6. The contribution of the processed food sector to the triple challenge

This chapter investigates how the processed food sector contributes to the triple challenges facing food systems: ensuring global food security and nutrition, providing livelihoods to farmers and others along the food chain, and using natural resources in a sustainable manner.

The consumption of foods that have been processed to varying degrees constitutes the final stage of the agro-food supply chain.1 Processed foods, and the processed food sector more broadly, make important contributions to the economy and to dietary patterns worldwide. Indeed, food and beverage manufacturing ranks among the top three manufacturing activities in terms of value added in 27 OECD countries.2 In 2019, the world’s top ten food, beverage and tobacco3 companies generated over USD 539 billion in revenues.4

Several types of food processing have a positive impact on the safety and quality of food products and are essential to supporting safe, affordable, and nutritious diets. Nevertheless, there is growing concern about the regular or excessive consumption of energy-dense and nutrient-poor processed food products to overall dietary quality and human health. According to the Global Burden of Disease Study (Afshin et al., 2019[1]), in 2017 poor diets were responsible for 11 million deaths worldwide, surpassing the number of deaths attributable to smoking. Conditions of over-nourishment (i.e. consuming too many calories) are rapidly increasing worldwide, with some 39% of adults categorised as either overweight or obese in 2016 (FAO, 2019[2]). Excessive consumption of sugars, salt, oils, and fats is associated with higher prevalence of overweight, obesity, specific forms of cancer, and other non-communicable diseases (NCD), contributing to the overall level of malnourishment and the global disease burden. In addition, several farm-level practices and manufacturing techniques involved in the production of processed foods contribute to environmental degradation. To overcome these problems, public policy can help support and complement the efforts of the processed food sector to improve food safety and quality, as well as the sustainability of food systems.

The processed food sector is at the interface of supply and demand, and has the potential to influence both on-farm practices and consumption patterns. Interventions that target the processed food sector offer opportunities to take advantage of important synergies across policy areas. For example, policies that incentivise the alignment of processed food composition or variety with dietary guidelines, while also stimulating sustainable production practices, have the potential to improve both public health and environmental outcomes. Policies that promote various labelling schemes for packaged products could similarly support the consumption of food products with improved nutritional, social, or environmental characteristics while potentially offering new value creation opportunities for actors along the agro-food value chain. This chapter looks first at how the processed food sector relates to each component of the triple challenge, and highlights the synergies and trade-offs across these policy areas. It then provides a policy perspective, examining both some of the issues that need to be navigated to develop more coherent policies, as well as existing or proposed policy mechanisms that target the processed food sector. The policy examples and insights from OECD country experiences presented build on the four-track approach developed in previous OECD work (Giner and Brooks, 2019[3]).5

Processed food, as used in this chapter, refers broadly to any food that has been in some way altered from its raw state. As such, this term covers a wide diversity of food products. Food processing encompasses a wide range of activities, and most foods are processed to some degree before consumed. For example, foods may undergo low amounts of processing via activities such as peeling, chopping, freezing, drying, or a number of other preparation or preservation techniques before they are purchased. Similarly, consumers may process food at home before they are consumed (e.g. by peeling, chopping, or boiling). Other food products are the result of multiple, sophisticated industrial procedures.

The term “processed food” is thus vague and unhelpful when used broadly, as it ignores the wide variation in processed food products. For this reason, several frameworks have been proposed to disaggregate the category of processed foods (Monteiro et al., 2019[4]). The NOVA classification is used most commonly in the scientific literature, and for this reason, it is described briefly here.6 This system groups food into four categories based on the extent and purpose of industrial processing, from unprocessed and minimally processed foods (e.g. frozen or dried fruits and vegetables) to ultra-processed foods (Monteiro et al., 2017[5]; Monteiro et al., 2019[6]). Ultra-processed foods are defined as “formulations of ingredients, mostly of exclusive industrial use, that result from a series of industrial processes” (Monteiro et al., 2019[4]). Examples of food products included in this category are carbonated soft beverages and other sugar-sweetened beverages, sweet or savoury packaged snacks, confectionery, industrial packaged breads, buns, cookies, pastries, cake and cake mixes, breakfast cereals, cereal and energy bars, margarines and spreads, processed cheese, energy beverages, sugared fruit yoghurts, meat and chicken extracts, and instant sauces, infant formulas, follow-on milks and other baby products, ‘health’ and ‘slimming’ products such as powdered or ‘fortified’ meal and dish substitutes, and many ready-to-heat products including pre-prepared pies and pasta and pizza dishes, poultry and fish ‘nuggets’ and ‘sticks’, sausages, burgers, hot dogs and other reconstituted meat products, and powdered and packaged ‘instant’ soups, noodles and desserts. Food products falling under this category are often engineered to be highly palatable, affordable, and convenient (e.g. they are often sold ready-to-consume) (Monteiro et al., 2019[4]).

A classification system can be a helpful tool that allows for greater specificity when discussing the wide range of available processed food products and the processing techniques employed to make these products. However, this report recognises that the NOVA classification is not universally defined or employed, and further, that there is no universally agreed upon categorization system for the diverse array of products that come from the processed food sector. A detailed discussion of the merits and criticisms of the NOVA classification, and in particular the use of the term ‘ultra-processed’, is not a focus of this report (though a very brief overview of some of the common criticisms is provided in Box 6.1). This report only uses terms from the NOVA classification, such as “ultra-processed”, for the sake of clarity when discussing the results of scientific literature that uses the NOVA classification.

Food that is processed does not by itself define the singular relationship of each food product to consumer health. While this section brings together conclusions drawn from several articles using the NOVA classification, as well as articles using other classification schemes, the discussion on nutrition and health focuses mostly on processed foods that are energy-dense and nutrient-poor ‒ in particular products that are high in sodium, free sugars, and/or some fats ‒ in order to distinguish them from the larger assortment of all other processed food products. It should be noted here that the use of food technology is not inherently problematic, and that indeed many food technologies bring important benefits that support food security and nutrition.

Food processing techniques play a key role in food safety, storage, transport stability, and trade (Knorr and Watzke, 2019[10]). Techniques such as drying, smoking, canning, freezing, pasteurization, and fermentation are used to preserve foods, and, as such, can increase the availability and stability (important dimensions of food security, in addition to access and utilisation) of the food supply across seasons and geographic regions, for example by enabling the trade of products that would otherwise perish or deteriorate in quality. This is the case, for instance, with exports of milk powder from New Zealand, a leading exporter of dairy products (OECD, 2016[11]), which depends upon dehydration processing techniques to remove water from liquid milk. Preservation and storage techniques are particularly important to increase resilience in rural or remote areas of developing and least developed countries that may experience intermittent shortages and/or drastic seasonal fluctuations in the availability of local foods. New and emerging non-thermal technologies, many of which are described by Knorr and Watzke (2019[10]), can improve the retention of various nutrients during processing operations, and thus preserve the nutritional quality of foods. Other processing activities can increase micronutrient contents, such as fortification for example the iodization of salt (Box 6.2). Another example is the use of pulsed UV light to increase vitamin D levels in mushrooms (Cardwell et al., 2018[12]).

While many processing activities make crucial contributions to the availability of safe, affordable and nutritious foods, the end-products of some processing activities can be energy-dense and nutrient-poor, and the excessive consumption of these foods can undermine population health objectives.7 For example, using 2009-2010 National Health and Nutrition Examination Survey data and the NOVA classification to group dietary patterns in the United States into quintiles based on the energy contribution from ultra-processed foods, Steele et al. (2017[13]) found that diets with a higher energy contribution from ultra-processed foods are on average lower in protein, fibre, vitamins A, C, D, and E, zinc, potassium, phosphorus, magnesium, and calcium, and higher in carbohydrates, added sugar, and saturated fat contents. Another study, which used data from the United States 2000-2007 Homescan Panel and classified purchases of consumer packaged goods by degree of industrial processing and convenience, found higher saturated fat, total sugar, and sodium content among highly processed purchases compared to less processed purchases and ready-to-eat purchases compared to foods that required cooking or preparation (Poti et al., 2015[14]). This study also reported substantial variability in nutrient content within categories of consumer packaged goods, highlighting the potential importance of food choices within product categories. Several features of dietary patterns with excessive contributions from energy-dense and nutrient-poor processed foods correspond to some of the dietary risk factors listed in the 2017 Global Burden of Disease study (Afshin et al., 2019[1]). Some examples of these dietary risk factors include a diet low in fibre and calcium, and high in sodium and trans fatty acids. Other studies have also indicated that high sugar intake poses health risks (Box 6.2).

