Australian act costing $20billion and how supermarkets make a profit

Australian households waste almost $20 billion a year throwing away food – the equivalent of 152 Sydney Harbor Bridges – while retailers rake in more than $1 billion from this simple act.

The shocking findings from progressive think tank The Australia Institute follow the country’s supermarket giants as they make huge profits amid a cost-of-living crisis, with Australians struggling to keep rising grocery bills down.

Woolworths announced in August through June, the company had posted after-tax profits of $1.62 billion, up 4.6 percent from last year.

Coles also recorded a 4.8 per cent increase on its 2021-2022 profit, with a net profit of $1.1 billion.

Researchers from the Australia Institute found that Australian households waste 7.6 million tonnes of food every year.

For context, that’s the equivalent of 152 Sydney Harbor Bridges. It weighs 50,000 tons.

In their report, titled ‘Food waste in Australia and how supermarkets benefit from it’, the researchers say this food waste amounts to a loss of .

3 billion for families, which equates to an average of $2,000 to $25,000 per household.

“Ironically, wasting and buying back food contributes to the rising cost of living, exacerbating these financial pressures,” the report said.

The report examined food waste data from 2018-2019, as well as subsequent reports from the National Food Waste Strategy Feasibility Study, which was commissioned by the federal government two years ago.

An analysis found that food retailers make $1.2 billion in profit annually from this wasted food.

“If the average industry profit rate is 6.1 percent, and we assume that the $19.3 billion in food wasted by households generated this average profit, then the profit on the wasted food was $1.2 billion ‘, the report said.

“It is important to note that this $1.2 billion represents the profit food retailers earn from food waste alone.

‘It does not include the income and expenditure of other upstream industries, such as growers and food processors, when they produce food that is never eaten.’

The report attributes strict cosmetic standards for the appearance of fruits and vegetables as the reason for product waste.

Matt Grudnoff, senior economist at the Australia Institute, said reforms to reduce food waste are needed if Australia is to achieve its goal of halving food waste by 2030.

For context, that’s the equivalent of 152 Sydney Harbor Bridges. It weighs 50,000 tons

The report’s authors found it is feasible to halve Australia’s food waste within ten years, with $7 billion to $7.5 billion needed from federal and state governments to achieve this.

In 2021, Food Innovation Australia Limited (FIAL) developed a roadmap to help reduce food waste in Australia, outlining potential campaign and policy changes to reduce the amount of food that goes to waste.

The authors of the report found it was feasible to halve food waste in Australia within the next decade, requiring $7 billion to $7.5 billion from federal and state governments to achieve this.

“For every dollar spent on food waste interventions, this scenario returns at least seven dollars to the economy,” FIAL’s report said.

“These returns on investment will only increase as the social costs of carbon and the costs of landfills increase over time.”

Mr Grudnoff said it was “high time” for the government to act on the recommendations.

“It proposed removing the expiration dates on products that do not require them, removing the expiration date or expiration date and extending the allowable expiration dates for long-lived products,” he said.

“If that means cutting into the profits Coles and Woolies make from food waste, then that’s a price I think most Australians are willing to pay.”

Both supermarket giants already have a food waste policy, including contributions to hunger relief programs such as Foodbank and OzHarvest.

Coles’ sustainability policy states that it also redirects products that would not normally be sold into products, such as using bananas in its own frozen banana pieces, banana bread or muffins.

“We recognize that food waste is a significant issue in Australia and support informed industry reform that seeks to address the problem,” a Coles spokeswoman said.

“We are committed to working with government and industry to advance discussions about use-by-labeling practices.”

Both supermarket giants already have a food waste policy, including contributions to hunger relief programs such as Foodbank and OzHarvest

Last fiscal year, 84 percent of the company’s landfills were diverted and an additional 20.3 million pounds of unsold edible food, worth $133 million, that would otherwise go to landfill was made available to the food assistance programs.

Woolworths’ policies include promoting The Odd Bunch range to sell substandard food and vegetables.

The company also says it is investing $123 million over the next decade to find ways to reduce food waste.

‘We are working hard to reduce food waste, with our supermarket teams diverting more than 80 percent of food waste from landfill. Not only is it good for our customers and the environment, but it is also good business,” a Woolworths spokesperson said.

“Every year, expiration and expiration costs our company tens of millions of dollars in food that cannot be sold. So we have every reason to extend the shelf life of products in our supply chain where possible.

“Usage data plays an important role in food safety and can reduce food waste by helping customers eat food before it becomes inedible. It is therefore important that food manufacturers tackle these issues in the right way.’

The company donated 28 million meals worth of surplus food to Australian hunger relief organizations in the past financial year.