150 million meals a year thrown away rather than given to hungry because of £600m government subsidies

Supermarkets, farmers and manufacturers are being incentivised to dump good-to-eat surplus food as waste rather than donating it to feed the hungry as a result of a £600m government subsidy scheme, The Independent reveals today.

Three programmes pay public money to waste operators that use anaerobic digestion (AD) to create biogas from food waste – with a fourth due to start in the autumn for a further £150m, taking the total subsidisation to £750m.

These subsidies, up from £200m five years ago, are so lucrative that AD operators will even pay food businesses to take their surplus produce away, rather than the other way around.

As a result, the equivalent of 150 million meals in edible food is sent to AD plants each year, at a time when research from the Food Foundation shows that 30 per cent of parents are worried about feeding their children this summer.

Meanwhile, food redistributors that take surplus food to charities and schools – such as FareShare, The Felix Project and City Harvest – receive no government subsidies and must rely, for the most part, on donations and fundraising.

The Felix Project, the biggest distributor of surplus food in London, runs a social kitchen that can cook and distribute 1.5 million meals a year as highlighted by The Independent’s Help The Hungry campaign. It reduces food waste by transforming large quantities of very short-dated surplus produce and huge commercial-sized catering packs into nutritious meals, but relies on supplies of surplus food.

The Anaerobic Digestion and Bioresources Association (Adba), which represents the industry, admitted that rising numbers of AD plants – built in response to the lucrative subsidy schemes – have skewed the business practices of AD operators who compete with each other to obtain food waste. The competition has become so fierce that it has led to them actually paying food outlets to take away their surplus.

Adba said the rise of these “negative gate fees” was a “new and growing phenomenon”, while food redistribution charities branded the issue “utter madness”.

Luke Pollard, shadow environment, food and rural affairs secretary, warned that the government “cannot allow good food to be taken from hungry families” and must “get a grip on the problem”.

Subsidies were originally thought to be a good idea, because anaerobic digestion is a greener alternative for waste disposal than incineration or landfill, which releases methane into the atmosphere.

AD plants operate by pulverising waste food into sludge and passing it through a giant sealed tank (anaerobic means “without oxygen”) to create two products: nutrient-rich digestate that farmers use as fertiliser; and biogas that can be sold to gas and electricity networks to power our homes.

Digestate is not cost effective to transport long distances and is sold at cost, but biogas generates millions – the government pays producers a fixed tariff, or subsidy, on top of the market rate that power networks fork out. These subsidies, guaranteed for up to 20 years, encourage waste operators to spend the £15m or so it costs to build an AD plant.

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There are now 685 plants in the UK, a rise of around 100 in the past four years, and between them they take 64,500 tonnes of food a year that “could and should” be used to feed the hungry, according to government-funded charity Waste and Resources Action Programme (Wrap). That equates to more than 150 million meals and is more than double the 51,420 tonnes of surplus food currently being redistributed.

Meanwhile, 2.5 million food parcels were given to those in crisis by food bank group Trussell Trust in the first year of the pandemic, while 4.7 million adults suffer food insecurity. As school holidays approach, 1.7 million pupils are facing weeks without free school meals.

FareShare boss Lindsay Boswell said: “The bad guys in this aren’t the AD industry, it’s the subsidy system. What AD does, turning food waste into green energy, is a wonderful thing. But when people are going hungry because of the way the AD industry is supported by government, then that is utter madness and that is wrong.

“We worked with a carrot producer who used to give us 10 tonnes of carrots a week and suddenly stopped. When we asked why, he said, ‘We’ve got AD plants prepared to buy this off us now and we can’t afford not to take it’.”

He added that subsidisation has had the “unintended consequence” of using taxpayer money to subvert the government accepted “food waste hierarchy” – which stipulates that surplus food that is edible should first be redistributed to people.

Just five years ago, food companies would pay AD operators a “gate fee” of up to £63 per tonne to dispose of their surplus food, whereas today Adba said the average price is £0 per tonne. Adba estimates that about 15 per cent of deals involved AD operators paying to take away waste – which amounts to around 120,000 tonnes of the 800,000 processed each year from food suppliers.

When asked about their arrangements with AD operators for edible surplus food, none of the top 10 supermarkets would reveal whether they were paid.

Charlotte Morton, chief executive of Adba, said: “It is hard to know the exact amount of negative gate fees because the information is deemed commercially sensitive and is not readily available, but we estimate that around 15 per cent of AD food waste deals involve the AD operator paying to take away the waste. AD plants compete heavily for food waste because AD income is dependent on energy production and food waste produces a lot of biogas.”

There are three subsidy schemes available for AD at present – the Renewable Obligation to support electricity production, worth £127m a year; the Renewable Heat Incentive, worth £385m, to support biogas and biomethane production; and £88m in Feed-in Tariffs, incentivising renewable electricity production. From August, subsidies will also be available from the £150m Green Gas Support Scheme for new-build plants producing biomethane, a greener form of energy than biogas.

But even those behind AD plants question the subsidies available and the impact they are having. Adba told The Independent: “We too want edible food to go to people and not to waste. The problem lies with the government subsidy schemes because they put too much focus on the energy AD plants produce and this skews economic behaviour and produces undesirable results. AD is a waste management technology, the greenest we have, and that needs to be supported above other waste disposal methods. But there is no doubt that we need a rethink and a new system.”

Dan Purvis, chief operating officer of south London AD firm Bio Collectors, said: “The subsidy model was a wonderful tool to get AD started but is now past its sell-by date. My belief is that AD subsidies should be scrapped and renewable energy should stand on its own and be charged at market rates. But the government needs to create the right overall framework.”

The firm’s CEO, Paul Killoughery, said he supported the idea that edible surplus food should go to humans, but warned that cutting all subsidies would be a “disaster” for climate change as AD plants would no longer be viable. “To be clear, we don’t want to compete against the likes of FareShare and Felix and we support the idea that all edible surplus food should go to humans. But that leaves over 3 million tonnes of inedible food waste to process and we are the best solution to prevent the disastrous environmental impacts of incineration and landfill.”

The Department for Environment, Food and Rural Affairs said: “Our priority is to prevent food waste occurring in the first instance. Where waste cannot be prevented, edible waste should be redistributed. In instances of unavoidable food waste, anaerobic digestion presents the best environmental outcome, due to the generation of bio-fuel and digestate.”