Economic development and income growth are associated with a dietary transition towards increased consumption of sugars and refined carbohydrates, salts, and oils and fats via some types of processed foods (Popkin, 2017[15]).8 Several studies using the NOVA classification show that the consumption of ultra-processed foods accounts for a large share of total dietary energy intake among many high-income countries, and that their sales are growing rapidly in middle-income countries (Baker and Friel, 2016[16]; Monteiro et al., 2019[4]; Monteiro et al., 2013[17]; Sievert et al., 2019[18]; Popkin, 2014[19]). For example, national food consumption data for children and adults in the United States, Canada, Australia, and Chile reveal that ultra-processed foods are responsible for 60%, 48%, 42%, and 29% respectively of total dietary energy (Moubarac, 2017[20]; Baraldi et al., 2018[21]; Cediel et al., 2017[22]; Machado et al., 2019[23]).9 Recent analysis of NutriNet-Santé cohort data from France revealed that ultra-processed foods contributed to 36% of dietary energy (Julia et al., 2017[24]). In the United Kingdom, ultra-processed foods accounted for 51% of calories purchased in 2008 (Monteiro et al., 2017[25]). Although processed foods high in sodium, free sugars, or fats are associated with adverse health effects when consumed in excess, it is important to note that other ingredients or additives can provide various positive functions, such as preservation or an increase in micronutrient content (in the case of fortification).

Problems associated with poor diet quality have become increasingly prevalent at the global level. For instance, the global prevalence of obesity among children aged 5-19 years increased more than five-fold between 1975 and 2016 (Abarca-Gómez et al., 2017[26]). In G20 countries, the rate of obesity among children aged 5-19 years increased from an average of 2-3% in 1975 to about 10% in 2016. Nearly one-quarter of people in OECD countries were categorised as obese in 2016 (OECD, 2019[27]), and conditions related to overweight and obesity account for approximately 8% of total health expenditure in OECD countries today (OECD, 2019[27]).

Shifts in dietary patterns are not solely responsible for these trends; other factors include level of physical activity, genetic characteristics, and microbiota (Graf and Cecchini, 2017[28]; Valdes et al., 2018[29]). Yet, it seems likely that the growing consumption of energy-dense and nutrient-poor processed food is an important contributing factor to the higher prevalence of overweight, obesity, and specific forms of cancer and other NCDs (WHO and FAO, 2002[30]; Fiolet et al., 2018[31]; Popkin and Gordon-Larsen, 2004[32]; Poti, Braga and Qin, 2017[9]; Schnabel et al., 2018[33]). A recent in-patient randomised controlled trial study demonstrated a causal relationship between the consumption of ultra-processed foods and excess calorie intake and weight gain, although further evidence based on a larger sample and over a longer period of time will be necessary to verify and support the results (Hall et al., 2019[34]).

Food access is not equivalent to food availability. Food availability is a prerequisite for food access, and refers to the existence of a sufficient supply of food within a given location (FAO, 2006[44]). Food access takes into account additional characteristics of the food environment, including spatial factors such as travel distance to stores where food is purchased and access to transportation (e.g. access to a personal vehicle, access to public transportation), and embeds the concept of affordability (e.g. food prices, real incomes, cost of transportation) (Chenarides and Jaenicke, 2018[45]). The assortment of accessible foods varies across space, and, in turn, processed foods make varying contributions to overall dietary patterns across different food environments.

An emerging body of research, largely limited to North America at present, has begun to investigate the spatial relationships between public health outcomes and access to different types of foods.10 The term “food desert” has emerged from this research. Presently, there is no consensus on the precise definition of a food desert, but the term generally refers to an area devoid of supermarkets with a resulting lack of access to nutritious and affordable foods (Ploeg et al., 2009[46]) (Walker, Keane and Burke, 2010[47]). Residents in such areas may have greater exposure to energy-dense and nutrient-poor processed foods due to the relative prevalence of convenience stores and fast-food outlets (Drewnowski and Specter, 2004[48]; Walker, Keane and Burke, 2010[47]). In line with this, a recent study using retailer scanner data from 2010-2015 in the United States found that consumers in areas with poor food access were also faced with fewer fruit and vegetable product options (referring to food items such as bagged produce, frozen fruits and vegetables, and shelf stable or canned fruits and vegetables) (Chenarides and Jaenicke, 2018[45]). In these areas, processed and shelf-stable options, such as frozen or dried fruits and vegetables among others, may be valuable for delivering many key micronutrients to consumers.

Existing evidence does not discern a clear causal relationship between food deserts and higher intake levels of processed foods. There is the possibility that local food environments reflect underlying food preferences. In line with this supposition, research has demonstrated that improving access to safe, affordable and nutritious food options by building new supermarkets in food deserts does not necessarily induce shifts towards dietary patterns that support population health objectives (Dubowitz et al., 2014[49]; Ver Ploeg and Rahkovsky, 2016[50]). Instead, taste preferences and other socio-economic factors may play a greater role in food choices.11 Thus, eliminating food deserts by improving access to safe, affordable and nutritious food options may not be sufficient to curb intake levels of energy-dense and nutrient-poor processed food products.

An additional term that has emerged from research investigating food environments is “food swamp”. This refers to an area with a high density of foods that contribute to the excess intake of sodium, free sugars, and fats on a regular basis. This is distinct from the concept of a food desert in that safe, affordable and nutritious food options are accessible but outnumbered by an abundance of energy-dense and nutrient-poor food items. A US study suggests that food swamps may be stronger predictors of obesity than food deserts, and zoning policies are proposed as a way to address the over-abundance of energy-dense and nutrient-poor processed food options (Cooksey-Stowers, Schwartz and Brownell, 2017[51]). The food environment extends to “commuter corridors” and food options in the vicinity of people’s work places (Dornelles, 2019[52]) (Burgoine et al., 2014[53]). Public policy could help to encourage retail outlets to provide and promote safe, affordable and nutritious processed or unprocessed food options.

Remote and isolated communities may struggle with poor food access, which can increase their reliance on certain processed foods that are potentially unhealthy, such as those high in sodium, free sugars, and/or some fats. For instance, in many communities across northern Canada, fresh fruits and vegetables are either unavailable or unaffordable due to long travel distances and the high costs associated with transporting food items to remote communities (Council of Canadian Academies & Expert Panel on the State of Knowledge of Food Security in Northern Canada, 2014[54]). In such cases, lower-cost food items may include energy-dense and nutrient-poor processed foods. In recent decades, communities across northern Canada have experienced a dietary shift towards increased consumption of such processed foods.12

In some cases where inadequate diets have resulted in micronutrient deficiencies within particular populations, food fortification has been employed as a corrective measure. Fortification refers to the deliberate addition of micronutrients to foods and has been used to address micronutrient deficiencies in both developed and developing countries. Efficient fortification programmes require co-ordination with the food processing industry, as well as the development of quality standards with monitoring to ensure that the levels of added micronutrients are effective while remaining below a determined intake level. International co-ordination is also important in order to prevent different stances that would result in unnecessary barriers to trade. Box 6.3 outlines a few examples of fortification programmes that have been implemented.

Similarly, “functional foods” have been suggested as a means to convey physiological benefits to consumers. However, unlike fortified foods, there is no consensus on the definition of a “functional food”. Broadly speaking, the foods that might be referred to in some contexts as ‘functional’ typically contain particular ingredients (such as vitamins, minerals, and bioactive compounds) at levels high enough to potentially impart physiological benefits to consumers. Examining the regulatory environment surrounding health claims for these products and other food products will be an important area for future work, along with more research to better understand their health impacts. 13 International alignment on defining foods that might be considered ‘functional’ is also important.14

Many food and beverage companies report substantial advertising expenses. For example, Coca-Cola Co. reported USD 4.1 billion in advertising expenses worldwide in 2018 (approximately 13% of net operating revenue) (The Coca-Cola Company, 2018[69]). Likewise, 2018 annual reports from the multinational companies PepsiCo and Kellogg Company show marketing and advertising expenditures of USD 4.2 billion and USD 752 million, respectively (approximately 6% of net revenue for each firm) (PepsiCo, 2018[70]; Kellogg Company, 2018[71]). In 2016, Nestlé spent USD 9.2 billion on all advertising (including television, in-store and social media), an amount equivalent to approximately 10.3% of that year’s sales. Nestlé was ranked third globally in the top 100 companies spending the most on advertising in 2016 (AdAge, 2017[72]; Nestle, 2017[73]). Seven firms from the food and beverage sector (excluding restaurants and alcohol) were included in the top spending 100 firms with a combined USD 23 billion spent on advertising (AdAge, 2017[72]).

Marketing of processed food products is one way to communicate important information to consumers. However, there is growing concern about the exposure of children to the marketing of foods in so far as it contributes to excess intake of sodium, free sugars, and fats. These concerns stem from the evidence that such marketing can influence the preferences and consumption patterns of children (Cairns et al., 2013[74]; Sadeghirad et al., 2016[75]; Norman et al., 2018[76]; Boyland et al., 2016[77]; Harris, Bargh and Brownell, 2009[78]).

Evidence on the impact of food marketing on the consumption behaviour of adults is mixed. For example, a meta-analysis from Boswell and Kober (2015[79]) shows the association between visual food cues and subsequent eating behaviour and weight gain. Other research suggests that intense exposure to food advertising of products high in sodium, sugar, or fat does not influence food intake in adults but is associated with increased food intake in children (Boyland et al., 2016[77]). Voluntary self-regulation schemes have been favoured as a means to address the marketing of processed foods that are potentially unhealthy, such as those high in sodium, free sugars, and/or some fats, but there is little evidence to support their effectiveness (Moodie et al., 2013[80]; Stuckler and Nestle, 2012[81]).

