Losses in Food Balance Sheets: Current Status, Imputation, and SDG 12.3

Losses in Food Balance Sheets
FAO Statistics Division (ESS)
September 29, 2016 1
Losses in Food Balance Sheets:
Current Status, Imputation,
and SDG 12.3
Katherine Baldwin
Production, Trade and Food Balance Sheets Team
FAO Technical Seminar on Food Loss and Waste
Measurement, Analysis and Solutions

Roadmap
1. Losses in Food Balance Sheets
1. Background
2. Losses in current FBS
3. Losses in new methodology
2. Imputation of missing data
3. SDG 12.3 and the Food Loss Index

1. Losses in Food Balance Sheets

What are Food Balance Sheets?
Accounting framework detailing the total supply and use of all
agricultural commodities within a given year within a given country.
• Based on supply = utilization identity
• Related to a commodity balance
• Individual accounts are created for each primary and derived product
• FBS are comprehensive, but only an average picture
• FBS are used to derive a total Dietary Energy Supply (DES) estimate

(Current) FBS Methodology
• Basic approach: for every commodity, supply = utilization
• Production + Imports – Exports – Stock changes =
Food + Feed + Loss + Seed + Other utilizations
• Variables are based on measured data, to the extent possible
• Missing values are imputed
• One utilization item must serve as the balancing item
• Balancer includes both a value for that item AND the residual/error

Sample FBS

Concept of loss in the FBS context
“Losses are all the crop and livestock human-edible commodity
quantities that, directly or indirectly, completely exit the post-
harvest/slaughter production/supply chain by being discarded,
incinerated or otherwise, and do not re-renter in any other utilization
(such as animal feed, industrial use, etc.), up to, and excluding, the
retail level. Non-edible parts of the commodity as a whole, and losses
that occur during storage, transportation and processing, also of
imported quantities, are therefore all included.”
-Tayyib and Golini, “The FAO approach to food loss concepts and imputation in the context of Sustainable
Development Goal 12 Target 3,” Discussion Paper, forthcoming.

Concept of loss in the FBS context
• Losses in FBS cover harvest to retail
• Losses cover also quantities not specifically destined for food
• ONLY quantitative losses are estimated. There is no accounting for
qualitative losses in this framework
• Losses include* inedible parts
• Losses are expressed in MT, so must be weighted before they can be
aggregated across commodities
*FAO is currently exploring the feasibility of publishing both total loss quantities in MT, and loss quantities net of
inedible parts

Why include loss in FBS?
• Goal of FBS is to account for all possible supply and utilizations
• Hallmark of framework is usefulness as a tool for cross-validating
data from various sources
• Framework is well-suited to validating loss estimates by placing them in the
context of other supply/demand elements
• Loss data is increasingly in demand, partly because of the SDGs

“Loss” in the current FBS context

Where does loss data come from in FBS?
• Collected/reported by countries
• Annual Agricultural Production Questionnaire (APQ)
• Data from official websites
• Included with another item (e.g., loss/feed)
• Calculated as a share
• Balancing item

Measured loss data
Developed Countries 1.6%
Africa 0.2%
Latin America and Caribbean 0.1%
Asia and Oceania 0.1%
World 0.8%
Proportion of FBS loss data collected from official sources, 2011-2013
Most countries are not providing data on losses

Calculated and balancing item loss data
• Calculated as share of “production + imports”
• From FAO’s Mexico FBS:
• 5% losses – milk, chillies, dry beans
• 10% losses – apple, avocado, eggs, lemon, mango, potato
• 13% losses – bananas
• Shares were likely originally based on some data for Mexico or like
countries/products
• Balancer
• Losses as balancing item in Mexico’s FBS: maize, safflower, wheat
• Presence/calculation of loss is somewhat ad-hoc
• No losses for milled paddy rice, wheat flour, or maize flour

Loss in the new methodology
• New FBS methodology currently being implemented by FAO
• Single balancer approach will be eliminated
• Each variable will be estimated independently and then balanced by
distributing the residual based on data quality
• Advantage: no variable will be carrying the residual
• Loss in new methodology
• Measured or official/semi-official data
• Imputed data
• Losses will be recorded/imputed for all primary products

Measured/official data
• FAO is making a push for countries to produce more official data
• Call in APQ
• Methodologies for measurement of PHL
• General universal push for data related to SDG 12.3
• FAO support to countries on measurement/imputation
• But with so few countries currently reporting, most losses in FBS at
present will be imputed…

