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Foodsharing in Russia
A way to save up to a million tonnes of produce every year:
by providing food
to 1.3m in need
by preventing
143,000 tonnes of
methane
emissions
by doing business with food with
expiring shelf-lives worth a total
of 85bn rubles
Moscow, September 2019.
CONTENTS
2
Food Waste: an Enormous Loss to the
Economy and Environment 3
The Russian Waste Chain:
How Food Ends Up as Refuse 4
Ingredients of Food Waste: the Main Culprits 5
The Value of Food with Expiring Sell-By Dates 6
The Solution: the Emergence of Foodsharing 7
How to Unlock Foodsharing’s Potential in Russia 14
Appendix. Foodsharing and the UN’s Sustainable
Development Goals 19
tap to navigate
Russia’s Foodsharing Projects 9
FOOD WASTE: AN ENORMOUS
LOSS TO THE ECONOMY AND
ENVIRONMENT
1 Study by the World Bank What a Waste 2.0, 2018 ; FAO, Global Food Losses
and Food Waste, 2011.
2 Study by the Higher School of Economics The Waste Management Market,
2018 .
3 Report by Greenpeace What to do with the Rubbish from Russia, 2017.
4 The World Bank (What a Waste 2.0, 2018), The European Commission
(Estimates of European Food Waste Levels, 2016) and study by the Higher
School of Economics (The Waste Management Market, 2018).
Every year, the world throws away at
least 20% of all food produced – that’s
about 884m tonnes of it. It makes up
around 44% of all household waste1.
In Russia, the food content in municipal
solid waste (MSW) reaches about 17m
tonnes every year. This is around 28% of
all the MSW created by the country2.
Virtually all food waste (94%)3 in Russia
ends up at garbage dumps and landfill
sites where it goes on to pollute the air,
soil and water table. That amount of
waste food, 17m tonnes, gives off around
about 2.4m tonnes of methane
(a potent greenhouse agent); not to
mention other gases such as ammonia
and hydrogen sulphide.
According to Rosstat, in the last five
years the amount of waste food in
Russia has fluctuated across the range
of ± 5% a year, depending on changes in
population numbers and corresponding
levels of disposable income.
3
884
The World
61.6
European
Union 17
2
Annual amount of food MSW
in millions of tonnes4
Russia
Moscow
More than 8% of losses occurs at the agricultural production stage; approximately as
much as is lost during processing. At the selling stage (retail & restaurants) the amount
lost comes to around 5%. The greatest wastage, almost 12%, is created at the
consumption stage, in households.
THE RUSSIAN WASTE CHAIN:
HOW FOOD ENDS UP AS REFUSE
agriculture
transportation
processing
logistics and
storage
sale
consumption
Cumulative
losses and
waste volume
41.3%> 20.3%
9.2%
of the original amount
of produce is lost at the
storage and retail stage
of losses
happens during
agricultural
production,
processing and
transportation
of food
11.8%
is thrown away
by consumers
-8.22%
-3,41%
-8.72%
-4.33%
-4.85%
The Food Wastage Chain5
-11.8%
45 Calculations based on data from the Russian Agriculture Ministry, 2017.
Cumulative
turnover of food
supplies
If we analyse the constituents of food waste, we can single out the top 3 food types which
go into creating it6:
Cereal products (bread and pasta based goods, flour) take first place in household
kitchen waste (62%) and third place in waste food from wholesale and
retail outlets (12%).
Dairy products (milk, kefir, yoghurt, cheese, curds) – conversely top the waste in
wholesale and retail (47%) while taking fifth place among consumer waste (5%).
Potatoes complete the trio: 15% of consumer waste and 11% of wholesale & retail
waste.
Completely eradicating losses in just these three categories would mean a reduction in the
amount of household waste by 82%, and of wholesale & retail wastage by 70%.
THE INGREDIENTS OF FOOD WASTE:
THE MAIN CULPRITS
0% 20% 40% 60% 80% 100%
Портится на оптовых
складах,
на полках магазинов
Выбрасывают потребители
Food waste by food category
Cereals Fruit Vegetables Potatoes Meat Milk Fish
6 Calculations based on data from Rosstat, 2017.
5
Thrown away by
consumers
Spoiled in wholesale storage
facilities and on shop shelves
7 Calculations based on data from Rosstat on average annual volume of consumption and average cost of food by category.
8 According to data from Rosstat for 2019, there are approximately 20.9m people with an income below the minimum subsistence level.
THE VALUE OF FOOD
WITH EXPIRING SHELF-LIVES
17m tonnes of wasted food is not only
the source of 2.4m tonnes of methane
and other gases created at garbage
dumps but also a substantial loss of
money. The cost of this food is
estimated at over 1.6 trillion
rubles7($25bn). This figure equates to
12% of food retail revenue in Russia.
Saving this amount of food would feed
30m people, in other words, more than
the number of people in Russia living
below the poverty line8.
Volume
17m tonnes
of food waste
per year
Cost
$25bn 3*1013 kcal
Calorific Value
= =
Emits 2.4m tonnes
of methane
(a potent greenhouse
agent)
1.58% of Russia’s
GDP
(2018)
30m annual rations
for an adult
+release of ammonia,
hydrogen sulphide,
aromatic hydrocarbons,
mercaptans, alcohols and
ketones, chloroethylene
12.23% of Russian food
retail market (2017)
6
THE SOLUTION: THE EMERGENCE
OF FOODSHARING
As the figures above show, in Russia
today, at the food distribution and
consumption stages at least 16% of food
goes to waste. That is about 17m tonnes
of produce every year which turns into
food waste.
An effective way of preventing
wastefulness where food is concerned
may be foodsharing. Foodsharing is
online services where food is distributed
among members of a community.
Members can post details of food
available, how much there is and where it
is, and negotiate transferring it, for free or
otherwise, to anyone interested.
Foodsharing services are akin to the
concept of foodsaving – the
environmental movement to rescue food
resources. Also, foodsharing services can
operate not only as non-profits but also
as businesses, deriving profit from
facilitating food distribution.
The foods which foodsharing deals with
may vary in what they are worth but what
they all have in common is their expiring
shelf-life. So, time is an essential factor
(perfectly good food could go to waste in
just a few days). It is none other than
online services with their geolocation and
instant messaging capabilities that can
make this food as mobile as possible.