While marketing strategies may influence preferences for existing processed food products, R&D expenditure influences the types of processed foods that will become available in the future, and hence plays an important role in shaping the food environment. Historically, public R&D investments have dominated total R&D expenditure in food and agriculture. However, the private share of worldwide agriculture and food R&D grew from 36% in 1980 to 44% in 2009, with recent data indicating continued expansion (Pardey et al., 2015[82]). Food processing accounts for more than half of private spending on food and agriculture-related R&D (Fuglie, 2016[83]; Pardey et al., 2015[82]; Bientema et al., 2012[84]). Business expenditures on R&D (BERD) as a percent of gross value added in the agriculture and food and beverage sectors are presented in Figure 6.1 for several OECD countries, as an indicator of the research intensity within those countries and sectors.

For all countries included in Figure 6.1 for which data were available for both sectors, research intensity was higher in the food and beverage sector than in the agriculture sector. Within the food and beverage sector, research intensity was highest in Korea, the Netherlands, and the United States. High research intensity within countries is linked with large multinational companies (Day-Rubenstein and Fuglie, 2011[85]). In cases where national food and beverage companies dominate, previous OECD work suggests that the associated low research intensity may be due to the high costs of conducting research locally, small local market size, regulatory burdens and inconsistencies, or intellectual property protection (OECD, 2019[86]).

These measures of research intensity, however, do not provide any indication of the objectives of R&D expenditures, e.g. is research directed towards increasing the palatability of food items or to test the retention of micronutrients following various transformations. More data are needed to understand how public and private R&D expenditure in the food and beverage sector can facilitate innovations that help the processed food sector maximise its contribution to meeting the triple challenge.

Economic activities related to food processing account for an important share of income generation (value added) and employment worldwide. Value added from food and beverage manufacturing was an estimated USD 750 billion in 2015, accounting for approximately 1% of world gross domestic product (GDP), but this figure does not take into account the substantial informal sector in developing countries.15 Moreover, the relative importance of the sector varies with the level of economic development.

As discussed in Chapter 1, as economies develop the share of total employment in agriculture decreases and a growing share of workers seek employment in downstream sectors, both within and outside the agro-food value chain (Barrett, Carter and Timmer, 2010[87]; Brooks, 2012[88]; Reardon and Timmer, 2012[89]; The World Bank, 2017[90]). This agricultural transformation, alongside the increase in processed food consumption that comes with rising incomes and the need for the preservation of foodstuffs as countries become more urbanised (Popkin, 2017[15]; Wilkinson and Rocha, 2008[91]), lends increasing importance to downstream sectors in the food chain, including the processed food sector. While food manufacturing accounts for just 3% of food system employment across a sample of low-income eastern and southern African countries, this share increases to 25% in Brazil (a middle-income country) and declines to 14% in the United States (a high-income country) as more employment shifts towards food services (covering activities such as the distribution, marketing, and sales of food) (Figure 6.2).

Food and beverage is the leading sector in terms of manufacturing value added in 16 OECD countries and in 2017 ranked among the top three manufacturing sectors in 27 OECD countries (Table 6.1).16 Across OECD countries that same year, the food and beverage manufacturing sector employed approximately 9.5 million people. Meat processing/preserving accounts for a relatively large share of employment in manufacturing across many OECD countries (Table 6.2).

The food and beverage sector is also the largest manufacturing sector and the leading employer in the European Union (FoodDrinkEurope, 2019[92]), accounting for a 12.3% share of value added in manufacturing and employing 4.7 million people in 2019, with SMEs responsible for most of this employment. In the United States, the Food Dollar Series maintained by the United States Department of Agriculture shows that food processing and packaging accounts for a substantial share of the final value of food products, contributing 17 cents of each dollar spent on food — second only to the food services sector. When considering only food consumed at home, food processing and packaging accounts for the largest share of value added (27.8%).17

At the global level, there has been increasing levels of vertical co-ordination of agro-food markets and an increased role for multinational companies (Swinnen and Maertens, 2007[93]; ILO, 2007[94]). The world’s top ten food, beverage and tobacco companies generated over USD 539 billion in revenues and employed over 1.2 million people in 2019 (Table 6.3).

Evidence of consolidation and market concentration in food and beverage manufacturing has raised concerns around the potential for buyer power to negatively impact producer incomes in agricultural product markets. The food chain often exhibits an “hour-glass” shape, with many agricultural producers supplying a smaller number of processors and retailers who in turn provide products to many consumers. One concern is that high levels of market concentration could lead to monopolistic or monopsonistic behaviours. However, at present empirical evidence does not appear to support the hypothesis of systematic exploitation of buyer power by food processing firms (Perekhozhuk et al., 2016[95]; Sheldon, 2016[96]; Sexton and Xia, 2018[97]). However, it should be noted that studies to date do not provide comprehensive coverage across all geographic locations or agricultural product categories.

Food processing plays a key role in the international trade of agro-food products. While some primary agricultural commodities are exported directly for consumption in foreign markets, many others are 1) exported as intermediates for processing in foreign markets, 2) processed domestically and exported for consumption in foreign markets, or 3) processed domestically and exported as intermediates for further processing in foreign markets. In this way, processed food products and intermediate products destined for further processing are dominant in agro-food trading activities in many OECD countries (Figure 6.3).

Current patterns of international trade in processed food products reflect the evolution of food processing technologies, consumer demand for year round access to a wider variety of foodstuffs, longer food chains, and increasing integration into global value chains (GVCs). The trade of processed food products and participation in GVCs has the potential to increase domestic value added and employment opportunities in the processing and agricultural sectors as domestic producers can take advantage of foreign demand for transformed and differentiated food products (Greenville, Kawasaki and Jouanjean, 2019[98]).18 Evidence about the participation of SMEs in GVCs for agriculture and food products in South East Asian countries suggests that SMEs might struggle to integrate directly into GVCs as buyers or suppliers but they might be increasingly engaging in indirect exporting (selling to domestic firms which then export these products) (López González et al., 2019[99]).

As discussed in Chapter 1, much of the food system’s environmental impact is associated with on-farm production and associated land use change. For example, greenhouse gas (GHG) emissions within the farm gate and from land use changes account for 16-27% of total anthropogenic GHG emissions, compared to just 5-10% from all remaining stages of the global food system together (IPCC, 2019[100]).

Yet complex linkages exist between the agriculture sector and its downstream sectors. As the food processing sector is at the interface of supply and demand, it can play a key role in shaping environmentally sustainable production and consumption patterns, e.g. by requiring improved sustainability monitoring and performance by suppliers and by providing consumers with information on performance (Poore and Nemecek, 2018[101]).To support this type of re-orientation, OECD-FAO (OECD/FAO, 2016[102]) outlined a framework to assist enterprises involved in food and agriculture to engage responsibly with their supply chains, as discussed in Chapter 2.

While farm level practices are responsible for much of the observed negative environmental impact of food systems, downstream sectors also make significant contributions. Overall, food processing accounts for an estimated 4.4% of GHG emissions, 2.4% of terrestrial acidification, and 1.7% of freshwater and marine eutrophication (Poore and Nemecek, 2018[101]). These negative environmental impacts ‒ GHG emissions in particular ‒ are due in part to the high energy requirements of the food processing sector (OECD, 2017[103]).

Improvements in efficiency could lower energy costs and reduce negative environmental impacts. Recent management practices and technological innovations have led to improvements in energy efficiency, leading to reductions in emissions. For example, the Food and Drink Federation in the United Kingdom reported a decrease in carbon dioxide emissions in 2017 of 53% from their 1990 baseline (Food and Drink Federation, 2018[104]).19 There is scope, however, for further efficiency gains (Tassou et al., 2014[105]; Chowdhury et al., 2018[106]). OECD (2017[103]) identified several barriers to adopting energy efficient practices and technologies in the food supply chain, including structural barriers (e.g. lack of know-how), behavioural barriers (e.g. informational market failures that inhibit the pursuit of energy-efficient opportunities), availability barriers (e.g. inadequate access to energy-efficiency measures), and policy barriers (e.g. energy subsidies that distort market prices and fail to incentivise energy efficiency).20

Environmental impacts vary across different food groups, and a growing body of research is investigating the connections between dietary patterns and environmental degradation (Clark and Tilman, 2017[107]; Springmann et al., 2018[108]). The growing concern over the environmental impacts of dietary patterns has led to calls to incorporate sustainability concepts into dietary guidelines, recommendations, and benchmarks (Blackstone et al., 2018[109]; Willett et al., 2019[110]; Gonzalez Fischer and Garnett, 2016[111]). For example, the most recent version of the Dutch dietary guidelines recommends limiting weekly consumption of red meat to 300g or less, specifying that adherence to this limit is ecologically desirable (Health Council of the Netherlands, 2016[112]) (discussed in further detail in the ruminant livestock sector case study). Similarly, the EAT-Lancet reference diet aims to improve both health and environmental outcomes (Willett et al., 2019[110]).

Nutritional outcomes and environmental considerations are different globally. From the ruminant livestock sector case study it is apparent that in many developing countries crops are the main source of protein. For example, consumption of all types of meat is low in Sub-Saharan Africa, Asia and the Pacific. In these regions increased consumption of all proteins, including animal protein, would be optimal for human health and nutrition. However, in developed countries which are large GHG emitters and which consume on average three times as much beef as developing countries the situation is different.

