Applying Circular Economy to the Agri-food Sector

SusConnect is a UK-based organization that provides B2B services to organisations within the agri-food sector. Their approach is to engage their clients in “end-to-end” value change management to explore the full range of opportunities for value creation. One of their latest projects includes working with the British Coffee Association on how best to integrate the circular economy principles in the production of coffee, specifically, by facilitating direct trade from producers.

Only in the UK, the agri-food sector produces around 10m tones of waste annually and accounts for 20% of the UK’s CO2 emissions (WRAP, 2018).

Improved practice and embedding circularity can lead to significant benefits within the agri-food sector. The use of more circular approaches could, therefore, lead to significantly reduced environmental impacts. Crucially, the impacts of action are not only environmental, but also socio-economic in enhancing the livelihoods of the farmers and producers who even with increased Fairtrade practices, often receive the lowest value in the chain.

Three of the key circular economy principles that could be implemented in the agri-food sector revolve around:

  1. The effective management of the supply chain to ensure efficiency and the minimisation of impacts on the environment (e.g. from emissions or overuse of water);
  2. Sustainable product manufacture for example, in the form of the type of packaging and labelling employed; and
  3. The use of ‘smart’ technologies to ensure that there is, for instance, greater precision in the resources used, and that data can be shared, in real time.

How do you close the loop on the agri-food supply chain, for example in the coffee supply chain?

Closing the loop in the coffee supply chain has to first start with an identification of the ‘linear processes’ that exist and the factors that influence them. These include fragmented supplies (i.e. where the beans are produced); often fragmented systems for recording and reporting movement of the coffee beans (e.g. from the use of pen and paper, to RFID tags – by farmers, logistics companies, retailers, roasters, etc.); geographical factors (e.g. the remoteness of most coffee farms, the impacts of climate change and disease on production and harvesting); and socio-economic considerations (most coffee farms are small, i.e.: less than 2 hectares), limited cash flow, limitations in being able to undertake due diligence, and the seasonality of harvesting and labour.

The range of the challenges indicates the difficulty in closing the loop and also that there is no one measure that will ‘solve’ all of the challenges. However, there are strategies that can address some of them.

  • The use of a ‘direct trade’ can enable higher payment for farmers, thus alleviating cash flow and improving livelihoods, as well as product quality and quantity.
  • The use ofclimate-smart technologies can also limit the impact of climate change, thereby enhancing the quality and quantity of the beans.
  • Finally, emerging technologies such as blockchain are increasingly being employed within the industry as a means of: enabling better sharing of (quality) data; providing traceability (and therefore improving product quality and reducing instances of mistreatment of staff along the supply chain); facilitating due diligence by for example, retailers on producers and vice versa; and potentially also the use of smart contracts to enable faster payments for farmers and producers.

The challenges of embedding circularity in the agri-food sector 

When thinking about embedding the circular economy framework in the agri-food sector, there are a number of challenges, including:

  1. The difficulty of the traceability of products on aspects such as food contamination risks and human rights abuses;
  2. The low quality of the date and limited sharing of these data between stakeholders;
  3. Limited use of smart technologies (e.g. climate-smart technologies and blockchain);
  4. The policy framework within which to enact change;
  5. The levels of awareness and engagement amongst stakeholders with the circular economy principles;
  6. Limitations in funding for farmers/producers which limits their opportunities to acquire new technologies and practices; and
  7. Increasingly long and complex supply chains to meet growing globalised tastes.

Thus SusConnect aims to optimise the quality, traceability, circularity and supply, and ultimately the value of the commodities along the agri-food value chain in order to support the move towards a circular economy.

The economic opportunities of enhancing technology

In the United Kingdom, Brexit has led to increased operational and input costs in the UK agri-food sector. A report by Accenture within the financial services sector, showed that blockchain could deliver on average 30% in annual savings, including cutting business operations and compliance by 50%. In 2016, the agri-food sector contributed £112bn to the UK’s GDP. Given the size of the sector, savings of even 5 – 10% in operational costs, would lead to significantly increased profitability. In fact, awareness and acceptance of smart technologies (e.g. to reduce fertiliser or water consumption), as well as blockchain is generally low within the sector, but uptake is increasing with increased awareness of the potential benefits.

For more information contact SusConnect ltd via:

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