Photo credit: Peter Goldsmith
Global food security and environmental sustainability should not be conflicting goals, but too often they seem to be. Tackling food security purely by increasing production requires additional use of land, water, pesticides, and fertilizers. The Food and Agricultural Organization of the United Nations reports that one-third of all food is lost or wasted worldwide. Decreasing losses could dramatically increase the food available to the world’s most vulnerable populations without putting additional strain on the world’s resources.
Current research on postharvest loss focuses on loss measurement and testing the effectiveness of mitigation strategies. Although both are crucial, we must take a step back and consider why losses occur in the first place. If farmers are rational yet choose to incur losses, the current system of agriculture must not incentivize minimizing postharvest loss. Without understanding why people aren’t already minimizing losses, we cannot predict what strategies will lead them reduce losses. I investigate the incentives to reduce losses, or lack thereof, along the grain supply chain based on interviews I conducted in Paraná, a state in southern Brazil.
Brazil is one of the world’s largest producers of grains, and Paraná is the country’s second largest producer of grains. Despite this, Paraná is still characterized by a smallholder system. Eighty-seven percent of farms in Paraná are less than 50 hectares, the government definition of a small family farm. These smallholder farmers have the power to affect global grain supply and global food security.
A system of contracted labor and cooperatives facilitates participation of smallholder farmers in the global agricultural market. Farmers who cannot afford expensive machinery can maintain efficiency by contracting a neighbor with a combine or a truck.
Cooperatives clean, dry, and store grain, and sell it to multinationals on behalf of the farmers. Although cooperatives never own the grain, they are liable to compensate farmers for the entirety of the grain they deposit, regardless of how much is lost during processing. They are already incentivized to achieve minimal losses. Contracted labor, however, introduces agency problems into the supply chain.
During harvest, the potential agency problem is addressed by the farmer’s ability to monitor grain losses. It is easy to see the amount of grain left behind in the field and discern whether the combine driver drove too fast in an effort to harvest more fields and increase his own salary. Even more formally, extension agents visit farms at harvest and collect measurements of grain loss. Each combine driver’s losses are announced at a regional event. This pressures drivers to minimize losses in order to maintain their reputation. The driver with the lowest losses also wins a large prize; last year it was a motorcycle.
During transportation there is currently no measurement of losses. Farmers report large amounts of grain left on the road during harvest, but it is impossible to tell who the grain belonged to. Farmers also lack the scales necessary to weigh grain on the farm, so they cannot compare the amount of grain that leaves the farm with the amount that arrives at the cooperative. A driver is therefore paid a flat rate for each trip, and will make more money the more trips he takes. Without the threat of a pay cut or even a mark on his reputation, truck drivers are free to drive quickly and rush the process of securing the grain, leading to high losses.
The current supply chain provides incentives to minimize postharvest loss during harvest and storage, but transportation must be addressed. There must be measurement of transportation losses to hold drivers accountable. This can be facilitated by the state extension agency, whose agents already are on farm at harvest. Portable scales would allow farmers to weigh their harvest and calculate transportation losses. Contracts could then be adjusted to reward low losses or penalize high losses. A competition among truck drivers, mimicking that used for combine drivers, would motivate drivers. At the very least, drivers would need to minimize losses for the sake of their reputations.
Rational actors will not minimize postharvest loss if the supply chain does not incentivize it. To address postharvest loss and global food security, we must first address the supply chain.