In light of the growing interest in the environmental sustainability of diets, an important consideration in the context of processed foods is whether a transition to dietary patterns supporting population health objectives (e.g. through product reformulation or through substitution with different food options) would improve environmental sustainability.

While there may be synergies between health outcomes and environmental sustainability for some product categories, overall it appears there is only a weak correlation between these two dimensions in the case of highly processed foods. Ingredients common to some highly processed foods — such as sugars, salt, and grains — can have lower environmental impacts per calorie than fruits, vegetables, and animal-sourced foods (Vieux et al., 2013[113]; Garnett, 2016[114]; Drewnowski et al., 2014[115]; Tilman and Clark, 2014[116]). Sugar-sweetened beverages, for example, have a relatively low environmental impact (Clark et al., 2019[117]). Moreover, processing itself is typically not the major contributor to the environmental footprint of food products. Thus a reduction in the consumption of many highly processed foods would be unlikely to contribute to better environmental outcomes.21

An important exception is processed red meat; evidence suggests that a reduction in consumption could have environmental and health benefits, although the same evidence suggests similar effects for unprocessed red meat (Clark et al., 2019[117]). New forms of processed foods such as meat analogues and lab-grown foods are now emerging in response to growing concerns over the health and environmental implications of high intake levels of red and processed meats (Box 6.4). The contribution of such food products to the different dimensions of the triple challenge constitutes an interesting area for future research.

Even if reducing the consumption of highly processed food does not by itself lead to significant improvements in environmental outcomes, the sheer size and influence of the processed food sector suggests it can play an important role in improving overall environmental sustainability and nutritional quality. This could be achieved by product reformulation, and by requiring stricter environmental standards and the provision of reliable information to allow consumers to choose environmentally-friendly options. Furthermore environmentally harmful subsidies in the food sector which can contribute to negative sustainability outcomes should be addressed, but due to reasons discussed in Chapters 2 and 3 these policies are very hard to reform.

Monitoring changes in the composition of processed food products and the production practices that are associated with sourced ingredients, as well as the implementation of labelling schemes (Box 6.5), will be valuable for evaluating policies that are aimed at improving health and environmental outcomes. New digital opportunities to monitor and share information regarding the environmental impacts associated with various agricultural practices are constantly improving traceability within the agro-food supply chain (The World Bank, 2019[126]; OECD, 2019[127]; Jouanjean, 2019[128]) (Baragwanath, 2021[129]). Efforts to monitor the composition of a range of packaged foods have been undertaken by the global market research company Mintel,22 and similar databases are being developed by government entities, including the Branded Food Products Database23 in the United States and the Oqali database24 in France. Moving forward, it would be helpful to expand such databases to include supply-chain data related to the environmental sustainability of production practices and processes associated with processed food products. Achieving more nutritious and sustainable processed food will also require further innovations in technologies and management practices; public policy can help incentivise such innovations.

An important share of all food produced for human consumption worldwide ends up as food loss (by actors along the food chain) or food waste (by consumers, retailers and food service providers) (FAO, 2019[137]).25 Food loss and waste entail the unnecessary consumption of natural resources, represent a lost opportunity to decrease food insecurity, and add to total anthropogenic GHG emissions.

Many factors drive food loss at the processing and packaging stage, including insufficient processing capacity to accommodate seasonal variations in food quantities, technical malfunctions, lack of proper process management, and aesthetic standards (FAO, 2019[138]). While longer and increasingly complex supply chains for processed food products create more opportunities for a diverse market for ingredient suppliers, including at a global level, they can also create more opportunities for food loss/waste between production and consumption. On the other hand, food processing can extend shelf-life, which may help limit food loss and waste downstream. Furthermore, by-products from processing can be used to make other products.

At the processing and packaging stage, food loss varies greatly across different food categories and geographic regions. In the United States and Canada, per capita food loss per year in the food processing sector is estimated to be 47 kg and 43 kg, respectively (Commission for Environmental Cooperation, 2017[139]). According to ranges reported by the Food and Agriculture Organisation (FAO) of the United Nations, food loss at the processing and packaging stage for cereals and pulses could be as high as 16% in Eastern and South-eastern Asia and 20% in Sub-Saharan Africa (FAO, 2019[138]).26 Food loss for fruits and vegetables during processing also shows geographic variability, with estimates of 0.25% in Central and Southern Asia, 37.5% in Eastern and South-eastern Asia, and 20.5% in Sub-Saharan Africa. Across the globe, approximately 14% of food is lost from post-harvest up to, but not including, the retail stage. It is clear that food loss and waste pose a global challenge. Previous OECD work indicates that many OECD countries address this problem within their waste prevention policies (OECD, 2015[140]).

Policies that influence packaging and date labelling practices (e.g. “use by” or “sell by” dates) used by food manufacturers can impact the quantity of processed food that is wasted at the consumption stage. A common criticism of date labels is that inconsistencies in terminology and information presented across different types of date labels can be confusing and may result in the premature disposal of food based solely on expiration dates (Newsome et al., 2014[141]; Wilson et al., 2017[142]; Wansink and Wright, 2006[143]). An investigation of the influence that different types of date labels and package sizes have on consumers’ “willingness to waste” (i.e. anticipated food waste) found varying levels of anticipated waste across date labels and package sizes (Wilson et al., 2017[142]). In particular, higher anticipated food waste was associated with the “use by” label implemented for food safety and health objectives and a larger package size.

Packaging can extend shelf-life and reduce the amount of food loss and waste at various stages along the food supply chain. For example, FoodDrinkEurope reports that 32% of non-packaged produce becomes food waste, compared to 16% of packaged produce (FoodDrinkEurope, 2012[144]). Technologies such as modified atmosphere meat packaging have been effective for extending the shelf-life of meat and poultry products, and thus contribute to the reduction of food loss and waste of these products (Narasimha Rao and Sachindra, 2002[145]) At the same time, the use of packaging for food products can generate greater amounts of packaging waste.

The generation and mismanagement of plastic waste from food packaging is problematic, in particular as much of it does not biodegrade. If current trends for the consumption and end-of-life management of plastics continue, an estimated 12 000 Mt of plastic waste will enter landfills and the environment by 2050 (Geyer, Jambeck and Law, 2017[146]). Food grade plastics, which must meet quality and purity standards, are challenging to recycle (Watkins et al., 2019[147]; OECD, 2018[148]). As such, a significant portion of the plastic waste stream comes from food packaging. For example, food packaging accounts for approximately 16% of plastic demand each year in the European Union (Schweitzer, Petsinaris and Gionfra, 2018[149]).

Plastic waste typically requires thousands of years to decompose. During this time, it can disrupt and accumulate in marine and terrestrial ecosystems and enter human food supply chains (de Souza Machado et al., 2018[150]; OECD, 2018[148]). Moreover, the production of plastics is energy-intensive and reliant upon fossil fuels (OECD, 2018[148]). In response to evidence on the health and environmental consequences of plastics, particularly single-use plastics, the European Commission released a proposal that included a ban on the use of several single-use plastics by 2021, as well as limitations on the use of plastic food containers and cups (European Commission, 2018[151]). There is also growing interest in developing more sustainable forms of food packaging to replace single-use plastics.27

As Chapter 2 shows, coherent policies require managing both synergies and trade-offs that can emerge across the different objectives for food systems. The following section provides an overview of programmes and policies that target the processed food sector in selected OECD countries in order to gain a better understanding of the approaches that countries have taken to navigate synergies and trade-offs across policy domains, as well as to highlight examples of public-private collaborations.

These examples are discussed within the context of the four-track policy approach developed by OECD (Giner and Brooks, 2019[3]). This approach can be used to reconcile health and nutritional objectives with wider food system objectives, including those related to environmental sustainability and to the livelihoods of agents along the food chain. The first track involves demand-side public interventions, such as policies that aim to promote nutritious or more environmentally or socially responsible food choices through the provision of public information. The second track involves public-private collaborations. For example, policies may focus on the voluntary reformulation of processed foods in order to provide consumers with more nutritious or sustainable product options. Food and beverage companies may also voluntarily adopt simplified labelling schemes in order to more effectively communicate food product attributes. The third track also focuses on the food industry but involves stricter regulations, such as mandatory restrictions on the marketing of foods that are potentially unhealthy, e.g. those that are high in sodium, free sugars, and/or some fats, or bans on the use of certain ingredients in processed food. The fourth track includes fiscal measures, e.g. taxes on sugar sweetened beverages. This four-track approach is used here in order to provide insights into the combinations of policy instruments that are likely to be the most effective in addressing the triple challenge with respect to the processed food sector.

Measures such as reformulation or reorienting consumers towards processed food options that enable dietary patterns to support population health objectives (e.g. by using public information/education campaigns) have been promoted to address the adverse impacts associated with the consumption of energy-dense and nutrient-poor processed foods. These approaches can be voluntary or mandatory, and have typically focused on reducing dietary intake levels of trans fats, sugar, and salt, based on established links between their consumption and adverse health effects (Box 6.2).