7
8
Developing the foodsharing model will
bring society a threefold benefit:
The food saved goes to those
who want it, including those in
need.
Natural and labor resources
are used in a rational way
(fewer resources overall are
used and more people are fed
as a result).
The amount of food going to
waste is reduced.
9 More details available in the appendix.
It is important to realize that those
involved in the consumer food market
(producers, retail chains, caterers), have
an interest in resolving the problem of
food with expiring shelf-lives. After all, if
they do not manage to sell or distribute it
before its shelf-life expires, they are
obliged to pay for the disposal of the
waste they have created.
The way foodsharing services work is
completely in step with the UN’s
Sustainable Development Goals (SDGs):
the eradication of poverty, the eradication
of hunger, responsible consumption and
production, and prevention of climate
change9.
Karma App is a project that
was launched in Sweden in
2016. Cafes, restaurants and
food shops post details on the
app about unsold food for sale at half-price,
and users select the goods, pay for them
using the app and then come and collect
them. Today, as well as in Sweden, the app
is available in London and Paris and is used
by about 4,800 vendors and more than
550,000 customers. As well as saving food
(550 tonnes since the online platform was
launched), companies use the app as a
platform for attracting new customers.
Karma App makes its money by taking a
commission (25% of the bill). In 2018, the
app attracted 12m dollars of investment to
enter overseas markets.
The Rus Food Fund is Russia’s first “food
bank”. It was registered as a charitable
foundation in 2012. Food is donated by
producers, shops, the public and it goes to
society’s disadvantaged via other charitable
organizations and government social
services. The fund operates a food quality
control system (it is sorted and screened).
Until recently, the Rus fund carried on its
work like a typical charity without the use of
an online platform. However, in September
2019, jointly with Х5 Retail Group, the fund
launched the Food Drive app, so that people
could register and take part in food charity
activities in X5 stores as well as provide
targeted aid by buying food baskets for
those in need.
The Rus Food Fund has had considerable
success in working with donors among
which are some of the largest producers
and retail chains, such as Mars
International, Cargill, Billa, Danone, Procter
& Gamble, DIXY and others. According to
the fund’s books, Rus provides aid in 54
regions across Russia. In 2018, the amount
of food distributed came to 4,600 tonnes
worth around 700m rubles.
producers | stores | general public
charitable foundations,
social services vulnerable groups
Specializations: working with large
producers and federal-wide
retail chains
Saved 4,600 tonnes of
food during 2018.
Geographic reach: 54 Russian
regions
Community: aid provided to 3m
people; over 60 donor companies
Workflow of the Rus Fund
In Russia, there are several notable
foodsharing projects at work which succeed
in salvaging a certain amount of food. They
employ various models and most of them
are noncommercial in nature.
9
International Experience:
a successful commercial venture
RUSSIAN FOODSHARING PROJECTS
Rus Fund
Foodsharing.Moscow
is a voluntary movement,
operating on the basis of
verbal agreements
between donors and
members of the
movement.
Coordination of volunteers
and contacts with the donors is
maintained via social media. Volunteers
collect food with expiring shelf-lives from
donor organizations.
Saves about 12.5 tonnes
of food a month
Geographic reach: Moscow and
close vicinities
Specializations: collaboration with
cafes, bakeries, canteens,
independent shops
Community: 6,700
subscribers;
200 volunteers;
50 donor companies
Donor
companies
Those known to
the volunteers
(pensioners, large
families…)
Wards of
charitable
organizations
Non-profits
(distribute large
consignments)
1
2
3
volunteers
Those interested in becoming volunteers
register, learn the community’s rules and
take a test on them. Then they go onto the
database of members and receive
notifications about upcoming trips out to
donor organizations. The food received is
distributed by the volunteers themselves.
Some of the food can be taken for
themselves, and the rest is handed out to
those in need. Those involved with other
charities can also become volunteers and
distribute food to those under their
protection.
10
Foodsharing We Give Food for Free is a
group on social network VK where
individuals or organizations can post
details about food they are willing to give
away for free.
Then group members leave comments
about what they are interested in and
decide with the author of the post on
where and when to meet.
post user
(“salvager”)
Saves about 5 tonnes of
food a day
Geographic reach: Moscow,
St Petersburg
Specializations: collaboration
with eco-stores, vegetable
wholesalers, bakeries
Community: 55,900 subscribers;
about 100 donor companies
11
organizations
individuals,
households
donates food collects food
Foodsharing We Give Food for Free
Food Hide is a similar
project, still at the
development and partner
company recruitment stage. There are plans
for cafes and restaurants to sell their food
through the platform at a discount of at
least 50%. For its part, Food Hide will
receive commission on each sale. In June
2019, the startup succeeded in attracting
investment (reportedly about 5-10m rubles)
from United Investors.
Alisok is a platform which
has been at the development
stage since 2018. It differs
from the other projects in its social focus – it
is planned to invest the profits in a network
of community kitchens for those in need.
The project’s core principle is similar: cafes
and restaurants sell their unsold food at a
discount via Alisok which takes a
commission (around 5%).
New Russian Foodsharing Startups
In 2018-2019, several foodsharing
startups emerged in Russia – online
platforms making money out of smart
allocation of food with expiring shelf-lives.
To a large extent they replicate the
approach taken by the previously
mentioned Karma App.
Eaty Eat is an app with
which restaurants, shops
and bakeries can sell their
unsold produce. With Eaty
Eat they have the opportunity to sell food
via the app at discount of 30-70%.
Customers pay for their orders and collect
it themselves at an agreed time. The
service was launched in early 2019. In its
first month of operation, about 25 kg of
food was saved. For now, the app
operates only in St Petersburg.
12
13
As we can see from this overview, the
foodsharing leaders in Russia today
are, on the whole, charitable food
salvaging schemes that don’t have
developed online platforms. Such an
approach has its limitations: upscaling
is difficult and it doesn’t always provide
the mobility needed when it comes to
food distribution.
That said, Russian online foodsharing
platforms are entering the market and are
well-placed for further development.
One of the successful overseas examples
of the rapidly growing foodsharing service
is the Olio app in England. It can serve as a
good guide for developing similar schemes
domestically.
