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Should food cost more?

Should food cost more?

March 21, 2014 1:42 pm

A couple of weeks ago, we received an email from a visitor to our website. The author asked, ‘How can anyone say that food is too cheap when food prices are actually going up?’ He was referring to the SFT’s position on ‘true-cost accounting‘, an idea explored at our recent London conference. The email noted the growing gap between rich and poor, and the dramatic increase in the use of food banks across the country, ‘…to tell these people that food is too cheap…is surely an offensive notion?’

The idea behind ‘true-cost accounting’ is to allocate a monetary value to the resources used, and impacts created, by different systems of farming and food production. True cost accounting seeks to allocate a value to ‘natural capital‘, and assesses the positive and negative impacts of different systems of agriculture, on both the environment and human health.

At the moment, these costs and benefits are not factored into the economic system used to price our food. When a multi-national corporation, for example, produces food in ways that use excessive amounts of water, or have devastating environmental or health impacts, there is no obligation to take responsibility. On the other side of the coin, many farming systems have the ability to deliver multiple, cost-saving, benefits – building soil-fertility, locking atmospheric carbon back into the soil, or delivering health and social outcomes. Yet these systems of production reap no additional reward. In fact, these producers often pay higher costs in order to deliver the benefits that they believe in.

At the SFT, we believe that this system is grossly distorted. We have to ask ourselves how it can possibly make sense for a vegetable grown half-way round the world, sprayed with chemical pesticides, harvested, packaged, stored, transported, marketed and distributed, to cost less than a vegetable grown close to home, without external inputs, harvested and sold fresh near to where it was produced. It simply makes no economic-sense that a resource intensive, global system of production should be the cheaper option, especially when we consider the percentage of the retail price that ends up contributing to the profits of share-holders. Only in a system extensively propped-up with protective policies and subsidies, could it be possible for such a situation to exist.

The perception of ‘cheap’, and the idea that food is a commodity that shouldn’t cost much, is a topic that we have been discussing a lot recently. The fact is, that whilst food prices are rising, most people in the developed world spend less than 10% of their total household income on food. The overall cost of food has dropped over the last half century, from 40–50% of household expenditure. This steep decline in the overall cost of food has largely resulted from the industrialisation of our food system, and the impact of cheap, abundant food on our overall standard of living is, we are told, a positive thing. In recent debates we’ve heard the oft-touted example of the beneficial cheap chicken. A product that used to be a monthly treat, has become so cheap and abundant that families have access to tasty, cheap protein, and who can claim that is a bad thing?

Well, we would argue that it depends largely on your perspective. If you are happy, as John Humphrys was in his encounters questioning our Chief Executive on this issue, that a chicken is a chicken regardless of how it is raised, then indeed you can probably argue that the cheaper the chicken the better. However, if this abundantly available chicken has been raised in horrendously cruel conditions, using a method of production so intensive that the animals generate huge amounts of toxic pollution, are routinely fed antibiotics, and are fed a diet of GMO-corn produced in developing world countries with a whole-host of additional consequences, then suddenly that cheap chicken seems not to be so cheap after-all. Rather it is the product of a system that is having such huge and devastating consequences on environmental and human health, that the long-term costs significantly out-weigh any short-term savings at the till.

All of this might make sense in theory, but we cannot avoid the fact that the additional costs we have mentioned are not currently felt by the consumers at the tills. Fundamentally, buying a cheap chicken in the supermarket costs the consumer £2.99, so why should we care about the range of additional consequences? As our visitor’s email suggested, times are hard, people have less disposable income and talk of increasing food prices is social and political suicide, so what is to be done in this situation?

The first thing to say is that food prices are already rising, and they will continue to do so in the face of global population increases, resource depletion and climate change. Our global, industrial food system is entirely dependent on the abundant use of cheap external inputs, particularly petrol, pesticides and fertilisers, and cheap labour. In the UK, only 60% of the food we eat is produced here, and our reliance on imports for the other 40% is helping to push up food prices across the globe. The UN has already predicted a 40% rise in the cost of food over the next decade, and as we enter a new period of increasingly challenging weather conditions, our reliance on a system of global exports looks precarious at best. At a time when we should be looking towards increasing the diversity and capacity of national production, moving towards climate resilient systems and building food-security, we are instead throwing astronomical quantities of money at subsidising a global system that is only going to continue to become increasingly expensive.

