“Real cost of food”: what then do we pay to consume?
The Food and Agriculture Organization (UNFAO) recently announced that world food prices have increased by around 40% from last year and reached their highest level in a decade.
Why this increase, what is so special this year to have triggered the rise in prices?
Well, what is not?
And this kind of food inflation could increase the number of hungry people by 130 million around the world, something we haven’t seen in the past half century.
The reasons can be multiple, redundant or persistent such as increased demand, drought or decreased productivity, etc.
But Covid changed the way things turned out. According to an Oxfam report, 11 people continue to starve alone every minute.
3.1 million children die because of insufficient food or nutrition across the planet which makes it possible to produce abundant food.
And there is nothing more to ponder over a recent report on the United Nations (UN) Summit on Food Systems, titled “The real cost and the real price of food”.
The report found that the price of the food we eat today is actually only a third of the real cost.
He succeeds in differentiating between good and bad food, relying on a reflection on the proposed price of harmful foods which makes sustainable and healthy foods less affordable in the market.
It is said: “The current externalities have been estimated at almost double ($ 19.8 trillion) of the current total world food consumption ($ 9 trillion).”
“These externalities amount to $ 7 trillion (range 4 to 11) in environmental costs, $ 11 trillion (range 3 to 39) in costs to human life and $ 1 trillion (range of 0.2 to 1.7) in economic costs.
Therefore, according to the scientists contributing to the article, this cost should be redefined, involving the very measures of environmental, economic, social, health costs and benefits.
This will be called True Cost Accounting (TCA), a tool that takes into account various systemic factors relating to the social, human and natural capital that contribute to the production of an asset.
However, these aspects of quantification may vary depending on their data and introduce uncertainties as the estimation of carbon emissions has been done for a long time and is mature while the quantification of health is rather young.
The author of the study clarified, saying:
“A TCA assessment usually begins by identifying the purpose and scope of the assessment, establishing the unit of analysis and the boundaries of the system. Then, various externalities are evaluated (qualitatively or quantitatively), valued and aggregated.
Scope and wider applications of the tool:
Stakeholders, private or public, large or small, can use the tool for its inherent benefits in food production, distribution and consumption:
The budgeting of local, indigenous or regional policies can be strengthened using this tool by the government. Likewise, private companies involved in supply chain and logistics can use the tool for structural assessments and subsequently minimize negative aspects and improve positive aspects.
In addition, financial institutions can use the TCA for reporting, impact investing or risk assessment and thus acquire insurance on their published property.
Meanwhile, farmers can use it to report cost-benefit analysis of their farming practices and products, and consumers to determine the environmental and social externalities so ingrained in the foods they buy and consume.
This is important because our agricultural transformation uses nearly 1.1 billion pounds of chemical pesticides each year, many of which are carcinogenic or neurotoxic.
Exposure to some of them can even cause environmental illness, from physical to psychological, and have respective economic costs for us, both at the individual and societal level. In a way, we pay the damages ostentatiously.
The externalities thus evoked are hidden ramifications of the choices of market players, and they choose to make sustainable and healthy food less affordable for consumers and even less profitable for producers.
The market price reflects the outputs of the business minus the inputs or added value to it. But if a business is accelerating climate change, underpaying workers, or enabling healthy, affordable food, none of that makes up its bottom line.
Likewise, the economic value of the entire food sector is measured by its contribution to GDP or GVA, which is again the total value added minus the intermediate consumption achieved.
Therefore, it omits the extent to which our food systems contribute to climate change, child labor, deforestation or poor health. Therefore, our policymakers consider the economic indicators crucial without other important factors for survival.
The TCA has made it possible to quantify and price these externalities, but it involves uncertainties.
“The information available at this scale is limited due to the young nature of TCA, the complexity of food chains and the wide variety of disciplines and data required.” explains an author.
In any case, this leads countries to have lower average living standards than what would have been possible otherwise and thus aggravating social and ecological injustices.
Modeling an agroecological future can serve human generations in two ways: reducing the environmental, social and health costs imposed by food and making healthy food affordable for everyone on the planet.
Even the EAT-Lancet report recommended that a transition to healthy eating by 2050 will require substantial dietary changes.
We can start to change our future from one perspective or the other. If we cannot influence the very policies created for us, we can exert pressure by exploiting our rights as informed consumers.