Only a limited number of studies have evaluated the impact of actual reformulation actions undertaken by the processed food sector (Spiteri and Soler, 2017[152]; Poti, Dunford and Popkin, 2017[153]); the vast majority of studies have used simulations to assess the potential impact of hypothetical or proposed reformulation actions (Pearson-Stuttard et al., 2018[154]; Federici et al., 2019[155]; Bruins et al., 2015[156]; Dötsch-Klerk et al., 2015[157]; Hendriksen et al., 2013[158]). This is largely due to a general lack of detailed, product/brand-specific, and up-to-date data on processed food composition (Spiteri and Soler, 2017[152]; Ng and Popkin, 2012[159]). Moreover, existing studies have largely focused on measures for sodium reduction; less is known about the potential population health impacts of reformulation efforts or public information/education campaigns to reduce certain types of fat (i.e. trans fat or saturated fat) intake, sugar intake, and the intake levels of other important nutrients. A recent simulation study in the United States examined how reformulation of packaged foods would affect calories and four nutrients (saturated fat, total sugars, sodium, and dietary fiber), using up-to-date product and purchasing data (Muth et al., 2019[160]). Results showed that reformulation could potentially reduce caloric, saturated fat, sugar, and sodium intakes and increase dietary fibre intake. Detailed data on actual purchasing patterns combined with product/brand-specific food composition data would be particularly helpful to assess the impact of actual, rather than simulated, reformulation actions.

Amongst the criticisms of the reformulation approach is that it does not address overconsumption of foodstuffs ‒ reformulation only addresses the intake of specific food components ‒ and by honing in on specific food components, it overlooks the contributions from other ingredients in processed food products and ignores the potential adverse effects of the substitution of new ingredients (e.g. artificial sweeteners in lieu of sugar) (Scrinis and Monteiro, 2017[161]).

This section discusses OECD country examples of reformulation measures and initiatives to re-orient consumers towards processed food products that support population health objectives.28

Industrial trans fats are produced through partial hydrogenation and have been used, replacing saturated fats from animal products, as a low cost ingredient to prolong shelf life and enhance flavour and/or texture in processed foods such as baked foods, fried foods, snack foods, and spreads (WHO, 2019[162]). In response to the large health burden associated with the intake of trans fats, the WHO launched its REPLACE action package in May 2018 with the aim to “support governments to eliminate industrially-produced trans fats from the global food supply by 2023” (WHO, 2019[163]).29

To complement this action and to track progress towards the 2023 target, WHO developed a scoring system that groups trans fats elimination measures into four levels, with the fourth level comprising best-practice policies. Based on data available in the Global Database on the Implementation of Nutrition Action (GINA), as of February 2020 only 15 countries have best-practice policies (Figure 6.5), while 27 countries have best-practice policies that have passed in legislature but are not yet in effect.

Two countries in the “best practice” category are Canada and the United States. A total ban on the sale of foods containing partially hydrogenated oils (and hence trans fats) was implemented in Canada in September 2020 (Health Canada, 2018[164]). This ban applies to domestic and imported foods, and to all food sold in all restaurants. The law was announced two years before its implementation to allow industry time to adapt.

In the United States, the Food and Drug Administration (FDA) ruled trans fats unsafe to eat in 2015 and set a June 2018 deadline by which foods containing trans fats were to be removed from the food system (US FDA, 2018[165]). According to the Grocery Manufacturers Association, 98% of trans fats were removed from the food supply between 2015 and 2018 (Dewey, 2018[166]). Nevertheless, due to concerns from the food industry with the various challenges of eliminating trans fats serving particular functions, it was requested that trans fats be permitted in some circumstances as flavour enhancers or greasing agents (Dewey, 2018[166]), and the ban was delayed. In 2018, a one-year extension to June 2019 was granted for the removal of trans fats from the food system (US FDA, 2018[165]).

More research is needed to gauge the success of the Canadian and United States’ programmes. There is concern that such bans will prompt manufacturers to replace trans fats with sources of saturated fats (which are functionally similar to trans fats and have been associated with negative health effects) such as palm oil (Box 6.6) (Kadandale, Marten and Smith, 2018[167]). This highlights the need to monitor and better understand the potential adverse effects (e.g. health, environmental, and/or social) of substitute ingredients following reformulation efforts. Research in Canada (prior to the implementation of the trans fats ban) examining reformulation efforts by some manufacturers to reduce trans fat content in processed food found no increase in saturated fat content following reformulation, suggesting that these manufacturers did not turn to saturated fats as a replacement for trans fats (Ratnayake, L’Abbe and Mozaffarian, 2008[168]). However, more research is needed to better understand how manufacturers respond to total bans on industrially-produced trans fats, and how these responses differ across different country contexts.

In the United Kingdom, one-third of children are overweight or obese by the time they have finished primary school. Obesity is a major cost to the national health care system (an estimated GBP 6.1 billion per year) (Public Health England, 2018[172]) and in response to this problem, Public Health England (PHE) instituted the Sugar Reduction Programme. This programme challenged the food industry to reduce sugar in their products by 20% by 2020, primarily by providing guidelines that stipulated the optimal quantity of sugar per 100g of a food product.30 The major strategies suggested to programme partners were a reduction of overall sugar per 100g, a reduction in portion size, and/or reorienting customers towards low or zero sugar options (Public Health England, 2019[173]). Engaged stakeholders include manufacturers, retailers, and trade associates (Public Health England, 2019[174]).

The sugar reduction programme operates in tandem with a second programme targeting overall calorie intake. The latter is also working with and challenging the food industry to reduce the amount of calories in their products, in this case by 20% by 2024 (Public Health England, 2018[175]; Public Health England, 2018[176]). This is complemented by informational campaigns, i.e. the PHE’s OneYou campaign which aims to make adults become more aware of the number of calories they consume on a daily basis and PHE’s Change4Life campaign that provides online tools such as recipes, meal-time suggestions for parents to reduce their children’s intake of sugary snacks and drinks replacing processed snacks with healthier alternatives.31

A recent modelling study found that meeting the targets of the sugar reduction programme would result in a gain of around 52 000 quality-adjusted life years and GBP 286 million in healthcare savings over a ten-year period (Amies-Cull, Briggs and Scarborough, 2019[177]). In support of this, recent work based on the OECD SPHeP-NCDs model indicated that a 20% reduction in the calorie content of energy-dense foods (across 42 countries included in the analysis) could avoid 1.1 million cases of NCDs and save USD (PPP) 13.2 billion in healthcare expenditures per year (OECD, 2019[27]). PHE has assessed progress in the sugar reduction programme, and found that between 2015 and 2018 there was an overall reduction of 2.9% in sugar intake per 100g of food products, with different rates of progress by category of sugary food product (Public Health England, 2019[173]).32 More assessments will be required to determine if the 2020 targets have been met, although the most recent available evidence indicates that in 2018 it remained far short of the targeted 20% reduction by 2020. Unlike the trans fat bans implemented in Canada and the United States, UK efforts do not involve binding laws but rely on the voluntary participation of stakeholders (falling in the second track of the four-track policy approach).33

Marketing of energy-dense and nutrient-poor processed food products, particularly marketing directed towards children, can shape preferences and contribute to poor dietary patterns. Alternatively, the implementation of labelling schemes can be used to communicate the various attributes of processed food products to consumers, helping to promote food choices for improved health or environment outcomes. An overview of different front-of-pack labelling schemes used in OECD countries is found in Giner and Brooks (2019[3]). This section discusses examples of marketing and labelling schemes applied to processed foods in selected OECD countries.34

Chile has one of the highest prevalence of obesity and overweight of any OECD country: in 2016, 39.8% of its population was overweight and 34.4% were obese (OECD, 2019[178]). To address this situation, Chile implemented a set of laws between 2012 and 2015 to limit the marketing (especially towards children) of foods high in sugar, sodium, calories or saturated fats, and require these food products to present warnings indicating they contain high levels of these ingredients.35 Warning labels (“high in sugar”; “high in sodium”; “high in saturated fats”; or “high in calories”) are included on foods which surpass a certain threshold of sugar, sodium, or saturated fats. Any foods exceeding the deemed threshold quantity level of these nutritional values may not be advertised in nurseries, and elementary and secondary schools, nor in general to minors under the age of 14 years, and such foods may not be distributed for free (e.g through “gifts, contests, games, or other items that attract children”). Marketing of these products is restricted to the hours of 22:00 and 6:00 as long as the marketing does not target children.

These laws have met with challenges and push-back from the food industry (World Trade Institute, 2017[179]; FAO and PAHO, 2017[180]). The food industry had concerns regarding loss of profit, violation of property rights and freedom of speech, the inability to indicate warnings based on serving size rather than the mandated 100g/ml size, and the inability to choose the warning label for their products. A recent assessment of these regulations found a significant decrease ‒ but not elimination ‒ in children’s exposure to televised advertising (e.g. the use of cartoon characters) of products high in sugar, sodium, saturated fats, and calories (Dillman Carpentier et al., 2019[181]). Further monitoring and evaluation will be important to ensure compliance by the private sector and to understand the long-term health impacts of these regulations on the population in general.