2. Imputation of missing data

Challenges of imputing loss data
• Model must be universal across commodities and countries
• Model must also taken into account differing nature of loss across
commodities
• Low availability of useful “universal” data on covariates known to be
related to loss
• Infrastructure
• Temperature
• Marketing arrangements

FAO approach to imputing loss
• Use all available information from the panel dataset of countries that
are/have been reporting losses
• Acknowledge that characteristics of loss differ amongst products and
product groups
• Utilize this information by clustering products into nested groups
during estimation
• Solution: Missing data are imputed according to a hierarchical
structure, so that the “best available” information is used

Hierarchical Linear Model (HLM)
• Mechanics: Data is imputed through a hierarchy:
• Data at level 1 is used. If not available,
• Data at level 2 is used. If not available,
• Data at level 3 is used. ….
• Approach pools information at the different levels to optimize
inference and improve prediction
• Nested linear regression models, where each level is adding a new
predictor

Hierarchical Linear Model (HLM)
• Losses imputed as a function of production (or production net of
trade) using parameters estimated from the nested regressions
• First level regression estimates losses using relationship between production
and loss for that country and that commodity in previous years
• Second level regression estimates losses using relationship between
production and loss for that commodity in all countries for which official loss
estimates appear in the panel dataset
• Third level regression estimates losses using relationship between production
and loss for all commodities in that food group in all countries in the panel
dataset
• Fourth level regression estimates losses using relationship between
production and loss for all commodities of the same level of perishability (low,
high, moderate) in all countries in the panel dataset

HLM data structure
Imputed Loss Data
Level 2: Commodity
Level 1: Country and Commodity
Level 3: Food Group
Level 4: Food Perishability Group
If not, then:
If not, then:
If not, then:

Imputing/estimating loss at the country level
• FAO model is designed to be “universal”
• Country-level models (and commodity-specific models) can be
developed that utilize locally-available information
• Models still need to be based on measured loss data
• Global Strategy is working in this area

3. SDG 12.3 and the Food Loss Index

Sustainable Development Goals (SDGs)
• Agenda adopted by United Nations in September 2015, setting 17
overarching goals for sustainable economic, social and environmental
development by 2030
• Goals cover numerous facets of development, including poverty,
hunger, gender equality, and resource use
• Each goal has various dimensions, and progress towards each
dimension is measured by a designated indicator (230 total)

SDG indicator tiers
• A tier system to classify indicators was proposed at the Inter-Agency and
Expert Group on Sustainable Development Goal Indicators (IAEG-SDGs)
meeting in March/April 2016.
Tier I: Indicator conceptually clear, established methodology and standards
available and data regularly produced by countries.
Tier II: Indicator conceptually clear, established methodology and standards
available but data are not regularly produced by countries.
Tier III: Indicator for which there are no established methodology and
standards or methodology/standards are being developed/tested.
-“Introduction to Provisional Tiers of Global SDG Indicators”, IAEG-SDG, 2016

Food loss in SDG 12.3
“By 2030, halve per capita global food waste at the retail and consumer
levels and reduce food losses along production and supply chains,
including post-harvest losses.”
• Part of Goal 12, “Ensure sustainable consumption and production
patterns”
• Classified as a Tier III indicator
• FAO assigned as custodian agency

Progress of work on SDG 12.3
• Currently finalizing an action plan for all work under the target
(development of indicator, measurement methodologies, outreach
and capacity-building), in accordance with guidance from IAEG-SDGs
• Clarifying concepts and intent of indicator with IAEG-SDG
• Clarifying timelines for program of work with IAEG-SDG
• Draft indicator, Food Loss Index (FLI), has been developed and is
currently being tested and refined
• Liaising and outreach with countries, other organizations, and private
sector will begin in Q4 of this year

What is the draft indicator measuring?
• The indicator is an index that compares the weighted sum of all
commodity quantity losses in a given year to the same weighted sum
in a reference base period
• Data for index comes from FBS loss data, harvest to retail (which will
have already been validated within the FBS supply/demand
framework)
• Waste at retail and consumer level will be measured/reported outside
of FBS context
• Exploring possibility of combining into one indicator or reporting separately
given more specific waste targets in SDG 12.3

Next steps for SDG 12.3 indicator
• Finalize approach and work plan with IAEG-SDG (next meeting – Oct
2016)
• Liaise with responsible SDG focal points/institutions inside countries
to begin to improve underlying FBS data on losses
• Alert countries when the indicator is finalized, so that progress can
begin to be measured

Thank You!
Questions?
Katherine.Baldwin@fao.org

Losses in Food Balance Sheets: Current Status, Imputation, and SDG 12.3

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