Ten chicken nuggets for $3. A kilogram of bacon for $6.99. A box of biscuits for less than a broccoli and 2.5 litres of Coca Cola for less than a bunch of carrots. Why would anyone in their right minds pay for fresh, unprocessed food, let alone the more expensive organic alternative when there is such an abundance of cheap calories filling the shelves of our supermarkets and the menus of our fast food outlets?
We in the western world now spend a smaller percentage of our income on food than ever before. For example, in the UK, the average citizen in the 1950s used to spend around 30% of her income on food, and only 11% on housing. Now, that figure has been reversed. Is this change simply a reflection of the benefits of the industrial food system and its efficiencies? Is it a good thing? Does it enable more people to provide themselves and their families with better nutrition? Not really, no. So what has gone wrong?
What is true cost accounting?
At present, the price we pay for food in the supermarket rarely represents the real cost of production. At one end of the scale, some food is artificially cheap. Subsidies are part of the problem, or at least they can be when they support the wrong industries. For example, in the United States subsidies have led to a vast over-supply of corn. This abundant, cheap corn is used for all manner of things: from producing the notorious high fructose corn syrup, to being fed to cattle, rather than grazing them on pasture. The products created by using this corn are, thanks to the subsidies, falsely inexpensive.
The artificiality of the price of cheap food is actually a double-whammy. Not only is it actually more expensive to produce the food than it appears from the shelf-price in the supermarket, but it’s also far more expensive in terms of the non-financial costs associated with its production. These non-financial effects, or externalities, are a major focus of the true cost accounting project.
For example, instead of paying $6 for two litres of milk that was produced on a sustainably managed farm, we get what the same thing for a little over half the price. But the cost of cleaning pesticides, nitrate and faecal residues, as well as any other by-products of poorly managed agriculture out of drinking water will generally be paid for by the consumer in the form of rates, taxes or water bills. The cost to consumers in the form of soil degradation, aquifer depletion is difficult to quantify, but is no less real. In the recent case of Havelock North, these externalities might also have been paid for in the form of health bills (although of course, the cause of the contamination has not yet been determined).
On the other end of the scale is the ‘expensive’, sustainably produced food like organic or free range produce. The first thing to note is that one thing that makes these foods ‘expensive’ is simply the comparison with the false cheapness of everything else. But true cost accounting goes deeper than that, and looks at the positive externalities created by sustainable food production.
Sustainably produced food creates a whole host of benefits that are not accounted for in the price we pay as consumers. For instance, well-managed pasture grazing systems actually build soil, which then both sequesters carbon from the atmosphere and ensures that the land is fertile for farming into the future. Holistic management systems can enhance biodiversity, which, aside from being good in and of itself, ensures such things as the survival of vital pollinators. A farm that pays its employees a living wage ensures a better quality of life for those workers, and ensures that they can actually afford to eat, and eat well.
If we can measure the ‘value’ of externalities, we can require those who damage the environment and society through their practices to pay for that damage, and we can reward those that create environmental and social benefits. For instance, farms that are net carbon sequesterers (is that a word?) could receive a tax credit, while those that are net emitters could incur an additional tax burden.
Why do we need it?
‘Cheap’ burgers and upgrades, ‘cheap’ coke and lollies: these all contribute to growing health problems related to obesity and poor diet, such as diabetes and a number of cardiovascular issues. We pay the real price of these foods at the other end: either in taxes to fund public health-care, or in the form of private health insurance and hospital bills. In a non-monetary sense, we pay the price in the form of reduced quality (and often duration) of life.
When we buy a cheap block of chocolate, we may think we’re getting a deal, but slavery, including child slavery, is a real problem in the cocoa industry. The real cost of that cheap cup of coffee, those bananas shipped half-way around the world for only two dollars a bunch, is the dignity and chance for a decent livelihood of a farmer you will probably never meet. Even products less stereotypically referred to in labour-justice debates, such as meat, have significant social justice implications. Slaughterhouse workers in the United States have an injury rate 33 times higher than other workers, and many develop mental illnesses such as post-traumatic stress disorder. Compounding these difficulties is the fact that many of those who work in these conditions are undocumented and exploited.
The European Nitrogen Assessment estimates that the total global cost of agriculture-related environmental damage caused by the use of nitrogen is USD236 billion. But because there is no financial or other form of accountability for this damage, the simple yield-increasing business case for nitrogen fertiliser remains strong. There is also evidence showing that the effect on human health of exposure to pesticides in the EU alone costs $127 billion per year in terms of health and economics, without even considering other agrichemical exposure. Land degradation, biodiversity loss, ocean and freshwater eutrophication: all of these things can at least partially be attributed to unsustainable agricultural practices, permitted because their cost is hidden away.
The thing is, there are so many positive elements to farming, especially good farming, all of which could be rewarded under a true cost accounting system. A third of economically active people worldwide are employed in the agricultural sector. In places where there is a shortage of decent employment, agricultural work could provide it. Instead of a hunt for efficiency and lowering prices, the focus could instead be on ensuring the price reflects the cost of employing enough people to do the job, and paying them well enough to lead a decent, dignified life. Funnily enough, this in turn would allow those self-same workers to afford the food they produce.