In March 2017, the French government adopted the Nutri-Score system as a new labelling practice in France (Giner and Brooks, 2019[3]) The basic idea behind Nutri-Score is a simplification – though not a replacement, since both systems now coexist – of existing labelling practices showing the nutritional values of food products. The system assigns a nutritional value (from a score of A for highest nutritional value to an E for relatively lower nutritional value) per 100g of a food product based on an addition of desirable nutrients, and a subtraction from the score based on the presence of harmful ones (Santé Publique France, 2020[182]). The system applies to all beverages and processed foods (with the exception of alcoholic beverages, coffee, tea, and herbs).

The basic purpose of the Nutri-Score label is to allow consumers to quickly and easily gain information on the product from a single aggregated score; a scoring system which can also be helpful to researchers as a tool to disaggregate the broad category of “processed foods”. For example, Nutri-Score was used in a recent analysis of adolescent and children’s exposure to food advertisements, which found that television advertisements for Nutri-Score D and E foods together represented more than half of food advertising seen by children and adolescents, respectively (Santé Publique France, 2020[183]).

Belgium and Spain have since adopted the Nutri-Score label as well (in 2018). Several other European countries have announced their plans to adopt the Nutri-Score label. Mandatory front of pack labelling in the EU by the end of 2022 is being proposed by the European Commission (European Commission, 2020[184]).36 The Nutri-Score programme remains optional (track two of the four-track policy approach), although a growing number of companies are adopting it. Companies such as Danone, Auchan, and Fleury-Michon are major participants, with some 500 brands worldwide applying the labelling system as of September 2020.37

The use of fiscal measures is the fourth of the four-track policy approach (i.e. excise or sales taxes), such that prices for various processed food products more closely reflect their social cost. An example is the soft drinks industry levy implemented in April 2018 in the United Kingdom (Scarborough et al., 2020[185]). In order to address well-established negative health outcomes associated with high intake levels of sugar, a tax is now applied to UK manufacturers and importers for beverages that contain more than the threshold of 5g of sugar per 100ml. Importantly, the implementation of taxes on food or beverage items that are potentially unhealthy, such as those high in sodium, free sugars, or fats, can incentivise reformulation (Giner and Brooks, 2019[3]), and a recent assessment suggests that reformulation for reduced sugar content was one of the outcomes of the soft drinks industry levy in the United Kingdom (Scarborough et al., 2020[185]).

Newspapers and other media can also play an important role in influencing public reaction to and acceptance of health policies. A study analysing newsprint articles from prominent UK national newspapers between April 2015 and November 2016 suggest that media covering the health effects of sugar and sugar-sweetened beverage (SSB) consumption, the industry’s role in promoting and enabling sugar consumption, and the need for government intervention helped to open a policy window for the development of fiscal approaches that sought to improve health outcomes by reducing sugar consumption (Buckton et al., 2017[186]).

Other fiscal policy approaches targeting energy-dense and nutrient-poor food have been imposed and subsequently revoked. For example, Denmark’s tax on saturated fat, a world first, was implemented in 2011 but was abolished a year after its introduction in part due to the sustained and intensive pressure exerted by food industry associations (Bødker et al., 2015[187]).

Developing coherent policies for the processed food sector that take into account potential trade-offs and synergies across the triple challenge domains requires co-operation and co-ordination amongst policy makers, scientific experts, and food and beverage manufacturers. However, these communities do not always relate to one another in a manner optimal to delivering coherent policies that are in the public interest. Focusing on the roles of each community, the following section discusses the key challenges to implementing coherent policies that are relevant to the processed food sector.

The problem of insufficient data pertaining to the consumption and characteristics of processed foods is a major challenge in developing coherent policies. Funding and budget constraints are the usual underlying causes (Giner and Brooks, 2019[3]). In particular, the laboratory tests that are necessary to obtain detailed nutrient composition data are generally very costly. Incomplete and infrequently updated food composition data makes it difficult to monitor the evolution and composition of product- and brand-specific packaged food (Ng and Popkin, 2012[159]). Inconsistencies in product classifications prevent matching food products across different food information sources (e.g. matching products across food composition and food purchasing and acquisition databases) (Giner and Brooks, 2019[3]). Existing food information databases typically do not contain data on the product- and brand-specific sustainability performance of processed food items. Additionally, there are little data available on the composition of foods consumed away from home.

For these reasons, it is difficult to estimate the true nutrient intake levels and, more broadly, evaluate the impact of policy interventions aimed at addressing processed food sector-related objectives across the triple challenges. Policies to improve the characteristics of processed food consumed away from home may be especially important as its share of the food budget has increased over the past few decades, and recent research indicates that meals from full-service and fast-food restaurants are largely of low nutritional quality (USDA ERS, 2018[188]; Liu et al., 2020[189]). More granular data are also needed to better understand processed food consumption patterns across different socio-economic strata in order to allow for improved policy targeting (Placzek, 2021[190]). The co-operation of the private sector in sharing their data with policy makers and researchers is thus important.

Co-ordination across different policy communities at the national level may pose a challenge to the development of coherent policies, as agricultural, environmental, health, economic, trade, and competition policy all touch in some way the processed food sector. Furthermore, the prominence of processed food products in international trade (and the role of trade in providing inputs for further processing), as well as the rise of transnational and multinational food and beverage corporations, necessitate co-ordination at an international level. For example, international co-ordination may be important to minimize potential unnecessary impediments to trade associated with inconsistencies in front-of-pack labelling schemes for packaged foods (Giner and Brooks, 2019[3]; Thow et al., 2017[191]). Such concerns give increasing importance to international standard-setting bodies such as the Codex Alimentarius that promote the harmonisation of requirements and approaches.38

A lack of trust on the part of consumers can undermine efforts to achieve objectives across the triple challenge with respect to the processed food sector. Erosion of consumer trust can stem from a general lack of coherence in public messaging. For example, marketing or informational campaigns by food industry actors with vested interests (e.g. the marketing of energy-dense and nutrient-poor food products, “greenwashing”39 of food products) can conflict with and/or drown-out scientific evidence from experts (Mozaffarian and Forouhi, 2018[192])40. Private interest groups, civil society and even the scientists themselves may also undertake efforts to cast doubt on the integrity of scientific evidence (Nestle, 2015[193]). As such, confusion and distrust amongst consumers can stem from the difficulty in distinguishing between “facts” and private interests. Further distrust may arise with the evolution of food and nutrition science (which prompts shifts in dietary recommendations), uncertainties and lack of consensus on certain topics, and time-lags between the generation and implementation of new knowledge, all of which can be perceived as inconsistencies in the scientific evidence base on food and nutrition (Mozaffarian, Rosenberg and Uauy, 2018[194]; Mozaffarian and Forouhi, 2018[192]). To illustrate the case of the time-lag, Mozaffarian and Forouhi (2018[192]) provide the example of low fat food options, which remain an industry focus, regardless of new evidence indicating that total fat intake is not as important to diet quality as previously suspected: more important are the intake levels of specific types of fats.

Even when the evidence base on certain foods and nutrition is firmly established and generally trusted by the public, related policy interventions that place regulatory burdens on businesses or interfere with the range of choices available to consumers ‒ measures that can be perceived as “paternalistic ‒ can face resistance (Reeve and Magnusson, 2015[195]; Hanock, Barnes and Rice, 2017[196]; Véliz et al., 2019[197]). For example, the ban on the sale of large sugary beverages proposed in 2012 in New York City was met with widespread concern regarding compromised individual freedom and autonomy, and the ban was ultimately repealed (Véliz et al., 2019[197]). Another example is when the restaurant industry sued the city of New York in response to menu-labelling requirements in 2008 (Brownell and Warner, 2009[198]). At the same time, the threat of binding regulations can incite a range of responses from corporations that do not wish to have their activities restricted, including lobbying (see below). Such responses by civil society and private actors have led to the preferential use of voluntary measures over direct restrictions and bans, despite concerns with respect to their efficacy (Brownell, 2012[199]; Scott, Hawkins and Knai, 2017[200]).

Stakeholder consultation is a critical part of policy development, and formal consultations should promote fair and transparent participation in policy-making. Interest groups can use a range of other means to influence policy processes, such as industry-funded scientific research, and industry funding of organisations and non-profit groups to shape news and media coverage. These new approaches often lack the transparency that comes from traditional lobbying registers or disclosure requirements. Such “corporate political activity” (CPA) (Baysinger, 1984[201]) exists in many industries, including in the processed food sector.

