$1.2 Billion

potential savings for the national economy from food rescue

Rescuing 20% of the food waste could close the food insecurity gap in Israel

Food Rescue: Feasibility to the National Economy

The rescue of 990 million pounds of food annually, constituting 20% of all food waste in Israel, would fully bridge the food consumption gap between the normative expenditure of the general population and those suffering from food insecurity.

Food rescue alleviates food insecurity at a 72% cost savings, and also provides significant social and environmental benefits.

According to BDO and Leket Israel estimates, the current rescue multiplier is 3.6, meaning that every dollar ($1.0) spent on food rescue saves food worth $3.6. Therefore, the cost of rescuing $834 million worth of food would be only $230 million. This is equivalent to the full value of the gap in spending on food consumption by the population suffering from food insecurity in relation to the normative level of consumption.

Without food rescue, it would require an annual cost of $834 million to fully finance this gap. Therefore, food rescue is clearly preferable to the alternative of attempting to bridge the food insecurity gap by means of allocations, donations, subsidies or other methods of support for the needy. Food rescue allows for reaching the same social goal at a significantly lower cost, approximately $230 million annually. Specifically, food rescue alleviates food insecurity at a 72% cost savings, and also provides significant social and environmental benefits. 

The problem of food insecurity is not expressed by the amount of money expended on food purchases; it also affects the types of food consumed. An analysis of average consumption basket expenditures by the portion of the population experiencing food insecurity reveals that food insecurity is accompanied by low expenditures particularly for fruit, vegetables, meat and fish, which have high nutritional values. 

The gap in expenditure for highly nutritious food such as meat, poultry, fish, and fresh fruit and vegetables ranges from 55% to 70% of the normative expenditure, while the gap for other products, like potatoes, bread and pita, is lower, from 15% to 25%.

Food insecurity is accompanied by low expenditures particularly for fruit, vegetables, meat and fish, which have high nutritional values.

Source: BDO estimates

Economic principles dictate that income in goods is an inferior alternative to monetary income, because it deprives those receiving support the freedom to allocate resources according to their full range of needs. Therefore, in principle, the general tendency is to provide monetary support over the direct provision of products. This economic principle is also summarized as, “Subsidize people, not products.” However, food rescue offers a unique set of circumstances in which there is a clear economic preference for supporting the needy with products over money. This advantage stems from the specific characteristics involved in transforming waste into food (i.e., that every dollar invested in food rescue generates a direct economic value 3.6 higher than the cost). Moreover, taking into consideration the FAO’s estimates of external environmental and social impact, the benefit to the economy increases to 7.2 times that of the cost.

Food rescue offers a unique set of circumstances in which there is a clear economic preference for supporting the needy with products over money. This advantage stems from the specific characteristics involved in transforming waste into food (i.e., that every dollar invested in food rescue generates a direct economic value 3.6 higher than the cost).

In this context, it should be noted that those suffering from food insecurity also suffer from financial insecurity, evident in consumption gaps of other basic necessities (housing, health, education, etc.). It is reasonable to assume that food rescue would enable households to then choose to allocate some of the effective increase in their disposable income to consuming other goods. Socially speaking, these households view consumption of such products as prerequisites for ensuring their financial security. Therefore, beyond the direct value of the rescued food distributed to them, they also benefit from having more resources available to purchase other goods and services.

For the national economy, such efforts would generate a savings of $604 million annually, bridging the gap between the value of rescued food and food rescue costs.

In September 2015, the US government established a national food waste reduction goal of 50% within fifteen years. Analysis of the data in this report shows that rescuing even less than half of the American goal, and contributing it to the approximately 450,000 households suffering from food insecurity in Israel, would provide enough food equivalent to fully cover the gap in their food intake compared to the normative level. For the national economy, such efforts would generate a savings of $604 million annually, bridging the gap between the value of rescued food and food rescue costs. This is even before considering the added benefits to the national economy from reducing poverty and inequality, and before factoring in the external environmental benefits. 

It should be emphasized that the incremental realization of a 50% national food waste reduction goal, over a fifteen-year period, is not expected to reduce the volume of agricultural production in Israel for local consumption compared to current conditions. Rather it is expected to only slow the growth rate of local food production.

Source: BDO analysis and Survey of Household Expenses, CBS
Yuval Shargian and Yiftach Verener, farmers donating surplus produce to Leket Israel for more than 15 years. Photo Credit: Leket Israel Archive
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