The soil sequestration capacity of well-managed farm systems is enormous, and the effect this could have in the fight against climate-change and its host of ill-effects is worth rewarding. The preservation of biodiversity, the revitalisation of local food cultures and communities, all of these things and more could be fostered and supported by a market which recognises the true cost of food. If we actively supported good practice, and disincentivised unsustainable practice, the ultimate result would be the increased accessibility of healthier, more sustainably produced food, and the dramatic increase in price and decrease in convenience of unsustainably produced, unhealthy food.
What are the challenges?
The first difficulty that springs to mind is the question of why on earth we would want to make food more expensive when there are already so many people who struggle to feed themselves and their families as it is. I was listening to a podcast the other day about the rise of food-banks in the UK and Europe, indicating that more people than ever are struggling to earn enough even to put a meal on the table three times a day, without even beginning to think about the content of those meals.
This is a difficult issue, and I think it’s far too broad to try to deal with in this article. The problem is partly a wider socio-economic issue, stemming from policies which increase inequality and make it far easier for the disadvantaged to fall through the gaps in the social floorboards. Interestingly enough, the food chain itself is a great example of this problem. In the UK, only around 20% of the money spent on food in supermarkets goes to the farmer. The rest goes to the middle-men: the transporters, the warehousers, the distributors, the supermarket chains. Even if a farmer spends a full half of everything she receives for her product on labour, that still means that those working to actually produce the food only get 10% of the (often minimal) price the consumer paid for it. In this way, those at the ‘top’ of the food chain – the CEOs and directors and board members – end up with more than enough, while those at the ‘bottom’ – the critical labourers who actually pick the broccoli and milk the cows – end up with hardly anything. Small wonder so few young people are interested in a career in agriculture.
I don’t really know what the solution to this problem is. Perhaps the subsidies diverted from propping up unsustainable industries could partly go to reducing the cost of fresh food, or to funding policies ensuring a minimum wage that enables a decent standard of living. This is an issue that those of us advocating true cost agriculture must continue to grapple with.
A second challenge facing the true cost accounting project is a practical one. There are real difficulties in allocating a monetary value to some of the externalities of agriculture. Some factors are easier to assess, such as the pollution of a river, which could be measured by the cost of cleaning it up and the amount of revenue lost from contaminated fisheries and other industries. Others are not so easy to imagine: how can we measure the exact value of productivity lost directly to malnutrition? How can we determine what portion of the cost of cancer treatments to attribute to exposure to certain agrichemicals?
And this challenge leads me to one of my biggest concerns with the true cost project: can we – should we – value everything? What price can you put on suffering? What is the value of a landscape? What is the cost of the loss of a species? I have major qualms with trying to put a dollar sign on everything. I think the need to connect everything to a monetary value is symptomatic of our cultural disconnect with nature. It is easy to forget in a world where almost everything has a price that the world around us is inherently valuable, for no reason other than because it exists. We continue to reduce everything down to its economic output. Sickness is measured by its effect on worker productivity, not suffering. The natural world is a resource to be exploited, not a gift to be marvelled at. Shouldn’t we be trying to get away from this view of the world?
On the other hand, we live in a world unequivocally dominated by money. Money is the global lingua franca, and it seems to be the single most effective motivator when it comes to policy. So perhaps to enable us to get back to a place where we value things in and of themselves, we need to help people to understand their value in terms they understand.
Again, I don’t know the answer to this one, but TEEB Ag Food’s argument is appealing. They say in their 2015 report that the purpose of true cost accounting isn’t to put a price on nature, as much as it is to examine the inherent value of the services provided by nature.
How can we achieve a food system that reflects the true cost of food?
There are two ways to achieve the goals of true cost accounting. Unfortunately, it seems to me that the most effective ways involve policy changes that will ultimately have to be implemented from above.
On the supply side, an obvious change would be to remove subsidies from harmful forms of production and instead provide support for the implementation of more sustainable practices. For example, payments could be made to farmers based on the ecosystem services their farms provide. In Costa Rica, the government compensates farmers practicing agroforestry where it helps to increase wild biodiversity and preserve habitats. This has had a significant impact on the rates of forest conservation.
On the demand side, measures such as a removal of goods and services tax from sustainably produced, fresh food and the implementation of a corresponding tax on unsustainably produced food, could help consumers to make choices based on environmental and nutritional factors rather than the limitations of their wallets. It would make the best choice the easier choice, rather than the other way round.
Policies making farming sustainably a profitable enterprise would encourage more people to get involved in sustainable production. If this were complemented by the provision of information and education, consumer choice would further support these sustainable producers.
And that raises the critical conundrum: what can we, as consumers, do? We can demand to know the story of our food. We can choose, wherever we can, to support the kind of agricultural practice we would like to see with our hard-earned money. We can choose to support smaller shops and farmers’ markets, to cut out the middle man and make sure more of what we pay goes straight to the farmer. We can wade into the daunting waters of advocacy and policy and call for, and support, policy measures which will help to achieve food prices that reflect its true cost.
True cost accounting is not the answer to the problems and hidden inefficiencies of the industrial food system. Instead it is a tool which will expose those things and encourage everyone involved in the food system – from policy makers, to farmers to consumers – to do things differently. Hopefully, this will result in a food system that respects the people, animals and natural environment involved in and affected by it.
Do you have any more ideas? Share them with me!
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