By themselves, these activities are not necessarily harmful and can even play an important role in providing policy makers with useful information on the potential effects of proposed measures. But as in other sectors, the economic interests pursued by food and beverage companies (e.g. the pursuit of earnings growth, maximising value for shareholders) are not necessarily aligned with public interests, for example when public policies to improve environmental or health outcomes would reduce sales or profits for some firms.41 A key task of policy making therefore consists in finding ways to balance the diversity of interests and avoid both over-representation or under-representation (or even exclusion) of specific interests. Policy makers need to avoid a situation where decisions reflect the interests of a narrow interest group at the expense of the broader interests of society, a situation referred to as “policy capture” (OECD, 2017[202]).42

Research from Mialon, Swinburn and Sacks (2015[203]) noted there is limited monitoring of CPA in health-related food areas and proposed an approach at the country level, building on a taxonomy for the tobacco industry CPA previously proposed by Savell, Gilmore and Fooks (2014[204]). The proposed framework for the classification of food industry CPA consists of six types of activity: information and messaging; financial incentive; constituency building; legal; policy substitution; and opposition, fragmentation and destabilisation.43

Making use of this framework and the information collected from the public domain, parallel studies were recently conducted in France analysing CPA by actors in the dairy industry (including Danone, Lactalis and the Centre National Interprofessionnel de l’Economie Laitière) (Mialon and Mialon, 2017[205]) and other major actors in the food industry (including Association Nationale des Industries Agroalimentaires/National Association of Agribusiness Industries, Coca-Cola, McDonald’s, Nestlé, and Carrefour) (Mialon and Mialon, 2018[206]). Prominent practices identified included “information and messaging” (e.g. framing the debate on diet- and public health-related issues, shaping the evidence base on diet- and public health-related issues, promoting deregulation), “constituency building” (e.g. seeking involvement in the community), and “policy substitution” (e.g. developing and promoting alternatives to policies). Similarly, this framework was applied to food industry actors in Australia (including the Australian Food and Grocery Council, Coca Cola, McDonald's, Nestle, and Woolworths), and common practices identified included “information and messaging” and “constituency building” (Mialon et al., 2016[207]). The prominence of these practices in particular was supported by a second study that involved interviews with former policy makers, public health advocates, and academics who had interacted with the food industry in Australia (Mialon et al., 2017[208]). Based on such findings, some have argued that industry should be excluded from the development phase of health policies (Donovan, Anwar McHenry and Vines, 2014[209]).

However, the processed food sector can be a valuable source of information, practical knowledge and technical expertise to inform the development and implementation of workable policies. For example, public officials may need to interact with industry to gain access to data relevant to certain public decisions, such as information on specific technologies, consumer research, and other unique evidence sources (OECD, 2017[202]). Engaging with industry stakeholders early in the policy development process can be critical to avoid unintended consequences.

Yet such consultations create opportunities for industry actors to provide information that favours private interests, potentially at the expense of the public good (Helm, 2010[210]; OECD, 2017[202]). This tension is illustrated in the recommendations of the 2018 Australian Obesity Report, addressing the Australian Health Star Rating (HSR) system (a front-of-pack labelling system to rate packaged foods based on their respective nutrient profiles) (Select Committee into the Obesity Epidemic in Australia, 2018[211]).44 Among the listed recommendations is the following: “Representatives of the food and beverage industry sectors may be consulted for technical advice but no longer sit on the HSR Calculator Technical Advisory Group”. This recommendation recognises the potential need for technical information from industry, but also the potential for capture when industry actors are included in the development of programmes and policies.

The complexity of interacting with the processed food sector while preventing policy capture is evident in the case of lobbying, one of the sub-categories falling under the “information and messaging” group in the food industry CPA classification framework noted above. Lobbying, “the oral or written communication with a public official to influence legislation, policy or administrative decisions” (OECD, 2010[212]), is a legitimate practice for companies to share their needs and evidence about policy problems and how to address them. It can also be a valuable means to provide policy makers with information on which to base their decisions (OECD, 2017[202]). However, there is the risk that lobbying will result in powerful interest groups having undue influence in public decision-making, and transparency and integrity are needed to manage this risk (OECD, 2014[213]).

To enhance such transparency governments can require disclosures by lobbyists, including their employer’s name and name of clients, and whether the lobbyist is a former public official, receives any government funding or contributes to any political campaigns.45 Thirteen OECD countries have mandatory lobbying registers in place. Using this information, some databases have emerged that monitor lobbying activities and allow for their subsequent scrutiny by the public. An example is the publicly available database maintained by the Centre for Responsive Politics in the United States.46 Information contained in this database indicates that in 2019 the food processing and sales industry in the United States had lobbying expenditures of USD 24.2 million, with the top five firms consisting of PepsiCo, Grocery Manufacturers Assn, WH Group, Tyson Foods, and Nestlé. Additionally, some 68% of lobbyists in the food processing and sales industry were categorised as “revolvers”, which here refers to the concept of the “political revolving door” in which former public officials hold new positions in the industries that they previously oversaw (a practice falling under the “constituency building” category in the CPA framework noted above).

Similarly, consultations with stakeholders during policy development can be documented and made publically available. This was the case with the open consultation on Canada’s Food Guide (i.e. the proposed recommendations for Canada’s 2019 national dietary guidelines), where feedback from over 6 000 contributors, including 98 self-identified contributors from the food and beverage industry, was collected and synthesised into a publically-available report (Government of Canada, 2018[214]). This synthesis report indicates, for example, that many contributors from the food and beverage industry in Canada disagreed about the proposed recommendation to shift away from animal proteins. They also disagreed on the focus to reduce saturated fat consumption, were concerned that food taste and general food preferences were not being taken into account, and felt the recommendations should be based on food as a whole rather than their specific nutrients.

Corporate political activity can also affect the relationship between the food and beverage industry and the scientific research community, which in turn can impact public decisions. In particular, the scientific evidence base on the impacts of various food products on health can be shaped through industry funding of food and nutrition research, another activity that falls under the CPA category of “information and messaging” (Aveyard et al., 2016[215]; Mozaffarian, 2017[216]; Mozaffarian et al., 2018[217]; Mozaffarian and Forouhi, 2018[192]; Nestle, 2016[218]; Kearns, Schmidt and Glantz, 2016[219]; Nestle, 2016[220]; Lesser et al., 2007[221]; Chartres, Fabbri and Bero, 2016[222]; Nestle, 2015[193]). For instance, bias favourable to industry has been noted in the published conclusions of industry-funded research and reviews examining the association between sugar-sweetened beverage consumption, and weight gain, obesity and diabetes (Schillinger et al., 2016[223]; Bes-Rastrollo et al., 2013[224]). Similarly, bias has been identified in industry-funded reviews assessing the link between artificially sweetened beverage intake and weight outcomes (Mandrioli, Kearns and Bero, 2016[225]). Industry funding can enable important food and nutrition research and innovations (particularly where public funds are limited), but the establishment of clear governing principles is needed to manage the relationship between the food and beverage industry and the research community in a way that minimises the production and dissemination of biased information and safeguards public interest. Importantly, private sources of research funding are not necessarily problematic: the integrity of scientific evidence, rather than concern over the source of funding should be central in the establishment of such governing principles.

Policies targeting the processed food sector have an important role to play in addressing objectives across the triple challenge dimensions. Processed foods include a wide range of food products with differing health, environmental, and social implications. Processing techniques, such as preservation practices and fortification, have been important for improving food security and working towards various public health objectives. At the same time, there are well established associations between excessive intake of energy-dense and nutrient-poor processed foods and an increased risk of developing conditions of overweight, obesity, specific forms of cancer and other NCDs. Food processing accounts for an important share of income generation and employment in OECD, emerging, and less developed countries, including through participation in international trade and GVCs. Environmental impacts vary across different processed food products, and the processed food sector can influence the sustainability of diets through improving energy efficiency in processing, requiring stricter environmental standards of suppliers and conveying information on environmental sustainability performance to downstream consumers.

To date, policies targeting the processed food sector have largely focused on improving health outcomes. While further research is needed to better understand the impacts of these policies, existing evidence indicates that demand-side public interventions and voluntary measures targeting the processed food sector (tracks one and two of the four-track policy approach) have limited efficacy on their own. Mandatory measures and fiscal policies (tracks three and four of the four-track policy approach) may be more promising for achieving triple challenge objectives, particularly if they are able to effectively navigate and minimize potential resistance both from industry and the public. Strategies to achieve this could include transparent engagement with industry stakeholders during policy development (especially during early stages of policy development), protecting the integrity of scientific evidence, and strengthening the public’s trust in public officials and scientific experts.

When developing policies in any of the four tracks, consideration should be given to the potential negative impacts that regulatory burdens can have on industry innovation and initiatives that aim to support nutritious, sustainable, and socially responsible food systems. Addressing data scarcity pertaining to the health, environmental, and social attributes of brand- and product-specific processed food items will also be important to designing policy interventions and anticipating potential interactions that could occur across triple challenge dimensions. Overcoming challenges to the design and implementation of coherent policies will require improved co-ordination amongst policy makers, scientific experts, and industry.

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Notes

← 1. This chapter uses the term “processed food” to refer broadly to any food that has undergone any transformation from its raw form. This category encompasses a broad range of food products that have been processed to varying degrees and make varying contributions to each of the triple challenge domains.

← 2. See https://stat.unido.org/app/country/Emp.htm?Country=124&Group=null.

← 3. In this report, data for food, beverage, and tobacco are sometimes presented in the aggregate because many food and beverage companies also engage in tobacco processing activities and disaggregated data are typically unavailable. Where available, disaggregated data are presented.

← 4. See https://fortune.com/global500/2019/search/

← 5. The four-track approach consists of demand side public interventions, efforts to work with industry at the supply-demand interface, firmer regulations, and fiscal measures.

← 6. For examples of other classification systems, see (Poti et al., 2015[14]) and (Eicher-Miller, Fulgoni and Keast, 2012[236]).

