Lackey: We are working to bring together leaders in waste management and grocery store chains to catalyze waste into upcycled foods. This will only be efficient if done at scale and will be most attractive for investment if government agencies like the U.S. Department of Agriculture (USDA) and the Federal Emergency Management Agency (FEMA) are able to commit to long-term offtake agreements. 

What makes this difficult is that organizations like FEMA work largely on an annual budget and will require significant political support from industry and both Houses of Congress to have a unique solution like this added into their mandate.  

Waste360: In your experience, what’s fueling food waste and food system inefficiency?

Lackey: Food system inefficiency in developed markets comes from decades of focus on getting more products to more consumers faster and with longer shelf life with less concern on how product is to be managed after the sale.  The result is enormous amounts of waste.

Food system inefficiency in developing markets comes from the general lack of a formal ecosystem to produce, harvest, gather, and store commodities.  This results in volatile production volumes of poor-quality produce that doesn’t get to where it needs to go in a timely manner.

Waste360: Discuss problems around soil health and the concept of “institutional” composting to attack them at scale

Lackey: The health of our food is derived from the soil.  More than 850 micronutrients come together along with bacteria and fungi to produce each grain, pulse, fruit, or vegetable.  Today soil is largely dirt.  It’s dead.

Composting may be the link to rebuild dirt into soil. Individual family composting is great, but the millions of acres that need regeneration will likely require institutional solutions.

The most likely buyer is also the most likely benefactor: municipal governments.  Waste management companies could vertically integrate their services to provide commercial composting with the offtake being purchased by cities for large-scale soil biome building, or for sale to tree farms, greenhouses, and more.

Waste360: What’s the difference in how food banks work and in how World Food Bank works?

Lackey: Food banks typically suffer from inconsistent supply and demand.  They have too much of some things sometimes and not enough of other things at other times.  We appreciate the value of fresh food at food banks, but we at World Food Bank are promoting a model for drying and storing fruits and vegetables that are beginning to pass their peak.  Dried fruits and vegetables can be stored in air-tight bags that can add two to 10 years to their shelf life. 

Waste360: How do you help farmers ensure that what they grow and raise is eaten rather than wasted?

Lackey: Farmers typically see waste in two forms.  When the product they grow has damage from pests or disease it is lost.  This can happen during the season or post-harvest while in storage. The second form is when there is not a ready market for what they have grown, and it rots while waiting on a market. World Food Bank helps farmers to grow products that are less susceptible to pest and disease, and we provide an offtake guarantee so that they will always have a market. 

One partner, a large poultry producer operating in Zambia and Zimbabwe, has more than 115,000 farmers engaged in a tiered educational program.  Farmers living there have been told they are poor people living in a poor country.  We give them a new narrative. We have organized farmers into clubs and have them learn to grow broiler chickens. In this scenario it is not uncommon for a farmer to see a 50% return on their original investment every six-week growing cycle.  They are also trained to use soil tests, no till planting, and proper crop rotation for better outcomes.

Waste360: Tell us more about the farming “clubs” and what’s accomplished through them

Lackey: World Food Bank Agri-Services Zambia finances these farmer cooperatives (clubs).  They have mastered efficient feeding models and conversion of 100% of their waste into fertilizer. They use no chemical fertilizers; and they are paid a premium for their eggs and their broilers because they are naturally fed.  The poultry company is able to scale quickly as more out-growers want to join the program, and consumers are eating food that is much healthier.

In addition, we teach them to use the chicken waste to make fertilizer that builds strong soils, and we guarantee them a market for their crops, some of which go right back into making chicken feed.  We regularly see incomes grow more than 20x in one year. 

Waste360: Describe World Food Bank’s school nutrition program work

Lackey: World Food Bank is working in the United States with three metropolitan areas to launch upcycled energy bars that are created from peak of freshness fruits and vegetables.  Through this upcycle model we get great nutrition into the hands of school children at a fraction of the cost.  

The model has to change in developing markets.  In South Africa school children living in refugee camps can be fed a porridge made from locally grown corn and other ancient grains, then fortified with 26 minerals and vitamins.  By sourcing locally rather than importing from Europe or the U.S. we support local farmers and ensure the food prepared adheres to local preferences.

Waste360: Can you elaborate on how you extend food’s shelf life?

Lackey: We strive to source grains, pulses, fruits, and vegetables that are near their expiration dates for a fraction of market price. We dry and or powder these food items, which brings 1) extended shelf life, 2) added value, 3) opportunity for traditionally high-value products to be produced at a lower cost.

Waste360: You say you aim to rebuild the world’s soils. What’s the plan to accomplish such a tall task?

Lackey: Through the regenerative farming process, the World Food Bank champions combinations of composting, biochar, and no-till farming practices to rebuild the world’s soils. This will require millions of tons of composting that would ideally begin at the restaurant, grocer, or manufacturer level and then be managed by traditional waste management organizations who have mastered the logistics of waste transport.

Waste360: What are your greatest expenses and how do you work toward financial sustainability?

Lackey: The largest expense we incur is what we call a 'treasury function.'  This is the funding of inputs for animal farmers and guaranteed offtake or purchase of crops from small farmers.  This commitment keeps prices from dropping too low for small farmers, allowing them to grow confidently every year. 

We use a technology that allows us to store grains and pulses for years, which takes much of the calendar risk out of holding those commodities.  It does, however, require hundreds of millions in patient (long-term) capital.  The good news is that the returns are market rate returns and are secured by an underlying asset that never goes out of style: food.