Olio is platform that has
created a community of
people who either want to
give or receive for free food with an
expiring (but not expired) sell-by date.
The service was launched in the UK in
2015. In 2014, when moving house,
Tessa Clark, the app’s founder, could not
find a neighbour willing to come and
collect the food she was unable to take
with her. It was then that she thought
how it would be much easier to give the
food away if there was a special app for
it. She was supported in her idea by her
friend Saasha Celestial-One, and
together they started Olio. How does it
work? Anyone can register on the
platform, create a profile and leave
posts.
Posts have to include a photograph of
the food and a description of it.
Users who are interested write to the
post’s author and agree on a time and
place to meet. Usually the food is
collected from the home of the person
giving it away or they agree to meet in a
public place. The app operates an online
reputation system where each user is
rated.
Olio allows businesses (hotels,
supermarkets, catering companies etc.)
to take part and offers them a separate
service for a small fee (£2.00 for each
trip made by volunteers) – Food Waste
Heroes. The businesses hand over the
left-over food to the volunteers who then
distribute it using the Olio app.
businesses
volunteer
wants to give
food away
wants to take
the food
they meet up
leaves post writes
directly to
donor
International Experience: a successful project
Ready-Meals Fish
Milk Meat
Potatoes Vegetables
Fruit Cereals
HOW TO UNLOCK FOODSHARING’S
POTENTIAL IN RUSSIA
During 2018, in Russia, thanks to
foodsharing, approximately 7,000 tonnes of
food was saved. According to market
players, the removal of regulatory barriers
(of which more later) could lead to
foodsharing in Russia to increase in
volume to 1m tonnes by 2024.
Other local initiatives
Total food
waste content
of MSW
17m tonnes
2018
7,000
tonnes
2024
1m
tonnes
Foodsharing.Moscow
Foodsharing service
We Give Food for Free
Rus Fund
14
The Prospects for Foodsharing in Russia
According to experts, there are three key
components to realizing the potential of
foodsharing in Russia:
• friendlier state regulation regarding the
status of produce used in foodsharing
and taxation;
• the development of technological
platforms to enable a rapid growth in
the number of participants and provide
the mobility needed for distributing
food;
• food producers and distributors
dedicated to making food management
as efficient as possible.
1. Friendly state regulation regarding the status of
produce used in foodsharing and taxation.
According to retail companies, the current tax
system makes its collaborations with foodsharing
services economically unviable. It is cheaper for
companies to dispose of food than it is to give it
away to the needy for free as the tax burden on
donation can amount to 40% of the cost of the
goods (see table on p.16). A draft law intended to
resolve this problem was put before the State
Duma in June 2019, however it was rejected by the
Budget and Taxation Committee soon after.
There are also more particular complications. Like,
according to sanitary-epidemiological requirements,
it is forbidden to sell fruit and vegetables the
integrity of the peel of which is impaired10, even
though they may be perfectly edible.
It should be noted that from June 2019 a law came
into force forbidding the return to producers of
residual stock with less than 30 days until its expiry
date11, as a result of which disposal of unsold stock
is the responsibility of the retailer. In the light of
this, chains order fewer goods from suppliers which
quite often leads to empty shelves at the end of the
day. Giving retail the opportunity to sell left-over
stock via foodsharing would rid chains of the risk of
creating extra waste.
15
10 SP 2.3.6.1066-01 “Sanitary and epidemiological requirements for trade
organizations and the circulation of food raw materials and food products
in them”
11 Federal law No. 446-FZ ‘On amendments to article 5 of the Federal Law
“On the Development of Agriculture” and the Federal Law “On the Basics
of State Regulation of Trade Activities in the Russian Federation”’
Issue Description Possible Solution
Passing on goods
through foodsharing
is prohibited by
current health
regulations
A whole range of foods suitable for
consumption cannot in fact be sold,
including:
• foods unmarketable in
appearance (bruised, for
example);
• goods that are incorrectly
labelled.
A change in the status of
foodstuffs suitable for
consumption but not
intended for sale with
regard to current health
regulations.
The high costs for
companies
associated with
passing on food to
foodsharing services
Goods officially passed on by
companies to charity are classified
as having been released into the
market (subpara.1 para.1 art. 146 of
the Tax Code of the RF), therefore in
company accounts they are
recorded in earnings at their market
price (para.2 art.154 of the Tax Code
of the RF), which means that they
are subject to the corporate tax
(20%).
Also, companies transferring goods
to foodsharing services find
themselves last in the value-added
chain and thus have to pay VAT, for
which they cannot be compensated
(up to 20%).
The total tax burden on food given
to foodsharing can amount to 40%
of its market value. These costs can
significantly exceed those
associated with the disposal of
waste.
Passing of amendments to
the Russian Tax Code
providing for goods
handed to foodsharing
services to be removed
from the VAT and profit tax
bases. Incentives to be
created for organizations
donating food with
expiring shelf-lives free of
charge.
Additional risks
associated with
producer
responsibility for the
quality of goods
passed on to
foodsharing services
Some existing foodsharing schemes
are not officially registered but
operate as social media groups
through which food is redistributed.
In light of this, donor companies
have a responsibility to consumers
for the quality of the food donated to
foodsharing services. Risks are
particularly high with hand-over of
the following categories of food:
meat, fish and dairy products,
especially given that volunteers
collecting them could fail to store
them properly, causing them to be
spoiled as a result.
Those in receipt of said
food should sign a
disclaimer, thus relieving
the company of all
responsibility.
Appropriate amendments
in the Civil Code of the
Russian Federation would
be required for such an
option.
16
Outline of Legal Constraints Hindering the Development of Foodsharing
2. The development of technological
platforms to enable the rapid growth in the
number of participants and the mobility
needed for food distribution.
According to the study by RAEC and
TIARCENTER “The Sharing Economy in
Russia 2018”, growth in the sharing market
last year amounted to around 30%, but
individual sectors (carsharing or P2P
leasing of items, for example) doubled their
gross transaction volume. Foodsharing, on
the other hand, is expanding and a much
slower rate than other segments. It is seen
primarily as charity rather than business.
The Russian market is yet to see any
sufficiently notable technology-based
foodsharing projects, although the first
startups and investment in this area exist
already. International experience (including
Karma and Olio) shows that it is possible
for social and commercial goals to be
combined successfully.