← 7. Research on diet quality is evolving. A growing body of evidence is outlining the linkages between poor diets and negative health outcomes. Based on the current body of scientific evidence pertaining to health, nutrition, and the qualities that make up healthy dietary patterns, the World Health Organisation provides recommendations for the intake of whole foods, fats, salt, and sugar in the WHO Healthy Diet Fact Sheet (WHO, 2020[35]). In addition, national-level food based dietary guidelines are available for 90 countries globally (Herforth et al., 2019[233]).

← 8. Rising national incomes typically lead to a declining share of disposable income spent on food (Engel’s law) and shifts towards higher caloric consumption and more diverse diets (Bennett’s law). Arguably, the rise of processed foods is a similar stylised fact. Technological innovations and shifts in living and working conditions make “ready-to-consume” foods or food away from home an attractive alternative to preparing meals at home (Rahkovsky, Jo and Carlson, 2018[226]). Factors such as increasing urbanisation and a greater number of women entering the labour force have fuelled the growing demand for convenient processed/preserved food products (Bleich et al., 2008[227]; Seto and Ramankutty, 2016[228]).

← 9. Many types of processed foods have evolved in order to meet emerging consumer preferences for convenience and palatability, while remaining affordable (Gupta et al., 2019[229]; USDA, ERS, 2003[230]). This is partly achieved through a heavy reliance on low-cost and energy-dense ingredients such as sugars, fats, oils, and grains (Drewnowski and Specter, 2004[48]; Headey and Alderman, 2019[231]).

← 10. Spatial overviews of food access in the United States by income levels and a community’s ability to access healthy food are downloadable at the USDA ERS Food Access Research Atlas and Food Environment Atlas websites. See https://www.ers.usda.gov/data-products/food-access-research-atlas/ and https://www.ers.usda.gov/data-products/food-environment-atlas/

← 11. The socio-economic and demographic determinants of food choices are explored in greater detail in (Placzek, 2021[190])

← 12. This dietary transition is particularly complex among Indigenous peoples in northern Canada, and can involve interactions between traditional/country food systems and market food systems, as well as various socio-economic factors. This is explored in detail in (Council of Canadian Academies & Expert Panel on the State of Knowledge of Food Security in Northern Canada, 2014[54]), and more recently in work from PROOF, an interdisciplinary research programme working to identify effective policy interventions to reduce household food insecurity in Canada, https://proof.utoronto.ca/

← 13. The Codex Alimentarius Commission has established guidelines for the use of nutrition and health claims in food labelling (Codex Alimentarius Commission, 1997[240]). Many countries have national regulations for the use of nutrition and health claims.

← 14. Health Canada is working on a regulatory framework for Supplemented Foods. A supplemented food is broadly defined as a pre-packaged product that is manufactured, sold or represented as a food, which contains added vitamins, minerals, amino acids, herbal or bioactive ingredients. These ingredients may perform a physiological role beyond the provision of nutritive requirements.

← 15. The global estimate for value added from food and beverage manufacturing is from FAOSTAT, http://www.fao.org/faostat/en/#data/MK (accessed February 2020); Beverages include alcoholic beverage products.

← 16. See UNIDO Statistical Country Briefs (ISIC rev3), https://stat.unido.org/app/country/Emp.htm?Country=124&Group=null (accessed February 2020).

← 17. See https://www.ers.usda.gov/data-products/food-dollar-series/documentation/

← 18. While participation in GVCs can provide domestic opportunities to transition along the value chain to the production of more “sophisticated” processed products, in some contexts just as much domestic value added can be generated via the export of a higher volume of primary agricultural products (Greenville, Kawasaki and Jouanjean, 2019[98]).

← 19. Much of the energy consumed in food processing and manufacture goes towards heating and cooling procedures. Technologies such as the recirculation of air in dryers, waste recovery, and pre-cooling methods are particularly helpful for improving energy efficiency (OECD, 2017[103]).

← 20. For a more detailed discussion of the poor alignment between energy taxes and the negative impacts of energy consumption, see OECD (2019[232]).

← 21. Some life-cycle assessments suggest that ready-to-eat food has higher emissions relative to similar home-made products (Box 6.5).

← 22. See the Mintel Global New Products Database: https://fr.mintel.com/gnpd-global-new-products-database.

← 23. https://data.nal.usda.gov/dataset/usda-branded-food-products-database.

← 24. https://www.oqali.fr/Base-de-donnees-Oqali.

← 25. Previous FAO estimates from 2011 put total food loss and waste at one-third of global production by weight and around one-quarter by calories (FAO, 2011[239]). Given more recent advances in data and methodology, these estimates are currently being revised by FAO and the United Nations Environment Programme. Numbers cited here refer to FAO’s revised estimates for food loss (FAO, 2019[138]).

← 26. These data can be explored using the FAO Food Loss and Waste Database, (FAO, 2020[234]).

← 27. For an overview of how policies can be used to incentivise sustainable plastic design, see (Watkins et al., 2019[147])

← 28. For more examples and discussions on reformulation in terms of health and economic impacts in OECD countries, see (Goryakin et al., 2019[241]).

← 29. See https://www.who.int/nutrition/topics/replace-transfat.

← 30. Sugar here refers to the intake of free sugars, under the definition adopted by the Scientific Advisory Committee on Nutrition, “all monosaccharides and disaccharides added to foods by the manufacturer, cook or consumer, plus sugars naturally present in honey, syrups and unsweetened fruit juices” (SACN, 2015[235]). This definition is in line with the WHO definition (Box 6.2).

← 31. See https://www.nhs.uk/change4life#5IfkYIFWdGz0hJdU.97

← 32. The major food product targets include breakfast cereals, yogurts, ice cream, confectionary, and cakes; although the Change4Life campaign also insists on the reduction of sugary drink intake.

← 33. For yearly summaries of stakeholder engagements, see https://www.gov.uk/government/publications/sugar-reduction-and-wider-reformulation-stakeholder-engagement

← 34. More information and comparisons across 52 countries in terms of life expectancy, health and labour market costs of different interventions, including FOP labelling and product reformulation, can be found in the technical notes to the OECD’s 2019 report on obesity (OECD, 2019[27]) (OECD, 2019[242]).

← 35. Three laws enact these changes: Law 20.780 (a beverage tax law instituted in 2014), Law 20.606 (an advertising law instituted in 2012), and Law 20.869 (a food marketing law instituted in 2015).

← 36. See https://fr.openfoodfacts.org/nutriscore.

← 37. For a full list of participating companies, see https://world.openfoodfacts.org/label/nutriscore/brands.

← 38. See http://www.fao.org/fao-who-codexalimentarius/about-codex/en/; Proposed draft guidelines on front-of-pack nutrition labelling from the 2019 Codex Committee on Food Labelling are available at http://www.fao.org/fao-who-codexalimentarius/sh-proxy/en/?lnk=1&url=https%253A%252F%252Fworkspace.fao.org%252Fsites%252Fcodex%252FMeetings%252FCX-714-45%252Fdocuments%252Ffl45_06e_final.pdf.

← 39. Referring the practice of using misleading or fraudulent claims pertaining to the environmental performance of products (Dahl, 2010[238]).

← 40. Sensational news media headlines can also add to the confusion and distrust.

← 41. Growing evidence and awareness of the negative health effects associated with certain categories of food products and certain ingredients used in processed food products can be understood by food and beverage companies as a business risk. For example, in Coca-Cola’s 2018 annual report, one of the listed risk factors was as follows, “obesity and other health related concerns may reduce demand for some of our products” (The Coca-Cola Company, 2018[69]). Likewise, potential policy measures to improve public health outcomes and also environmental outcomes can be understood by food and beverage companies as risks. For example, the list of risk factors contained in PepsiCo’s 2018 annual report included “the imposition or proposed imposition of new or increased taxes aimed at our products could adversely affect our business, financial condition or results of operations”, “significant additional labelling or warning requirements or limitations on the marketing or sale of our products may reduce demand for such products and could adversely affect our business, financial condition or results of operations”, and “changes in laws and regulations relating to the use or disposal of plastics or other packaging of our products could continue to increase our costs, reduce demand for our products or otherwise have an adverse impact on our business, reputation, financial condition or results of operations” (PepsiCo, 2018[70]). Food and beverage companies that anticipate adverse impacts (e.g. threats to profitability) from various health (or environmental) initiatives may resist them (Nestle, 2013[237]).

← 42. As discussed in Chapter 3, previous OECD work provides four key recommendations to prevent policy capture: 1) levelling the playing field; 2) enforcing the right to know; 3) promoting accountability through competition authorities, regulatory agencies and supreme audit institutions; and 4) identifying and mitigating capture risk factors through appropriate organisational integrity policies (OECD, 2017[202]).

← 43. For a more detailed description of the types of practices falling under each of these six groups, see (Mialon, Swinburn and Sacks, 2015[203]).

← 44. See http://www.healthstarrating.gov.au/internet/healthstarrating/publishing.nsf/Content/About-health-stars

← 45. Governments can further enable scrutiny of lobbying activities by providing timely, reliable, accessible and intelligible public disclosures of reports on those activities. Moreover, creating open and user-friendly registers can facilitate public access to data on lobbying activities.

← 46. See https://www.opensecrets.org/federal-lobbying/summary (monitored by the Centre for Responsive Politics).

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