China's battle with food waste, food shortages and climate change

How much food waste does China produce, why are there food shortages, and how can cockroaches solve China's climate change challenges?

by Michael Baldinger, Head of Sustainable and Impact Investing 30 May 2019
  • China produces up to 18m tonnes of food waste per year
  • China also faces the challenge of producing enough food to feed its population, particularly as diets shift to become more protein-rich
  • Entrepreneurs in China see cockroaches as a solution to food waste and animal feed problems
  • Insects are increasingly seen as a source of 'sustainable protein' and the cockroach example shows how China is an increasing source of new, innovative ideas that have the potential to change the world we live in

China faces three pressing challenges: how to handle food waste, how to feed its 1.3 billion population, and how to sustainably fight climate change. Though these challenges are daunting, enterprising entrepreneurs in China now have a scientifically-solid solution - but it might make you feel uncomfortable.

China's 18m tonne food waste problem

China produces up to 18m tonnes1 of food waste every year – enough to feed up to 15 million people2 and worth an estimated USD 32bn3.

How do the Chinese authorities handle it? Alarmingly, studies show these mountains of wasted food are rarely recycled.

In Beijing, less than 10% of the 13,500 tonnes of food waste produced daily gets recycled4 with the rest sent to landfills or incineration plants – and that's bad for the environment.

Landfills produce methane as food waste decomposes, and methane is one of the most hazardous greenhouse gases (GHGs), which research shows is 84 times stronger5 as a pollutant than CO².

And that's one of the reasons why China is believed to be the world's biggest sources of GHG6, estimated to generate around 60 million tonnes of methane in 2015, with an estimated 8 million tonnes coming from food waste alone7.

 

As if this wasn't bad enough, China's food waste challenge is likely to get tougher.

Rapid urbanization – estimated to see an additional 120 million people move to China's cities by 20258 – will put even more pressure on China's food disposal and supply chains, and all the research shows that China is not well resourced enough to handle it.

Feeding 1.3 billion people

But China's food fight isn't just limited to handling food waste, it stretches to producing enough food for 1.3 billion people in the first place, and in a sustainable way.

And that challenge is getting tougher, particularly as diets change.

The average Chinese person consumed 48.7kg of meat per year in 2015, 62.3% higher than the average in 1995, and that's predicted to grow to 53.9kg by 2025, up by 10.6%9.


Annual Meat Consumption per Capita in China (kg), 1995-2025(forecast)

This trend is going to put even more strain on China's livestock sector and will work its way down the food chain into greater demand for animal feed.

And China increasingly imports its animal feed needs, which drives huge demand for soybeans, making China the world's largest importer10.

China: Soybean Imports (Billion Bushels), 1995-2018
 

Soybeans are a valuable case in point. China's meat production industry is geared toward pork production, and soybeans are regarded as an excellent feed for pigs because of their high protein and energy content11.

But China's growing appetite for soybeans has major effects on the environment, for two principal reasons:

  • Soybeans are one of the most water-intensive crops: soybeans require an estimated 900 liters of water to produce one kilo of crop12.
  • Growing soybean demand feeds through into deforestation: as China has emerged as a huge market for soybeans, producer countries, like Brazil, have converted forest space into arable land for soybean crop exports, resulting in the deforestation of an estimated 21,000 sq.km13 of land.

So, as Chinese demand for meat grows, the knock-on effects on the global environment are growing increasingly severe, adding an extra dimension to the food challenges that China faces.

In an ideal world then, scientists  could create an efficient way to process food waste, as well as creating a ready and sustainable supply of nutrient-rich feed to give to animals.

Even better if these solutions could be bundled into one focused package.

The good news then is that enterprising entrepreneurs in China have come up with what they think could be an answer. And the solution is cockroach farming.


Cockroaches: a cure-all for China's food challenges?

Li Yanrong, founder of Shandong Qiaobin Agriculture Technology, based in Jinan in China's north-eastern province of Shandong, has built a climate-controlled complex to house cockroaches and sustainably address China's food waste and supply challenges.

