The issue of true cost accounting seemed to be on everyone’s lips at this year’s Oxford Real Farming Conference. As the hidden costs of industrial food are increasingly exposed, there is growing concern amongst those who advocate for more sustainable food systems. How can we tackle these hidden costs?

This made for a popular and lively debate during our session on True cost accounting in food and farming, which featured SFT Chief Executive Patrick Holden, TEEBAgFood study lead Alexander Müller and Shadow Secretary of Defra, Kerry McCarthy. Patrick Holden began the discussion by laying out one of the biggest problems of our food system and why true cost accounting is so important:

The activities of farmers, and the manufacturers of farming inputs, have impacts on the environment and public health which are not reflected either in the prices farmers receive or in the prices consumers pay for the products.

This means that food which appears cheap is not really cheap at all because the polluter is not paying for this damage and is instead passing on the costs to society. Because these impacts are not accounted for it also becomes very difficult for farmers to change their practices and become more sustainable. Farmers who follow the best business case will find that farming intensively will generally receive a better return than being sensitive to the environment and human health.

Pollination is a good example of this problem. Without pollinators we cannot produce food. But farms that encourage insects and bees do not get paid for doing so, whereas those using pesticides and other chemical inputs experience short-term gains.

In order to address this issue, according to Alexander Müller, we must not only look at farming practices, but also the economic environment. Traditional agricultural economics looks only at the visible costs and benefits, but we must also look at the invisible costs and benefits. When we do this we realise that we are undermining the future of mankind in the way that we manage natural resources.

This is why we need true cost accounting. In attempting to identify, categorise, quantify, and where possible monetise the range of costs and benefits arising from food and farming, we may be able to employ mechanisms to redress the balance of our distorted economic system.

The panel discussion in our session threw up a lot of questions, particularly surrounding the practicality of true cost accounting and the mechanisms for change. Kerry McCarthy raised one of the most pressing questions for farmers – how can we reward people for doing good? It won’t be easy, but McCarthy agreed that something fundamental must be done to make our food systems more sustainable. Saying that bureaucracy is a deterrent when it comes to incentives for farmers, she argued that sustainability must instead become embedded in the way we farm.

As the issues underlying our food and economic system become increasingly apparent, and as pressure grows to adopt the concept of true cost accounting, we will need to begin looking in detail at mechanisms for change and how we can go about making true cost accounting a reality. This is the next stage and is something the Sustainable Food Trust is working hard to facilitate. Between 14th-17th April, we will be hosting a conference in San Francisco which will delve further into this topic.

Photograph: Cath in Dorset

Sign up to our Newsletter

Stay up to date with the latest SFT views and news