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 food production. It seeks to allocate a value to natural capital, and assesses both the positive and negative impacts of different systems of agriculture.
At present, these costs and benefits are not factored into the price of our food. When a multinational corporation, for example, uses excessive amounts of water, there is no financial obligation to take responsibility. On the other hand, many farming systems have the ability to deliver multiple, cost-saving benefits – building fertility, locking atmospheric carbon into the soil, or delivering health and social outcomes. Yet these producers often pay higher costs in order to deliver the benefits that they believe in.
We believe that this system is grossly distorted. As citizens, we have to ask ourselves how it can possibly make sense for a vegetable grown half-way around the world: (harvested, packaged, stored, transported, marketed and distributed) to cost less than a vegetable grown and sold close to home. It makes no economic-sense that resource intensive, global 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 supporting subsidies, could it be possible for such a situation to exist.
The perception of ‘cheap’ 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 has dropped significantly over the last half century, from 40–50% of household expenditure. 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 was a monthly luxury has become so abundant that families have easy access to cheap protein, and who can claim that is a bad thing?
Well, it depends largely on your perspective. If you are happy, as John Humphrys was in his encounters with our Chief Executive, that a chicken is a chicken regardless of how it was raised, then indeed you can probably argue that the cheaper the chicken the better. However, if this abundantly available chicken has been raised in inhumane conditions, using a method of production so intensive that the animals generate huge amounts of toxic pollution, are routinely fed antibiotics and live appallingly unhappy lives, 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.
Having said this, we cannot avoid the fact that consumers at the tills do not currently feel the additional costs we have mentioned. Buying a cheap chicken in the supermarket costs the consumer £2.99 and 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, 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 increase 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 system that is only going to become increasingly expensive. Though industrially produced food is designed to be cheap, it’s actually very expensive in terms of resource use, the damage it does to our environment, the terrible loss of biodiversity, 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, we support an urgent shift towards relocalised systems of food production, which can be designed to deliver a range of environmental and social benefits. We believe that this is key to keeping prices from rising as drastically as they would do otherwise.
At the moment industrial production is subsidised and prioritised above and beyond systems that deliver long-term 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, who is responsible for footing the bill. Whether through the cost to our health services in the explosion of chronic, diet-related diseases, or in our water bills when we pay to strip pesticides out of our drinking water, it is simply untrue that consumers are not picking up the bill for the destructive consequences of our food systems. The problem is that the additional costs are often less-visible than the direct, tangible impact we feel on our pockets when buying the weekly shop. We urgently need to ensure 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 method that incorporates 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, and would ensure that those polluting or damaging our health, would pay more than those who were limiting their use. Simple things, like taxes on nitrogen fertilisers, could help to encourage farmers to use less, and funds could directly contribute to a programme to promote the use of legumes as a nitrogen-fixing alternative. On a broader level, policy could go a long way towards more substantive changes to how subsidies are distributed. Perhaps the 70 billion euros that European taxpayers put into the Common Agricultural Policy, could be used to ensure that production methods are more sustainable in the long term? Most EU consumers have little idea about the amount of their money that goes towards supporting systems of production with such damaging consequences (approximately £10 per week, per household), and those who choose to buy local or organic, are currently footing the bill twice, paying extra at the tills, and again to prop-up a system they 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 consequences created by 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.
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