3. Food producers and distributors
dedicated to making food management as
efficient as possible.
More and more companies are aware of
their responsibilities regarding the effect
they have on the environment and are trying
to adhere to the principles of sustainable
development. One of these principles is the
rational use of resources. In this regard
foodsharing services can be attractive
partners in corporate programs to minimize
food waste and in charitable activities. This
practice is flourishing in Europe and North
America:
• Auchan regularly sends food to European
food banks;
• Mercadona (a Spanish retail chain)
collaborates with community dining
rooms and food banks;
17
• The Champions 12.3 initiative,
supported by companies such as
Mars, Nestle, IKEA Food Services AB
and many others, works towards
reducing the amount of food wasted in
a transparent way: it regularly
publishes the results of its mission.
The initiative’s name comes from Goal
(SDG) 12, objective 3: to halve the
waste and reduce losses incurred
along food supply chains.
18
Russian experience also offers quite a few
examples of responsible business. Among the
committed partners of the Rus food bank are
some of the biggest players in the consumer
sector like PepsiCo, X5 Retail Group, Mars,
Cargill, Billa, Danone, Procter & Gamble, DIXY
and others. Yet these projects still haven’t
yielded significant quantitative results on a
nationwide scale. Less than one percent
of food with expiring sell-by dates is
successfully saved today through
foodsharing.
The further development of foodsharing in Russia is to a large extent dependent on the
emergence of new technology-based platforms. In the mid-term, the potential annual
amount of food saved could reach 1m tonnes – and this could provide food to around
1.3m Russians in need, prevent the emission of 143,000 tonnes of methane, and enable
business to be done with food with expiring shelf-lives with a total value of around 85bn
rubles.
APPENDIX. FOODSHARING AND THE UN’S SUSTAINABLE
DEVELOPMENT GOALS
The Sustainable Development Goals (SDGs), set by the UN for the period leading up to 2030,
are directed at raising people’s living standards and improving the environmental situation on
our planet. The Russian Federation government is currently working on its first voluntary
national report on the meeting of sustainable development goals, which it plans to present to
the UN in 2020. As can be seen from the table below, foodsharing has the capability of having
a significant influence over the achieving of SDGs in Russia.
Foodsharing’s Contribution to the Achievement of Sustainable Development Goals
SDG Problem in Russia Foodsharing as a Solution
SDG 1. No Poverty Over 13% of Russia’s population
(20m people) have an income
lower than the minimum
subsistence level12.
The opportunity to increase availability
of food for socially vulnerable groups.
In 2018, aid from the Rus Food Fund was
received by 3m Russians.
SDG 2. Zero Hunger 3.6m people in Russia do not
have enough to eat (around 2.5%
of the population)13.
The opportunity to rescue around 1.3m
annual rations by 2024, in other words to
feed over a third of the hungry in Russia.
SDG 11. Sustainable Cities
and Communities
About 12% of the Russian
population live in cities with high
and very high levels of air
pollution14.
The opportunity to reduce food waste by
1m tonnes by 2024 and, as a
consequence, reduce emissions of
substances caused by the breakdown of
organic matter (ammonia, hydrogen
sulphide etc.).
SDG 12. Responsible
Consumption and
Production
Around 16% of food produced is
wasted at the distribution and
consumption stages. 94% of this
waste is sent to landfill sites, the
area of which increases by 0.4m
ha every year15.
The opportunity to reduce the amount of
food waste at the retail and consumption
stages by 1m tonnes by 2024.
SDG 13. Climate Action The amount of greenhouse gas
emissions annually reaches from
2.6 to 2.7bn tonnes of CO2 eq.
Waste accounts for 0.12bn
tonnes of CO2 eq.16
The opportunity to reduce the amount of
food waste and reduce annual methane
emissions by 143,000 tonnes (3m CO2
eq. tonnes) by 2024.
12Rosstat, indicator “Numbers of inhabitants with monetary income below the minimum subsistence level overall across Russia”, 2018.
13 FAOstat, Country Profile (Hunger and Food Insecurity), 2005.
14 Russian Ministry of Natural Resources and the Environment “Characteristics of the Level of Atmospheric Air Pollution in Subjects of the Russian Federation”,
2017.
15 Greenpeace report “What to do with the rubbish from Russia?”, 2017.
16 Bulletin from the Analytical Center of the Government of the Russian Federation “Ecology and the Economy: the rise in the country’s atmospheric pollution”
2018.
19
20
Regulations
• SP 2.3.6.1066-01 “Sanitary and epidemiological requirements for trade organizations and the
circulation of food raw materials and food products in them”
• Federal Law No. 446-FZ ‘On amendments to article 5 of the Federal Law “On the Development of
Agriculture” and the Federal Law “On the Basics of State Regulation of Trade Activities in the
Russian Federation”’
Reports and Studies
• European Comission, “Estimates of European Food Waste Levels”, 2016.
• FAO, “Global Food Losses and Food Waste”, 2011.
• Greenpeace, “What to Do With the Rubbish from Russia?”, 2017.
• HSE, “The Waste Management Market”, 2018.
• World Bank, “What a Waste 2.0”, 2018.
Statistical Data Sources
• Analytical Center of the Government of the Russian Federation, “Ecology and the Economy: the
Rise in the Country’s Atmospheric Pollution”, 2018.
• FAOstat, Country Profile (Hunger and Food Insecurity), 2005.
• NIFI, guidelines on: “Development of a network of wholesale distribution centers for the sale of
agricultural products, including the creation of the necessary engineering and transport
infrastructure and the functioning of automated information logistics and settlement systems”,
2014.
• Rosstat, balances of food resources by category, 2017.
• Rosstat, data on the average annual volume of consumption and average cost of food by
category.
• Rosstat, indicator “Numbers of inhabitants with monetary income below the minimum
subsistence level overall across Russia”, 2018.
• Russian Ministry of Natural Resources and the Environment, “Characteristics of the Level of
Atmospheric Air Pollution in Constituent Entities of the Russian Federation”, 2017.
