A woman walks past a grocery store in Loughborough, central England, January 10, 2013.

LONDON | Thu Jan 10, 2013 1:04pm EST

LONDON (Reuters) - Up to half of all the food produced worldwide ends up going to waste due to poor harvesting, storage and transport methods as well as irresponsible retailer and consumer behavior, a report said on Thursday.

The world produces about four billion metric tons of food a year but 1.2 to 2 billion metric tons is not eaten, the study by the London-based Institution of Mechanical Engineers said.

"This level of wastage is a tragedy that cannot continue if we are to succeed in the challenge of sustainably meeting our future food demands," said.

In developed countries, like Britain, efficient farming methods, transport and storage mean that most of the wastage occurs through retail and customer behavior.

Retailers produce 1.6 million metric tons of food waste a year because they reject crops of edible fruit and vegetables because they do not meet exacting size and appearance criteria, the report by the engineering society said.

"Thirty percent of what is harvested from the field never actually reaches the marketplace (primarily the supermarket) due to trimming, quality selection and failure to conform to purely cosmetic criteria," it said.

Of the food which does reach supermarket shelves, 30-50 percent of what is bought in developed countries is thrown away by customers, often due to poor understanding of "best before" and "use by" dates.

A "use by" date is when there is a health risk associated with using food after that date. A "best before" date is more about quality - when it expires it does not necessarily mean food is harmful but it may lose some flavor and texture.

However, many consumers do not know the difference between the labels and bin food after "best before" dates.

Promotional offers and bulk discounts also encourage shoppers to buy large quantities in excess of their needs.

RISING POPULATION

In Britain, about 10.2 billion pounds' ($16.3 billion) worth of food is thrown away from homes every year, with one billion pounds' worth being perfectly edible, the report found.

By contrast, in less developed countries, such as in sub-Saharan Africa or South East Asia, wastage mostly happens due to inefficient harvesting and poor handling and storage.

In South-East Asian countries, for example, losses of rice range from 37 to 80 percent of their entire production, totaling about 180 million metric tons per year, the report said.

The United Nations predicts global population will peak at around 9.5 billion people by 2075, meaning there will be an additional 2.5 billion people to feed.

The rising population, together with improved nutrition and shifting diets will put pressure for increases in global food supply over the coming decades.

Rising food and commodity prices will drive the need to reduce waste, making the practice of discarding edible fruit and vegetables on cosmetic grounds less economically viable.

However, governments should not wait for food pricing to trigger action on this wasteful practice, but produce policies that change consumer behavior and dissuade retailers from operating in this way, the study said.

Rapidly developing countries like China and Brazil have developed infrastructure to transport crops, gain access to export markets and improve storage facilities but they need to avoid the mistakes made by developed nations and make sure they are efficient and well-maintained.

Poorer countries require significant investment to improve their infrastructure, the report said. For example, Ethiopia is considering developing a national network of grain storage facilities which is expected to cost at least $1 billion.

"This scale of investment will be required for multiple commodities and in numerous countries, and co-ordinated efforts are going to be essential," the report said. ($1 = 0.6247 British pounds)

(Reporting by Nina Chestney; Editing by Pravin Char)

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The U.S. Capitol Building stands in Washington December 17, 2012.

LONDON | Fri Dec 21, 2012 7:28am EST

LONDON (Reuters) - Global investors are betting Washington will overcome its budget deadlock despite an apparently serious setback.

If they are wrong, there could be a sharp market reaction and the U.S. dollar and Treasury bonds would be among the main beneficiaries, making for a very different dynamic to the euro zone crisis, where bond market pressure was instrumental in forcing policymakers to act.

Republican lawmakers rejected a proposal on Thursday by their leader, House of Representatives Speaker John Boehner, designed to extract concessions from President Barack Obama.

It threw into disarray attempts to head off $600 billion worth of tax hikes and spending cuts that could push the U.S. economy into recession.

