Currently, the price of food does not reflect the full costs and benefits associated with different farming systems. As a result, intensively produced food, which appears cheap, is causing serious damage to the environment, health and society. Conversely, sustainably produced food appears more expensive even though it is delivering many positive social and environmental benefits.

To address this problem, Dr Harpinder Sandhu, of Flinders University, South Australia, has developed a new assessment tool which identifies, quantifies and monetises these costs. This would allow food prices to be adjusted, by various policy mechanisms, to reflect its true production cost.

In a study released today, Dr Sandhu has used this assessment tool to evaluate four US farming systems:

  • Conventional corn/soybean system – Minnesota, USA
  • Straus Family Creamery, an organic dairy production system – California, USA
  • Joel Salatin’s Polyface Farm, a diversified livestock system – Virginia, USA
  • Organic rice farms, California, USA

In each case, Dr Sandhu has calculated the environmental and social costs and benefits arising from each system, and adjusted the product price to reflect the true cost. Using an ecosystem services approach, the study measures the value of production, environmental and social benefits, as well as the costs of environmental and social impacts.

All four of the farming systems evaluated had both positive and negative environmental and social impacts. But interestingly, the organic and sustainable systems delivered significant environmental and social benefits that have not been previously visible. If these were incorporated into the price of food, this would enable consumers to make better informed decisions about which food to purchase.

Dr Sandhu is now working closely with a new international initiative aiming to significantly extend this work through The Economics of Ecosystems and Biodiversity for Agriculture and Food (TEEB AgFood) hosted by the United Nations Environment Program, Geneva. TEEBAgFood aims to build on his assessment methodology and evaluate a wide range of food production systems.

Commenting on Dr Sandhu’s work, Patrick Holden, Chief Executive of the Sustainable Food Trust, said, “Harpinder Sandhu is a true pioneer – he is breaking new ground in enabling society to better understand the true costs of our food.” We spoke to Dr Sandhu to find out more about his research and why it’s so important:

Why is your work needed?

Agriculture worldwide is facing one of its greatest challenges: to produce enough nutritional food to fulfill the needs of our current and future human population, while at the same time, protecting the environment and human health. Current farm policies support agriculture by providing subsidies to produce large amounts of food. But these policies have not yet begun to fully grapple with the high costs associated with our industrialised food system. Unsustainable farm practices currently dominate global agriculture.

What persuaded you to take on the challenge of quantifying and monetising the hidden costs of our food system?

We need to examine both the positive and negative impacts of agriculture and food production, so it is very important to enumerate the social and environmental benefits and costs of different production systems. This can help improve current agricultural practice and develop more sustainable agricultural systems in future. But as impacts on human health and the environment become more visible and recognised, the call for agriculture to recalibrate itself towards sustainability is gaining momentum. One way of making environmental and social impacts more visible is to identify and put a monetary value on them.

How distorted is current food pricing – when we talk about the true cost of industrial food, is it under-priced by 20%, 50%, 100%? Give us some guidelines.

Research on eight food commodities, including corn, soybean, milk, beef, poultry meat, eggs, pork meat and rice produced in the US shows that there are high environmental costs associated with their production. These specific case studies showed environmental costs comprise 30-50% of the farmgate price, the net value of the product when it leaves the farm. It is important to note that there are huge environmental costs associated with transport, processing, storage and consumption. When these costs in the value chain are added to the farmgate costs, the price of food doubles.

What would you say is the greatest area of cost in relation to our present industrial food system? Is it destruction of natural capital, pollution, public health or social and cultural costs?

Worldwide data suggests that the public health costs of industrial food production are the highest. For example, the global cost of diabetes is now $825 billion per year, and over 2 billion people are obese or overweight. However, at farm level, if we examine the impacts of soil degradation, greenhouse gas emissions and water pollution, the costs are also considerable. These are generally associated with excessive energy use from fossil fuels used in machinery for planting, harvesting, drying crops and other inputs such as chemical fertilisers and pesticides. In the current economic system, individuals are not paying the price of the environmental and health costs from industrial farming but some of these costs are reflected in the increasing cost of health care. For example, total global expenditure for health care is $6.5 trillion, which is about 10% of the global Gross Domestic Product.

What are your priorities for future research?

There is a need to raise citizen’s awareness of the costs – referred to as ‘externalities’ – of agriculture and food production, so that whether as a policy maker, farmer or consumer, we can effect necessary change in our current practice. We need to develop a standardised framework for examining all of the externalities of food production and communicate the values attached to them to society at large. My future research priorities are to refine this framework and apply it to other agricultural systems, carrying out a comparative analysis of all the costs and benefits for conventional, organic, agroecological and other types of farming systems. This will help to develop sustainable and productive farming systems that can supply nutritious food in sufficient quantity without damaging human and environmental health.

Click here to see Dr Sandhu and farmers from three of the case studies speak about the research

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