SELECTED SOURCES
21
CONTACTS
Anton Gubnitsyn
Head of RAEC / Sharing Economy Cluster,
CEO of TIARCENTER
gubnitsyn@tiarcenter.com
Constantine Streltsov
Head of Analytics at TIARCENTER
streltsov@tiarcenter.com
TIARCENTER
TIARCENTER is an independent think tank and advisory firm. We are focused on policy
development for circular economy promotion in Russia and the Eurasian Economic Union. We
provide strategic advice to corporations and government bodies on the implementation of
sustainable development principles.
Foodsharing in Russia
Published by TIARCENTER LLC.
By Anton Gubnitsyn, Konstantin Streltsov,
Alexandra Kumpan.
English translation by Jason J. Shaw.
Moscow, September 2019.
All rights reserved.
The information therein was accurate to
the best of the authors’ knowledge at the
time of release. The opinions featured in
this report are those of its authors and do
not constitute investment advice.
www.tiarcenter.com

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Food waste and Foodsaharing in Russia

  • 1. Foodsharing in Russia A way to save up to a million tonnes of produce every year: by providing food to 1.3m in need by preventing 143,000 tonnes of methane emissions by doing business with food with expiring shelf-lives worth a total of 85bn rubles Moscow, September 2019.
  • 2. CONTENTS 2 Food Waste: an Enormous Loss to the Economy and Environment 3 The Russian Waste Chain: How Food Ends Up as Refuse 4 Ingredients of Food Waste: the Main Culprits 5 The Value of Food with Expiring Sell-By Dates 6 The Solution: the Emergence of Foodsharing 7 How to Unlock Foodsharing’s Potential in Russia 14 Appendix. Foodsharing and the UN’s Sustainable Development Goals 19 tap to navigate Russia’s Foodsharing Projects 9
  • 3. FOOD WASTE: AN ENORMOUS LOSS TO THE ECONOMY AND ENVIRONMENT 1 Study by the World Bank What a Waste 2.0, 2018 ; FAO, Global Food Losses and Food Waste, 2011. 2 Study by the Higher School of Economics The Waste Management Market, 2018 . 3 Report by Greenpeace What to do with the Rubbish from Russia, 2017. 4 The World Bank (What a Waste 2.0, 2018), The European Commission (Estimates of European Food Waste Levels, 2016) and study by the Higher School of Economics (The Waste Management Market, 2018). Every year, the world throws away at least 20% of all food produced – that’s about 884m tonnes of it. It makes up around 44% of all household waste1. In Russia, the food content in municipal solid waste (MSW) reaches about 17m tonnes every year. This is around 28% of all the MSW created by the country2. Virtually all food waste (94%)3 in Russia ends up at garbage dumps and landfill sites where it goes on to pollute the air, soil and water table. That amount of waste food, 17m tonnes, gives off around about 2.4m tonnes of methane (a potent greenhouse agent); not to mention other gases such as ammonia and hydrogen sulphide. According to Rosstat, in the last five years the amount of waste food in Russia has fluctuated across the range of ± 5% a year, depending on changes in population numbers and corresponding levels of disposable income. 3 884 The World 61.6 European Union 17 2 Annual amount of food MSW in millions of tonnes4 Russia Moscow
  • 4. More than 8% of losses occurs at the agricultural production stage; approximately as much as is lost during processing. At the selling stage (retail & restaurants) the amount lost comes to around 5%. The greatest wastage, almost 12%, is created at the consumption stage, in households. THE RUSSIAN WASTE CHAIN: HOW FOOD ENDS UP AS REFUSE agriculture transportation processing logistics and storage sale consumption Cumulative losses and waste volume 41.3%> 20.3% 9.2% of the original amount of produce is lost at the storage and retail stage of losses happens during agricultural production, processing and transportation of food 11.8% is thrown away by consumers -8.22% -3,41% -8.72% -4.33% -4.85% The Food Wastage Chain5 -11.8% 45 Calculations based on data from the Russian Agriculture Ministry, 2017. Cumulative turnover of food supplies
  • 5. If we analyse the constituents of food waste, we can single out the top 3 food types which go into creating it6: Cereal products (bread and pasta based goods, flour) take first place in household kitchen waste (62%) and third place in waste food from wholesale and retail outlets (12%). Dairy products (milk, kefir, yoghurt, cheese, curds) – conversely top the waste in wholesale and retail (47%) while taking fifth place among consumer waste (5%). Potatoes complete the trio: 15% of consumer waste and 11% of wholesale & retail waste. Completely eradicating losses in just these three categories would mean a reduction in the amount of household waste by 82%, and of wholesale & retail wastage by 70%. THE INGREDIENTS OF FOOD WASTE: THE MAIN CULPRITS 0% 20% 40% 60% 80% 100% Портится на оптовых складах, на полках магазинов Выбрасывают потребители Food waste by food category Cereals Fruit Vegetables Potatoes Meat Milk Fish 6 Calculations based on data from Rosstat, 2017. 5 Thrown away by consumers Spoiled in wholesale storage facilities and on shop shelves
  • 6. 7 Calculations based on data from Rosstat on average annual volume of consumption and average cost of food by category. 8 According to data from Rosstat for 2019, there are approximately 20.9m people with an income below the minimum subsistence level. THE VALUE OF FOOD WITH EXPIRING SHELF-LIVES 17m tonnes of wasted food is not only the source of 2.4m tonnes of methane and other gases created at garbage dumps but also a substantial loss of money. The cost of this food is estimated at over 1.6 trillion rubles7($25bn). This figure equates to 12% of food retail revenue in Russia. Saving this amount of food would feed 30m people, in other words, more than the number of people in Russia living below the poverty line8. Volume 17m tonnes of food waste per year Cost $25bn 3*1013 kcal Calorific Value = = Emits 2.4m tonnes of methane (a potent greenhouse agent) 1.58% of Russia’s GDP (2018) 30m annual rations for an adult +release of ammonia, hydrogen sulphide, aromatic hydrocarbons, mercaptans, alcohols and ketones, chloroethylene 12.23% of Russian food retail market (2017) 6
  • 7. THE SOLUTION: THE EMERGENCE OF FOODSHARING As the figures above show, in Russia today, at the food distribution and consumption stages at least 16% of food goes to waste. That is about 17m tonnes of produce every year which turns into food waste. An effective way of preventing wastefulness where food is concerned may be foodsharing. Foodsharing is online services where food is distributed among members of a community. Members can post details of food available, how much there is and where it is, and negotiate transferring it, for free or otherwise, to anyone interested. Foodsharing services are akin to the concept of foodsaving – the environmental movement to rescue food resources. Also, foodsharing services can operate not only as non-profits but also as businesses, deriving profit from facilitating food distribution. The foods which foodsharing deals with may vary in what they are worth but what they all have in common is their expiring shelf-life. So, time is an essential factor (perfectly good food could go to waste in just a few days). It is none other than online services with their geolocation and instant messaging capabilities that can make this food as mobile as possible. 7
  • 8. 8 Developing the foodsharing model will bring society a threefold benefit: The food saved goes to those who want it, including those in need. Natural and labor resources are used in a rational way (fewer resources overall are used and more people are fed as a result). The amount of food going to waste is reduced. 9 More details available in the appendix. It is important to realize that those involved in the consumer food market (producers, retail chains, caterers), have an interest in resolving the problem of food with expiring shelf-lives. After all, if they do not manage to sell or distribute it before its shelf-life expires, they are obliged to pay for the disposal of the waste they have created. The way foodsharing services work is completely in step with the UN’s Sustainable Development Goals (SDGs): the eradication of poverty, the eradication of hunger, responsible consumption and production, and prevention of climate change9.
