Circular economy: a race among agrifood startups

The innovative bustle in the agrifood sector not only remained alive but even thrived in spite of the health emergency. The latest available data suggest that we are currently in the midst of a boom in the number of new companies that offer circular economy solutions and pursue one or more of the Sustainable Development Goals (SDGs) set out in the UN 2030 Agenda. Let’s look at the data. No fewer than 1,808 sustainable agrifood startups emerged internationally between 2016 and 2020, a growth of 56% in the last year alone: This particular business type amounted to 25% of the total number of agrifood startups (7,120). Forty percent secured at least one venture capital deal to raise a total of $5.6 billion, thus averaging roughly $7.7 million ($2.5 million more than in 2019). The priority SDGs for startups entail a transition to ensure sustainable consumption and production patterns (SDG 12), making up 35% of the solutions proposed by startups, followed by ending hunger (SDG 2) with 21% and inclusive and sustainable economic growth (SDG 8) with 17%.

Norway (24 agrifood startups, 58% sustainable), Israel (139 startups, 46% sustainable) and Uganda (24 startups, 46% sustainable) are the countries with the highest percentage of agrifood startups pursuing sustainability goals. Italy places only twelfth in this ranking with 22 sustainable startups out of the 76 new agrifood companies surveyed (29%), yet the market is clearly growing compared to last year: Fifteen more sustainable startups (versus seven in 2019, 13% of the total) and $23 million in investment raised compared to $300 thousand a year ago, averaging one million dollars in funding.

The goal of a sustainable and inclusive transition ‘from farm to fork’ can only be achieved by working on the circularity of resources.

Raffaella Cagliano, Scientific Director of the Food Sustainability Observatory

These are the results of the research ‘From the seeds of innovation to the fruits of sustainability’ by the Food Sustainability Observatory at the Polytechnic University of Milan’s School of Management.. “The pandemic has had a major impact on urban food systems, undermining access to food for the most vulnerable population groups, accentuating the paradox of food insecurity in the face of food wastage and stressing global food supply chains”, explains Raffaella Cagliano, Scientific Director of the Food Sustainability Observatory, “The importance of tracking and sharing information emerged, and also the central role of packaging, which through innovative technologies and materials has adapted to the e-commerce boom. The goal of a sustainable and inclusive ‘from farm to fork’ transition can only be achieved by working on the circularity of resources, on the integration of the various innovations available, on the development and updating of the skills of operators in the sector and on the building of stronger and more direct relations between the various players in the agri-food chain”.

“Service providers drive sustainable innovation in the agrifood system (744 startups, 41%), with solutions to collect and share data and information, improve production planning and stock management, reduce waste”, adds Paola Garrone, Scientific Director of the Food Sustainability Observatory. “This is followed by food processing startups (352, 20%), investing in natural ingredients and alternative protein foods, and technology providers (205 startups, 11%), offering innovative technologies for precision farming”.

Progress report of the Neighbourhood Hub project in Milan

City governments are assuming a key role in solving the paradox between food insecurity and food waste in urban areas by developing policies to combat poverty and redistribute food surpluses. One example of these policies is the Neighbourhood Hub against Food Waste project, launched in January 2019 in Milan’s Isola district to collect unsold products from large-scale retail outlets and meals not served in company canteens in a logistics hub where products are sorted, creating balanced food mixes, and redistributed to people in need through a network of non-profit associations. The initiative stems from a memorandum of understanding involving the Polytechnic University of Milan Milano Food Policy and Assolombarda, in synergy with the QuBì ‘The recipe against child poverty’ programme coordinated by the Cariplo Foundation. The Lambrate Hub came aboard in October 2020.

“In 2020, the two hubs collected 76 tonnes of food, worth more than €310,000, which was redistributed to 3,300 households”, explains Giulia Bartezzaghi, Director of the Food Sustainability Observatory. “In the first 4 months of 2021, more than 60 tonnes of surplus, worth more than €250,000, have already been collected and redistributed to 27 non-profit organisations. To date, the network of actors involved has been further expanded and work is underway to open a third hub in the Gallaratese district”.

