Circular Economy in Food Supply Chains

Approximately 30% of waste is generated in crop production. Around 62% of total waste is produced in production and processing only. Where does all this waste go? Is there a method to produce less waste that doesn’t harm the environment? A circular economy might be the next best thing. Learn what it’s about and how it can drive a sustainable future.
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Feeding a 9 billion population by 2050 will be one of the greatest challenges if we do not change the way we produce and consume food and create a better food system with optimum resource utilization. The move towards Circular economy is a must in cities where 80 % of food will be consumed in 2050. Transforming organic waste into compost, fertilizers or bioenergy are the circularity solutions that can be scaled up. 

Why Linear Food systems need to disrupt? 

The world loses one-third of the food produced for human use. This equates to roughly 1.3 billion tonnes each year, or US$1 trillion. In terms of the effect caused to the environment, the total food waste amounts rank as 3rd largest producer of carbon dioxide. Around 40% of such losses occur post-harvest and in processing.  Today’s food system has an enormous social and environmental footprint starting from climate change to food waste, water availability to inequality and healthy living to biodiversity loss. USD 5.7 trillion costs are due to the linear nature of food production which utilizes finite resources, pollutes them and harms the natural systems. 

The agrifood industry is responsible for almost a quarter of GHG emissions that degrades the environment causing air, soil and water pollution. The diseases caused by this pollution along with consequences of pesticide use, overuse of fertilizers, reliance on antibiotics in animals, untreated human waste and increased antimicrobial resistance are threatening scenarios in food security. 

Circular economy offers a vision for  a fit future for all with a healthy food system. 

What is circular economy (CE)? 

“A circular economy is a closed-loop economic system that uses renewable energy sources, systems thinking, and minimizes the value loss of raw materials, components, and finished goods”. 

The present food and agriculture supply chain is affected with social, economic and environmental problems making it unsustainable. Circular economy offers tools to enhance and optimize production and consumption to achieve sustainability. 

In agriculture or circular economy for food, it is a system of regeneration that aims to minimize waste by making the most out of resources available. It aims to keep the supply chain in a closed loop of maximizing product life and reducing waste. It is performed through sustainable and natural modes of regeneration, in a way that by-products are reused in a different cycle to minimize inputs and reduce waste. Ingredients of low impact, diversified, repurposed, and regeneratively produced are the four main potentials for the circular economy in the food industry.  

The circular economy promotes elimination of waste and use of natural resources that can yield up to $4.5 trillion in economic benefits to 2030.

Circular economy in the food supply chain 

The current supply chain is bombarded with issues like an increase in population and the ever-increasing demand for food while there has been a shortage of natural resources like water, limited land, labour etc. along with pressure to keep the emissions of greenhouse gases in check. 

With the traditional supply chain or the linear supply chain, products were produced and consumed with no further processing done to the wastes that find their way into landfills. The recent shift towards sustainable agricultural practice has brought the circular economy, wherein products are produced, used and then disposed of. It concentrates on deriving the maximum out of a resource, for as long as it is possible to provide the benefit of regeneration to a product. The circular economy doesn’t change the structure of the food supply chain but it adds value to every process in the supply chain to strive toward ecosystem optimization. 

It works by providing extra economic value while contributing to the environmental value through the process of circulation. It uses efficient and redesigned management processes to minimize resource utilization and environmental impact while maintaining economic growth. To put it into a nutshell, the circular economy makes, uses, remakes, reuses and recycles. 

How does CE in food supply chains affect people and the planet? 

Economic growth 

A circular economy concentrates on efficient resource utilization and sustainable agricultural practice which creates a gain in terms of fewer resources utilized and more yield produced with the same available resources. The economic gain also creates room for a special workforce creating employment, lowing the cost of raw materials and less maintenance. 

Food security and health 

Regenerative and organic agricultural practices are promoted in the circular economy which focuses on producing high-quality food while keeping the environment safe. This not only ups overall health but acts to consumers’ access to fresh food. 

Climate impact 

Circular economy adds to the benefits of regenerative and sustainable agriculture to reduce emissions on a global scale. Around 62% of emissions occur in the production and processing stage and the remaining are emitted during the supply and service stage. With CE working on reusing and reducing wastes, it contributes to the reduction of greenhouse emissions. 