The dollar climbed versus the euro, stocks slid from Tokyo to London and safe haven government bonds rose but in only muted fashion, indicating a continued belief that a deal will be done.

Is this sensible or complacent?

Jeffrey Rosenberg, chief investment strategist for fixed income at BlackRock, said the only approach was to "hope for the best, but plan for the worst".

"Given the much greater downside from a fiscal cliff failure than upside from success, we continue to maintain our tactical defensive positioning," Rosenberg said.

If differences between Republicans and Democrats cannot be bridged, the dollar -- counter intuitively to the layman's eye -- would attract safe haven flows as the world's reserve currency. The yen could do even better despite the new Japanese government's intent on more forceful monetary and fiscal easing.

"The dollar goes up when people get more nervous because the reflex in the market is to assume it's a safe haven, there's very little consideration given to the nature of the crisis," said Daragh Maher, FX strategist at HSBC.

"If the U.S. is heading towards recession it's not good for anyone, therefore if I have to hold something I may as well hold the dollar. That's how the sequence of logic goes."

Obama and Boehner aim to reach a deal before the New Year, when taxes will automatically rise for nearly all Americans and the government will have to scale back spending on domestic and military programs. The politicians are now in recess until at least December 27.

"The time left to seal a deal is limited," said Kit Juckes at Societe Generale in London.

There is, however, good reason not to panic since the term "fiscal cliff" is somewhat misleading. America will not crash off it on January 1. The tightening process will be more gradual.

The head of G10 FX Strategy at one bank in London said it was much more of a slope than a cliff. "The market's working assumption has been all along that it's going to go right down to the wire, and then they're going to cut a deal."

Hong Hao, Bank of Communications International Securities' chief equity strategist in Hong Kong, said: "If I were a fund manager, I would be looking to lock in gains and going off for the holidays. The U.S. will eventually come to a deal, maybe just not by their self-imposed deadline."

NO BOND PRESSURE

As with the euro debt crisis, the markets could offer a natural check and balance -- if their reaction turns savage, it might pressure a divided Washington to come together.

The difference is that, as with the dollar, U.S. government bonds are viewed as a harbor from risk, so the bond market pressure brought to bear on the euro zone is unlikely to be replicated in this case.

"Although trading at all-time lows, treasury yields could benefit both from renewed equity volatility and the short-term economics after any resolution," said Edward Smith, global strategist at Collins Stewart Wealth Management.

Unlike the euro zone periphery, shunning U.S. assets is not really an option, not least because global markets tend to correlate closely with Wall Street anyway.

For Juckes, the latest standoff in Washington could go two ways: The weakening of Boehner's position could strengthen Obama's hand, particularly since he has already given ground. Alternatively, the Republicans may now be so divided that they cannot back any sort of deal that raises taxes on the wealthier.

The optimists would buy equities and the euro on any dip, he said. "(They) will look at the improving tone to U.S. data and at the vast amount of money that needs investing."

If the glass-half-full view prevails and the world economy starts looking up, Reuters asset allocation polls show major investors are looking to areas that underperformed this year -- notably the Chinese stock market, one of the few major bourses in the red for 2012.

After two years in which the stock markets of the emerging giants underperformed, Russia and Brazil also have backers.

For now, most investors seem to be hoping for the best rather than altering their strategies.

"If it turns out that there's a poor agreement delaying a number of issues until the spring but skating away from the immediate catastrophe of January, or no agreement at all, that clearly is not priced into market expectations," said Andrew Milligan, head of global strategy at Standard Life Investments, which has 163.4 billion pounds of assets under management.

"I think (a lack of agreement) would encourage people even more to go into the dividend yield type stocks ... And clearly the stocks that are more associated with global trade would be the ones that investors would be pulling back from," he said.

(Reporting by Sinead Cruise, Sujata Rao, Nia Williams, Tricia Wright, Richard Hubbard and Clement Tan. Editing by Jeremy Gaunt.)

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