Indonesian food loss in the production side of the food supply chain is primarily the result of the inefficiency of farm businesses in managing the procurement of means of production, power supply, harvest processing, storage after harvest, and transportation expenses. This issue not only leads to food loss but also contributes to the increased cost of food.
Similarly, poor food quality assurance, stability of supply, distribution management, timely delivery, cost efficiency, product appearance, and compliance with product standards such as ISO series, halal status and sustainability are major causes of food waste on the consumer side. Pricing concerns and promotions also need to be addressed.
To effectively manage food waste, high-cost economies in the purchase of agricultural production elements across the food supply chain as a whole must be eliminated. Establishing an ecosystem that covers the entirety of the food supply chain is essential. This ecosystem should address various issues, including the quality of the agricultural industry’s human resources, the availability of agricultural infrastructure, information technology and its supporting systems, agricultural financing and production innovations that shape food consumption patterns. (Fitria, 2018).
The composition of food waste in Indonesia is dominated by organic waste from agriculture, such as leftovers from individual consumption, waste leaves from trees, food material residues wasted due to expiration or non-compliance with food safety standards, fruit skins, vegetable peels, egg shells, edible animal bones and skin, and edible animal fat. In addition, Indonesians throw away a significant amount of food that can still be consumed.
From Disaster to Blessings
Home is where the food supply chain comes to an end. Waste that occurs in the home throughout making, storing, and eating food is referred to as “food waste”. Some causes for this include behavioral variables, particular food preferences, storage techniques and improper preparation for grocery shopping.
First and foremost, there are the three behavioral components, as follows: 1. Most households are uninformed about the quantity of food that is wasted, the issues that are caused by food waste and the financial advantages that come from purchasing food judiciously. 2. The family does not have a firm understanding of how to make effective use of food. 3. Households do not understand the importance of eating food and do not believe that it is vital to do so.
Some bits of food that contain nutrients are thrown away because of factors such as personal choice or preference. For instance, apple peels and hard pieces of bread are two examples of such portions of food. Inadequate planning, for instance, results in the purchase of an excessive amount of food, most of which is then wasted because it is never consumed (Wahyono, 2017).
The methods used to store food may cause it to lose its nutritional quality, such as storing it in circumstances that are less than ideal or in inadequate packaging, both of which increase the likelihood that the food will spoil or get damaged.
To ensure the food waste management, effectively transforming it from disaster to blessings, first we should provide an ecosystem of agrifood supply chain end-to-end mechanism, and the second, we should set priorities on responsible consumption behavior for ourselves to the community at large.
On the farm side, vertically-linked business systems provide a number of benefits, most notably an improvement in productivity and the ability to participate in a wider range of activities. These benefits are particularly beneficial for smaller businesses. Vertical integration is an example of a sort of institutional innovation in the agricultural sector. The goal is to meet the requirements of both local and international markets with agricultural goods such that a significant amount of additional value may be derived from those items.
The vertically-integrated business system has an inverse link between the effectiveness of business specialization and the extent to which it engages in business diversification. This is because of the flexibility with which it manages both family labor and rental labor and resources. This flexibility is essential for small farms because it allows them to better manage price risk.
In order to do this, the integrated business system will need to be joined in a form of collaboration in the future. This will allow for the regulation of different business contract schemes, beginning with manufacturing and continuing through processing and harvesting. As a consequence of the increased level of specialization provided by the different types of businesses, this will assure general economic well-being. Collaborating in co-operative containers of the farmers’ group requires taking into consideration not only transaction costs between the labor force and the owner, but also the transaction costs of selling agricultural goods with added value.
A structural obstacle that contributes to high transaction costs is the difficulties that small businesses have when attempting to develop integrated business systems. For small businesses to have more access to the assets, information, services and markets, they need to enhance their revenues; one of the most important strategies is to reduce the high transaction costs they face. The most important tool for implementing this fundamental approach is institutional innovation; many forms of vertical integration of processing and marketing exist, each with a particular emphasis on lowering specific transaction costs. Agricultural contracts are one example of a kind of vertical integration that combines the processing and selling of agricultural goods and strives to boost agricultural output that has high added value.
Another kind of vertically-integrated company system is one that involves the diversification of economic scope, often known as ecological diversification, as well as the specialization in the technological efficiency of small businesses. This farm system is distinguished by the fact that it combines the cultivation of commercial crops with food crops for sustenance, which is one of its hallmarks. The dynamic processes of business systems that are integrated in size and specialization have the ability to exert an influence on output productivity potential and combined technical efficiency.