Conserve nature 

While a linear economy ultimately depletes resources to produce products, a CE works on optimizing the ecosystem through cleaning water, recycling, reducing wastes, reusing, pollination, less chemical usage, etc. these actions not only reduce the usage of raw material and wastes but creates a positive impact in preserving the ecosystem. 

Challenges in transition to CE economy 

Training and investment 

A farmer has minimal knowledge about the number of waste that he produces and the amount of opportunity cost that he is losing out on recycling and producing by-products. This requires technical knowledge and a special workforce to provide the skills, knowledge and methods to implement CE throughout the supply chain. This has a high economic investment at the beginning.  

Lack of regulation, innovation and incentives 

The slow rate at which CE is implemented in the food industry is because of unclear government regulations, lack of implementation, fewer innovations, less support, etc.  

Reverse logistics 

The circular economy requires products to be sent back to specialized sites for recycling or reuse, these create issues related to reverse logistics which in turn increases transportation.  

Supply chain support 

When an organization decides to implement CE practices, the benefits are fully earned when the entire supply chain works unanimously in the same direction. Lack of support has reduced the impact of CE implications. 

Uncertain lifetime 

There is a technological limitation created by products from CE which becomes uncertain about the phase of a product, durability, quality maintenance, etc. 

Technology Drivers for a Circular Economy 

Technology and innovations are opening up new opportunities. Solutions for waste valorisation give value to food waste, promoting a circular economy. These techniques turn food waste into finished goods, animal feed, or food components. 

  • Plant based alternatives for protein intake 

New technologies are making it possible to create meat, dairy and fish alternatives. Biotech entrepreneurs are developing meat substitutes to lessen the carbon footprint of the food processing industry. These either include meat substitutes made from plants or cellular farming. Cellular agriculture is used by the Dutch start-up Meatable to create a sustainable meat substitute. The startup does away with the necessity to slaughter an animal by utilizing induced pluripotent stem cell (iPSC) technology. It cultivates fat and muscular tissue from cells obtained from living cows and pigs. After that, it blends the two to produce a sustainable meat substitute. 

  • Investment in food and agriculture research 

A Singaporean firm called UglyGood is working on a waste-valuation solution. The start-up collects, processes, and extracts high-value items from fruit pulps and peels from fruit juicing businesses. Citrus fruit waste is converted into organic cleaning products or animal feed. The start-up additionally extracts orange peel essential oils using the cold press technique. By giving the waste fruit stream more value, it prevents emissions and creates a circular economy. 

  • Blockchain technology for transparency in food value chains 

Digital technologies provide capabilities to transform the existing food systems and accelerating transition to a circular economy. Sustainable food production practices with the smallholder farmers and ensuring responsible and sustainable consumption by the  end consumers can drive a circular economy that redefines growth and promotes a positive system. 

TraceX blockchain powered traceability platform ensures a climate resilient and sustainable food supply chain. The Farm Management solutions along with pre-harvest and post-harvest management enhances productivity, reduces food wastage and tracks sustainable production practices for quality yields. 

Benefits of Circular Economy 

  • Maintains health of mankind and ecosystem balance. 
  • Access to fresh food ensures safety of food 
  • Empowers the smallholder farmers for local food production 
  • Boosts innovation 
  • Contributes to GDP growth 


It is now certain that the circular economy adds to modern agricultural practice without disturbing the structure. It is capable to satisfy the needs of the consumer, regulatory bodies and the environment in reducing and reusing waste. Therefore, better than the linear supply chain.  

Lastly, CE is taking its baby steps and there is a need to support it in terms of better research, better data collection, accurate measurement indicators, and modern methods and techniques to derive and form a simple easy-to-use kit for farmers and decision makers. The food system can unlock solutions to climate challenges and basing these solutions on circular economy should benefit not only the climate but also food security, biodiversity and human health. It requires a collaborative effort in bringing circularity in food systems. 

Copyright © 2021 Blockchain for Food Safety, Traceability and Supplychain Transparency

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