Li's solution involves collecting food waste, processing it into a liquid substance, squeezing it through tubes that empty into the cockroach sheds, watching as the cockroaches eat it up, and then turning the cockroaches into animal feed at the end of their one-year lifespan.

Li believes cockroaches are a sustainable solution to the food waste problem.

Firstly, it's because cockroaches are highly efficient waste consumers, meaning they can get through a lot of waste in a very short time period.

For instance, the estimated one billion cockroaches at Li's farm can munch their way through 50 tonnes of food waste per day – the equivalent in weight to seven adult elephants14.

Secondly, cockroaches are efficient at not only working their way through waste, but also highly efficient in turning that waste into edible protein15, a key factor to consider when sustainably developing animal feed.

Finally, when corralled into temperature controlled sheds, cockroaches require little else in the way of inputs, meaning they are a low maintenance food processing solution.

And why are cockroaches a solution to animal feed challenges?

They are highly nutritious16 and considered a viable alternative to plant-based animal feeds, according to numerous research studies on the subject in the field of animal feed research17.

Because of their size and minimal input requirements, they are an attractive alternative to land-intensive animal feeds, like soybeans, and put less pressure on the environment.


Bug business?

When interviewed by Reuters, Li Yanrong revealed that he had plans to build even more cockroach farms, and estimates the three he had planned could process approximately a third of the food waste produced by the city of Jinan.

One constraint on growth remains sorting the food waste, most of which comes unsorted when delivered to the processing plant. Automation may solve this problem through tech-driven processes to sort the waste capable of being fed to the cockroaches from inorganic waste.

Finally, since the use of cockroaches in food processing is relatively new idea, there is still not enough research completed on potential hazards involved with putting them into the food chain as an animal feed alternative.

Get ready for 'sustainable protein'

Wider trends in the global feed industry suggest what's happening in China could be part of a gathering global trend. Feed companies all over the world, like Cargill, Wilbur-Elllis and Buhler Group, are investing heavily in 'sustainable protein' sources like insects as they grapple with changing diets and increasing demand for meat. 

But the cockroach story is also an important example of how private companies are responding to the challenge of climate change, and also that China is an increasing source of new, innovative ideas and technologies that  have  the potential to change the world we live in.

And as momentum grows toward sourcing and developing creative solutions to tackle climate change, we believe China will be an exciting source of innovative and investible ideas in the sustainable investing field for many years  to come.


Read more

Sustainable and Impact Investing

Redefining the way you think about sustainable investing


Important legal information

To proceed, please confirm that you are a professional / qualified / institutional client and investor.

Views and opinions expressed are presented for informational purposes only and are a reflection of UBS Asset Management’s best judgment at the time a report or other content was compiled. UBS specifically prohibits the redistribution or reproduction of this material in whole or in part without the prior written permission of UBS and UBS accepts no liability whatsoever for the actions of third parties in this respect. The information and opinions contained in the content of this webpage have been compiled or arrived at based upon information obtained from sources believed to be reliable and in good faith but no responsibility is accepted for any errors or omissions. All such information and opinions are subject to change without notice but any obligation to update or alter forward-looking statement as a result of new information, future events, or otherwise is disclaimed. Source for all data/charts, if not stated otherwise: UBS Asset Management.
Any market or investment views expressed are not intended to be investment research. Materials have not been prepared to address requirements designed to promote the independence of investment research and are not subject to any prohibition on dealing ahead of the dissemination of investment research. The information contained in this webpage does not constitute a distribution, nor should it be considered a recommendation to purchase or sell any particular security or fund. The materials and content provided will not constitute investment advice and should not be relied upon as the basis for investment decisions. As individual situations may differ, clients should seek independent professional tax, legal, accounting or other specialist advisors as to the legal and tax implication of investing. Plan fiduciaries should determine whether an investment program is prudent in light of a plan's own circumstances and overall portfolio. A number of the comments in the content of this webpage are considered forward-looking statements. Actual future results, however, may vary materially. Past performance is no guarantee of future results. Potential for profit is accompanied by possibility of loss. 
© UBS 2019 The key symbol and UBS are among the registered and unregistered trademarks of UBS.

Reset