  • 9. Karma App is a project that was launched in Sweden in 2016. Cafes, restaurants and food shops post details on the app about unsold food for sale at half-price, and users select the goods, pay for them using the app and then come and collect them. Today, as well as in Sweden, the app is available in London and Paris and is used by about 4,800 vendors and more than 550,000 customers. As well as saving food (550 tonnes since the online platform was launched), companies use the app as a platform for attracting new customers. Karma App makes its money by taking a commission (25% of the bill). In 2018, the app attracted 12m dollars of investment to enter overseas markets. The Rus Food Fund is Russia’s first “food bank”. It was registered as a charitable foundation in 2012. Food is donated by producers, shops, the public and it goes to society’s disadvantaged via other charitable organizations and government social services. The fund operates a food quality control system (it is sorted and screened). Until recently, the Rus fund carried on its work like a typical charity without the use of an online platform. However, in September 2019, jointly with Х5 Retail Group, the fund launched the Food Drive app, so that people could register and take part in food charity activities in X5 stores as well as provide targeted aid by buying food baskets for those in need. The Rus Food Fund has had considerable success in working with donors among which are some of the largest producers and retail chains, such as Mars International, Cargill, Billa, Danone, Procter & Gamble, DIXY and others. According to the fund’s books, Rus provides aid in 54 regions across Russia. In 2018, the amount of food distributed came to 4,600 tonnes worth around 700m rubles. producers | stores | general public charitable foundations, social services vulnerable groups Specializations: working with large producers and federal-wide retail chains Saved 4,600 tonnes of food during 2018. Geographic reach: 54 Russian regions Community: aid provided to 3m people; over 60 donor companies Workflow of the Rus Fund In Russia, there are several notable foodsharing projects at work which succeed in salvaging a certain amount of food. They employ various models and most of them are noncommercial in nature. 9 International Experience: a successful commercial venture RUSSIAN FOODSHARING PROJECTS Rus Fund
  • 10. Foodsharing.Moscow is a voluntary movement, operating on the basis of verbal agreements between donors and members of the movement. Coordination of volunteers and contacts with the donors is maintained via social media. Volunteers collect food with expiring shelf-lives from donor organizations. Saves about 12.5 tonnes of food a month Geographic reach: Moscow and close vicinities Specializations: collaboration with cafes, bakeries, canteens, independent shops Community: 6,700 subscribers; 200 volunteers; 50 donor companies Donor companies Those known to the volunteers (pensioners, large families…) Wards of charitable organizations Non-profits (distribute large consignments) 1 2 3 volunteers Those interested in becoming volunteers register, learn the community’s rules and take a test on them. Then they go onto the database of members and receive notifications about upcoming trips out to donor organizations. The food received is distributed by the volunteers themselves. Some of the food can be taken for themselves, and the rest is handed out to those in need. Those involved with other charities can also become volunteers and distribute food to those under their protection. 10
  • 11. Foodsharing We Give Food for Free is a group on social network VK where individuals or organizations can post details about food they are willing to give away for free. Then group members leave comments about what they are interested in and decide with the author of the post on where and when to meet. post user (“salvager”) Saves about 5 tonnes of food a day Geographic reach: Moscow, St Petersburg Specializations: collaboration with eco-stores, vegetable wholesalers, bakeries Community: 55,900 subscribers; about 100 donor companies 11 organizations individuals, households donates food collects food Foodsharing We Give Food for Free
  • 12. Food Hide is a similar project, still at the development and partner company recruitment stage. There are plans for cafes and restaurants to sell their food through the platform at a discount of at least 50%. For its part, Food Hide will receive commission on each sale. In June 2019, the startup succeeded in attracting investment (reportedly about 5-10m rubles) from United Investors. Alisok is a platform which has been at the development stage since 2018. It differs from the other projects in its social focus – it is planned to invest the profits in a network of community kitchens for those in need. The project’s core principle is similar: cafes and restaurants sell their unsold food at a discount via Alisok which takes a commission (around 5%). New Russian Foodsharing Startups In 2018-2019, several foodsharing startups emerged in Russia – online platforms making money out of smart allocation of food with expiring shelf-lives. To a large extent they replicate the approach taken by the previously mentioned Karma App. Eaty Eat is an app with which restaurants, shops and bakeries can sell their unsold produce. With Eaty Eat they have the opportunity to sell food via the app at discount of 30-70%. Customers pay for their orders and collect it themselves at an agreed time. The service was launched in early 2019. In its first month of operation, about 25 kg of food was saved. For now, the app operates only in St Petersburg. 12
  • 13. 13 As we can see from this overview, the foodsharing leaders in Russia today are, on the whole, charitable food salvaging schemes that don’t have developed online platforms. Such an approach has its limitations: upscaling is difficult and it doesn’t always provide the mobility needed when it comes to food distribution. That said, Russian online foodsharing platforms are entering the market and are well-placed for further development. One of the successful overseas examples of the rapidly growing foodsharing service is the Olio app in England. It can serve as a good guide for developing similar schemes domestically. Olio is platform that has created a community of people who either want to give or receive for free food with an expiring (but not expired) sell-by date. The service was launched in the UK in 2015. In 2014, when moving house, Tessa Clark, the app’s founder, could not find a neighbour willing to come and collect the food she was unable to take with her. It was then that she thought how it would be much easier to give the food away if there was a special app for it. She was supported in her idea by her friend Saasha Celestial-One, and together they started Olio. How does it work? Anyone can register on the platform, create a profile and leave posts. Posts have to include a photograph of the food and a description of it. Users who are interested write to the post’s author and agree on a time and place to meet. Usually the food is collected from the home of the person giving it away or they agree to meet in a public place. The app operates an online reputation system where each user is rated. Olio allows businesses (hotels, supermarkets, catering companies etc.) to take part and offers them a separate service for a small fee (£2.00 for each trip made by volunteers) – Food Waste Heroes. The businesses hand over the left-over food to the volunteers who then distribute it using the Olio app. businesses volunteer wants to give food away wants to take the food they meet up leaves post writes directly to donor International Experience: a successful project