Circular economy models for reducing waste

Companies are taking initiatives to recover and reuse the surpluses generated with a circular economy logic, defining strategic priorities and management criteria. An Observatory survey of 109 processing centres (production plants and distribution warehouses) of companies with a turnover of over €50 million shows that the focus of the food processing sector is on prevention through flexible planning of production capacity (87% of the sample), improved demand forecasting (83%) and the adoption of innovative packaging solutions (62%) and technologies to improve product shelf life (56%), the latter practices being particularly widespread in the fresh produce segment and also targeted by distribution and mass catering. The priority for the management of surpluses generated, however, is redistribution for human consumption, preferably through donation to non-profit organisations (70%). Reuse for animal consumption is implemented whenever possible, while recycling into other products and energy recovery are still little explored due to the difficulties and costs of implementation.

“The processing sector is devoting more and more attention to food waste prevention, but the measurement of surpluses is not yet systematic across the different stages of the product cycle and remains an area to be worked on and invested in to introduce more structured and effective processes”, explains Marco Melacini, Scientific Director of the Food Sustainability Observatory, “Management’s commitment to circularity, staff involvement and attention to the opinion of the media and other stakeholders, and opportunities for synergies with other players in the supply chain are the main drivers for adopting circular economy practices. However, a number of barriers to circularity emerge due to operational management difficulties, lack of knowledge of available solutions, regulatory uncertainties and limited supply chain communication”.

Food packaging sustainability

There is increasing attention and investment in new technological and packaging solutions to improve the shelf life of products. Packaging plays an increasingly vital role in preventing and reducing food surpluses and its design affects all stages of the food product life cycle. Packaging is sustainable when it promotes good consumer behaviour through ease of use, resealability, portioning, etc.; when it helps overcome critical logistics issues such as stackability, standardisation or handling efficiency; when it is ‘talking’, i.e. using innovative technologies to share information in real time to optimise storage and preserve food quality; when it improves traceability and uses high performance materials.


New technologies allow packaging to ‘talk’ to the different players in the supply chain, promoting sustainable and responsible behaviour”, explains Barbara Del Curto, Scientific Director of the Food Sustainability Observatory, “Technology lets us collect and transmit information directly to the consumer on critical dates, material composition and origin, packaging characteristics, supply chain relationships and production methods, extending the consumer experience beyond the purchase and consumption phase. However, the impact on the entire supply chain is positive, as it enables transparency and proximity of information, facilitates food management and prevents waste”.

Sustainable short supply chain

Worldwide, 90% of agricultural production companies are ‘family farms’, while in Europe the figure rises to 95%. The agricultural production stage is a key link in the supply chain, but their small size and low bargaining power often fuel inequalities in income distribution along the supply chain and the problem of rural poverty.

The development of rural areas and support for small-scale producers are challenges that can be met with ‘sustainable short supply chains’, i.e. supply chains based on the most direct and lasting relationships between the different actors in the chain”, points out Federico Caniato, Scientific Director of the Food Sustainability Observatory. “It is not just a matter of reducing the number of intermediaries and links along the supply chain, but also of working on the intensity of relations between producers, suppliers and consumers”.

The Observatory has identified three initiatives that can shorten the distance between producers and consumers along the supply chaintraining for producers, entailing direct interactions between processors and producers, in particular to work on the development of the long-term supplier; sharing benefits and risks upstream and downstream in the chain, which would reduce the disadvantages perceived by producers; jointly setting a fair price through specific agreements, which would reduce the existing gap between small producers and large retailers and also improve conditions and performance of the producers.

In addition to relational proximity, sustainable short supply chains also rely on informational proximity. Traceable information raises sustainability awareness, encourages good business practices and information sharing. It is linked to the type and amount of information shared between actors and the systems used to collect and manage it.

Di |2024-07-15T10:06:46+01:00Gennaio 12th, 2022|english, Innovation, MF, Sustainability & CSR|0 Commenti