Since the food prices we pay at the tills are so connected to the international system of production they depend upon, they are also increasingly vulnerable to the impacts of changes in countries far away from home. California, and other parts of the US, are experiencing their worst drought for over 100 years. Large parts of Australia have seen successions of severe droughts and flash floods in recent years – just about the worst conditions imaginable for producing food. In the Middle East, parts of India, and parts of China and Australia, declining rainfall, and or, major changes in rainfall patterns have resulted in unsustainable levels of irrigation. In addition, in many of the poorest countries huge areas of productive land are being lost to desertification, as soils lose their organic matter and with it the structure that holds them together, making them increasingly vulnerable to both wind and flash flood erosion.

Though industrially produced food is designed to be cheap, it’s actually very expensive in terms of this use of resources, the damage it does to our environment, the terrible loss of species biodiversity, ecosystem collapse linked to agriculture, and the cost of treating illness across an increasingly unhealthy population. As Dan Imhoff has written in Civil Eats, ‘When will these societal debts catch up with us like a giant looming credit card bill we’ve been ignoring for years?’

Given the rising cost of food that we will witness in the 21st century, we support an urgent shift towards local systems of food-production, which can be designed to deliver a range of environmental and health benefits. We believe that this is key to keeping prices from rising a much as they will do otherwise. At the moment industrial food production is subsidised and prioritised above and beyond systems that deliver benefits. Large, intensive systems receive more direct payment subsidies through CAP, or the Farm Bill, more energy subsidies to support the heavy-use of petrol, and pay none of the clean-up costs for any negative impacts of production. When our systems of producing food pollute the environment or damage our health, it is us, the taxpayer, responsible for picking-up the bill. Whether through the cost to our health services in the explosion of chronic, diet-related diseases, or through the cost in our water-bills when we have to pay to strip pesticides out of our drinking water, it is simply untrue that consumers are not paying for the destructive consequences. The problem is that the additional costs are often less-visible than the direct, tangible impact we feel on our pockets when paying at the tills. We urgently need to rebalance the system so that the real, long-term cost of the way our food is produced is visible to the consumer, and true-cost accounting can help us do this.

Rather than being a system that incorporates the true-cost into the retail price of a product, true-cost accounting calls for a range of incentives, taxes, subsidy redistribution, and policy initiatives to stimulate the growth of sustainable farming practices that deliver benefits, and would ensure that those polluting or damaging our health, would pay more than those who were limiting their use of pollutants. Simple things like taxes on nitrogen fertilizers and pesticides could help to encourage farmers to use less of them. Initiatives to support farmers in closed-circle management for nutrient recycling, including systems of composting, crop-rotation and companion cropping, could make a huge difference and were standard farming practice less than 50 years ago.

On a broader level, policy could go a long way towards more substantive changes to how subsidies are given out. Perhaps the 70 billion euros that European taxpayers put into the Common Agricultural Policy, could be used to ensure that production methods are sustainable in the longer term? Most EU consumers are woefully ignorant to the amount of our money that goes towards supporting systems of production with such damaging consequences, and those that choose to pay more for sustainable food are currently footing the bill twice, paying more for sustainable food and paying again to prop-up a system that they morally disagree with.

We urgently need common sense to prevail in the rebalancing of our food systems, and we need consumers to truly understand the full range of costs and benefits created in the production process. In a world marked by increasingly volatile climates, where a third of the global population goes hungry, while a third of our food is thrown away, we simply cannot afford to continue with business as usual. Re-localised, sustainable, resilient systems are the only way to future fit our food supply, and in doing so ensure that access to delicious, fresh, healthy food is a fundamental right for all people, and not the sweet privilege of those who can afford to pay extra.