  • 14. Ready-Meals Fish Milk Meat Potatoes Vegetables Fruit Cereals HOW TO UNLOCK FOODSHARING’S POTENTIAL IN RUSSIA During 2018, in Russia, thanks to foodsharing, approximately 7,000 tonnes of food was saved. According to market players, the removal of regulatory barriers (of which more later) could lead to foodsharing in Russia to increase in volume to 1m tonnes by 2024. Other local initiatives Total food waste content of MSW 17m tonnes 2018 7,000 tonnes 2024 1m tonnes Foodsharing.Moscow Foodsharing service We Give Food for Free Rus Fund 14 The Prospects for Foodsharing in Russia
  • 15. According to experts, there are three key components to realizing the potential of foodsharing in Russia: • friendlier state regulation regarding the status of produce used in foodsharing and taxation; • the development of technological platforms to enable a rapid growth in the number of participants and provide the mobility needed for distributing food; • food producers and distributors dedicated to making food management as efficient as possible. 1. Friendly state regulation regarding the status of produce used in foodsharing and taxation. According to retail companies, the current tax system makes its collaborations with foodsharing services economically unviable. It is cheaper for companies to dispose of food than it is to give it away to the needy for free as the tax burden on donation can amount to 40% of the cost of the goods (see table on p.16). A draft law intended to resolve this problem was put before the State Duma in June 2019, however it was rejected by the Budget and Taxation Committee soon after. There are also more particular complications. Like, according to sanitary-epidemiological requirements, it is forbidden to sell fruit and vegetables the integrity of the peel of which is impaired10, even though they may be perfectly edible. It should be noted that from June 2019 a law came into force forbidding the return to producers of residual stock with less than 30 days until its expiry date11, as a result of which disposal of unsold stock is the responsibility of the retailer. In the light of this, chains order fewer goods from suppliers which quite often leads to empty shelves at the end of the day. Giving retail the opportunity to sell left-over stock via foodsharing would rid chains of the risk of creating extra waste. 15 10 SP 2.3.6.1066-01 “Sanitary and epidemiological requirements for trade organizations and the circulation of food raw materials and food products in them” 11 Federal law No. 446-FZ ‘On amendments to article 5 of the Federal Law “On the Development of Agriculture” and the Federal Law “On the Basics of State Regulation of Trade Activities in the Russian Federation”’
  • 16. Issue Description Possible Solution Passing on goods through foodsharing is prohibited by current health regulations A whole range of foods suitable for consumption cannot in fact be sold, including: • foods unmarketable in appearance (bruised, for example); • goods that are incorrectly labelled. A change in the status of foodstuffs suitable for consumption but not intended for sale with regard to current health regulations. The high costs for companies associated with passing on food to foodsharing services Goods officially passed on by companies to charity are classified as having been released into the market (subpara.1 para.1 art. 146 of the Tax Code of the RF), therefore in company accounts they are recorded in earnings at their market price (para.2 art.154 of the Tax Code of the RF), which means that they are subject to the corporate tax (20%). Also, companies transferring goods to foodsharing services find themselves last in the value-added chain and thus have to pay VAT, for which they cannot be compensated (up to 20%). The total tax burden on food given to foodsharing can amount to 40% of its market value. These costs can significantly exceed those associated with the disposal of waste. Passing of amendments to the Russian Tax Code providing for goods handed to foodsharing services to be removed from the VAT and profit tax bases. Incentives to be created for organizations donating food with expiring shelf-lives free of charge. Additional risks associated with producer responsibility for the quality of goods passed on to foodsharing services Some existing foodsharing schemes are not officially registered but operate as social media groups through which food is redistributed. In light of this, donor companies have a responsibility to consumers for the quality of the food donated to foodsharing services. Risks are particularly high with hand-over of the following categories of food: meat, fish and dairy products, especially given that volunteers collecting them could fail to store them properly, causing them to be spoiled as a result. Those in receipt of said food should sign a disclaimer, thus relieving the company of all responsibility. Appropriate amendments in the Civil Code of the Russian Federation would be required for such an option. 16 Outline of Legal Constraints Hindering the Development of Foodsharing
  • 17. 2. The development of technological platforms to enable the rapid growth in the number of participants and the mobility needed for food distribution. According to the study by RAEC and TIARCENTER “The Sharing Economy in Russia 2018”, growth in the sharing market last year amounted to around 30%, but individual sectors (carsharing or P2P leasing of items, for example) doubled their gross transaction volume. Foodsharing, on the other hand, is expanding and a much slower rate than other segments. It is seen primarily as charity rather than business. The Russian market is yet to see any sufficiently notable technology-based foodsharing projects, although the first startups and investment in this area exist already. International experience (including Karma and Olio) shows that it is possible for social and commercial goals to be combined successfully. 3. Food producers and distributors dedicated to making food management as efficient as possible. More and more companies are aware of their responsibilities regarding the effect they have on the environment and are trying to adhere to the principles of sustainable development. One of these principles is the rational use of resources. In this regard foodsharing services can be attractive partners in corporate programs to minimize food waste and in charitable activities. This practice is flourishing in Europe and North America: • Auchan regularly sends food to European food banks; • Mercadona (a Spanish retail chain) collaborates with community dining rooms and food banks; 17
  • 18. • The Champions 12.3 initiative, supported by companies such as Mars, Nestle, IKEA Food Services AB and many others, works towards reducing the amount of food wasted in a transparent way: it regularly publishes the results of its mission. The initiative’s name comes from Goal (SDG) 12, objective 3: to halve the waste and reduce losses incurred along food supply chains. 18 Russian experience also offers quite a few examples of responsible business. Among the committed partners of the Rus food bank are some of the biggest players in the consumer sector like PepsiCo, X5 Retail Group, Mars, Cargill, Billa, Danone, Procter & Gamble, DIXY and others. Yet these projects still haven’t yielded significant quantitative results on a nationwide scale. Less than one percent of food with expiring sell-by dates is successfully saved today through foodsharing. The further development of foodsharing in Russia is to a large extent dependent on the emergence of new technology-based platforms. In the mid-term, the potential annual amount of food saved could reach 1m tonnes – and this could provide food to around 1.3m Russians in need, prevent the emission of 143,000 tonnes of methane, and enable business to be done with food with expiring shelf-lives with a total value of around 85bn rubles.
  • 19. APPENDIX. FOODSHARING AND THE UN’S SUSTAINABLE DEVELOPMENT GOALS The Sustainable Development Goals (SDGs), set by the UN for the period leading up to 2030, are directed at raising people’s living standards and improving the environmental situation on our planet. The Russian Federation government is currently working on its first voluntary national report on the meeting of sustainable development goals, which it plans to present to the UN in 2020. As can be seen from the table below, foodsharing has the capability of having a significant influence over the achieving of SDGs in Russia. Foodsharing’s Contribution to the Achievement of Sustainable Development Goals SDG Problem in Russia Foodsharing as a Solution SDG 1. No Poverty Over 13% of Russia’s population (20m people) have an income lower than the minimum subsistence level12. The opportunity to increase availability of food for socially vulnerable groups. In 2018, aid from the Rus Food Fund was received by 3m Russians. SDG 2. Zero Hunger 3.6m people in Russia do not have enough to eat (around 2.5% of the population)13. The opportunity to rescue around 1.3m annual rations by 2024, in other words to feed over a third of the hungry in Russia. SDG 11. Sustainable Cities and Communities About 12% of the Russian population live in cities with high and very high levels of air pollution14. The opportunity to reduce food waste by 1m tonnes by 2024 and, as a consequence, reduce emissions of substances caused by the breakdown of organic matter (ammonia, hydrogen sulphide etc.). SDG 12. Responsible Consumption and Production Around 16% of food produced is wasted at the distribution and consumption stages. 94% of this waste is sent to landfill sites, the area of which increases by 0.4m ha every year15. The opportunity to reduce the amount of food waste at the retail and consumption stages by 1m tonnes by 2024. SDG 13. Climate Action The amount of greenhouse gas emissions annually reaches from 2.6 to 2.7bn tonnes of CO2 eq. Waste accounts for 0.12bn tonnes of CO2 eq.16 The opportunity to reduce the amount of food waste and reduce annual methane emissions by 143,000 tonnes (3m CO2 eq. tonnes) by 2024. 12Rosstat, indicator “Numbers of inhabitants with monetary income below the minimum subsistence level overall across Russia”, 2018. 13 FAOstat, Country Profile (Hunger and Food Insecurity), 2005. 14 Russian Ministry of Natural Resources and the Environment “Characteristics of the Level of Atmospheric Air Pollution in Subjects of the Russian Federation”, 2017. 15 Greenpeace report “What to do with the rubbish from Russia?”, 2017. 16 Bulletin from the Analytical Center of the Government of the Russian Federation “Ecology and the Economy: the rise in the country’s atmospheric pollution” 2018. 19
  • 20. 20 Regulations • SP 2.3.6.1066-01 “Sanitary and epidemiological requirements for trade organizations and the circulation of food raw materials and food products in them” • Federal Law No. 446-FZ ‘On amendments to article 5 of the Federal Law “On the Development of Agriculture” and the Federal Law “On the Basics of State Regulation of Trade Activities in the Russian Federation”’ Reports and Studies • European Comission, “Estimates of European Food Waste Levels”, 2016. • FAO, “Global Food Losses and Food Waste”, 2011. • Greenpeace, “What to Do With the Rubbish from Russia?”, 2017. • HSE, “The Waste Management Market”, 2018. • World Bank, “What a Waste 2.0”, 2018. Statistical Data Sources • Analytical Center of the Government of the Russian Federation, “Ecology and the Economy: the Rise in the Country’s Atmospheric Pollution”, 2018. • FAOstat, Country Profile (Hunger and Food Insecurity), 2005. • NIFI, guidelines on: “Development of a network of wholesale distribution centers for the sale of agricultural products, including the creation of the necessary engineering and transport infrastructure and the functioning of automated information logistics and settlement systems”, 2014. • Rosstat, balances of food resources by category, 2017. • Rosstat, data on the average annual volume of consumption and average cost of food by category. • Rosstat, indicator “Numbers of inhabitants with monetary income below the minimum subsistence level overall across Russia”, 2018. • Russian Ministry of Natural Resources and the Environment, “Characteristics of the Level of Atmospheric Air Pollution in Constituent Entities of the Russian Federation”, 2017. SELECTED SOURCES
  • 21. 21 CONTACTS Anton Gubnitsyn Head of RAEC / Sharing Economy Cluster, CEO of TIARCENTER gubnitsyn@tiarcenter.com Constantine Streltsov Head of Analytics at TIARCENTER streltsov@tiarcenter.com TIARCENTER TIARCENTER is an independent think tank and advisory firm. We are focused on policy development for circular economy promotion in Russia and the Eurasian Economic Union. We provide strategic advice to corporations and government bodies on the implementation of sustainable development principles. Foodsharing in Russia Published by TIARCENTER LLC. By Anton Gubnitsyn, Konstantin Streltsov, Alexandra Kumpan. English translation by Jason J. Shaw. Moscow, September 2019. All rights reserved. The information therein was accurate to the best of the authors’ knowledge at the time of release. The opinions featured in this report are those of its authors and do not constitute investment advice.