True cost accounting in food and farming: stories, smallholders and virtuous circles

True-Cost_Option2-1389x500_(1)1On the 6th December the Sustainable Food Trust held a conference entitled True Cost Accounting in Food and Farming at the Royal Geographical Society following a two day workshop on the same topic. Central to the conference was the understanding that if food systems are to become truly sustainable, the actual (environmental and social) cost of producing food must be reflected in retail prices. Food producers, suppliers and retailers need to be financially accountable for the impacts of production on environmental and public health.

The challenges we face

The event began with a story, starting 60 years ago when the need for cheap food drove agricultural development, disconnecting people from the origin of our food and creating an industry where small family farms could not compete. Despite the good intentions to end world hunger and make food accessible to all, the environmental and public health costs were considered too late (if at all). A small group of people (environmentalists and animal welfare lobbyists among them) advocated the need to consider the wider impacts of our food systems, a plea that is ongoing but largely ignored even today. As Patrick Holden, Chief Executive of the Sustainable Food Trust and storyteller, explained, the conference, the largest international gathering on the subject of true cost accounting, aimed to be the beginning of a process of moving true cost accounting beyond rhetoric, objection and protest to one of real action.

Kicking off the event was a video message from HRH Prince Charles who began by stating that the biggest challenge the world faces today is producing enough food without doing irreparable damage to the environment and human health, a challenge made much harder by the likely impacts of climate change. He emphasised the need for the polluter to pay despite the financial odds being stacked against this objective. A burning question is whether the polluter pays principle will affect businesses and their ability to turn a profit or instead drive innovation, as in the case of the Land Fill Tax, which created new jobs and instigated greater recycling efforts. We need to understand better how food producers can make a profit whilst also moving to a more agroecological approach. He ended by expressing his hope that the outcome of the conference and workshops would be the commission of a study to find out if it is more profitable to farm by putting nature at the centre of food producing operations. The heart of the problem we face is the “economic invisibility of nature” and in realising that the ultimate source of economic capital is natural capital and not the other way around. We will only inflict conflict and misery if we continue farming based on increasingly weakened ecosystems.

Professor Jules Pretty, University of Essex, explained how our understanding of the negative externalities that the modern agricultural and green revolutions have caused began with Rachel Carson’s Silent Spring in 1962, which documented bird losses occurring due to seed treatments. In 1992 Prof. Pretty and Gordon Conway wrote Unwelcome Harvest, which documented the wider impacts of food production but was still only part of the picture. In 1998, a team at the University of Essex published a paper that showed the total cost of agriculture in the UK to the environment to be £2.4 billion per year, in part from the contamination of water by pesticides, soil erosion, organic carbon losses and greenhouse gas emissions. This figure showed that the environmental costs alone of our agricultural systems were higher than net farm income. While similar studies were published in other countries, the outputs were criticised for ignoring the positive externalities of agriculture i.e. its contribution to the environment and human health. In 2005, Prof. Pretty and another of the day’s speakers, Prof. Tim Lang, City University London, recalculated the externalities of agriculture, expanding the boundaries from farm to fork, resulting in a lower figure. The most surprising result was that the environmental burden arising from food miles was greater than the environmental cost on farm, and most significant of all was the minimal impact of importing food and transporting it around the country compared to household shopping trips.

Prof. Pretty then went on to discuss our current farming systems, divided into three and represented by a glass of water. The first, almost filled to the brim with water, represented an industrial system, very productive but with lots of spillover effects. The second, half full, showed moderately productive systems trading some of the productivity of intensive systems for a lower impact on the environment. The third glass, with only a small amount of water, represented the 2.4 billion producers in the world who have yields of ½ to 1 tonne per hectare (compared to the UK average yields of 8t/ha). The latter could, theoretically, more than double yields with little environmental impact with the right agroecological techniques and farmer engagement. While some argue that feeding the world is more a matter of better distribution and reducing food waste, Prof. Pretty believes we need to focus on increasing the food production of these 2.4 billion farmers, many of whom are poor, on their own farms. But we need to increase production in the right way.

In 1997, Prof. Pretty coined the term sustainable intensification to highlight the fact that we need to do more and better on existing agricultural land. The term doesn’t imply that one system or technology is better than another, instead it is about getting the best outcomes for a range of objectives. There are a pantheon of options, for example, no till farming, push-pull pest control, precision farming to name a few and the right choice will depend on the agroecological circumstances. In 2009, Reaping the Benefits, a report by the Royal Society concluded that the need to increase food production by 70% to 2050 would have to come from existing land and that we need to do intensification better, accentuating the positive and diminishing the negative. In a sense we need to:

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Of course the environmental impacts are only one of agriculture’s hidden costs, as Prof. Tim Lang explained. Of the 19 leading risk factors of disease, which account for 58.8 million deaths each year, food is a contributory factor in 10 of these, for example cardiovascular disease (CVD). In 2011 to 2030 CVD will cause economic losses of $15 trillion. From 2010 to 2030 non-communicable diseases such as diabetes are estimated to cost 48% of global GDP and yet the cost to prevent many of these diseases is very small in comparison. Prof. Lang expands that if food systems are to be designed with public health in mind they would look very different: more horticulture, less meat and dairy production for example. Dr. Pete Myers, Environmental Health Services, talked about the impacts of agrochemicals on human health, of which only the tiniest fraction of chemicals have been studied and linked to health and economic costs. Much of our knowledge on the impact of agrochemicals is based on outdated methodologies, ignoring the huge advances in epigenetics and endocrine disruptors of more recent years as well as cocktail and timing effects. For example, many chemicals whose properties we thought we knew may have a different impact when combined with other chemicals and exposure to even low doses of chemicals can have a profound effect, sometimes much later in life. Dr. Myers gave as an example the effect of 2.5 parts per billion (ppb) of atrazine (farmers usually apply at higher concentrations) to frogs from hatching to adult, the result was the conversion of a genetic male to a fully functioning female (i.e. able to reproduce). In another experiment, the same strain of mice, eating the same amount of calories and undertaking the same physical activities, would become obese when exposed to 1ppb of obesogens (commonly used as fungicides) from birth, stem cells that would have become bone cells becoming fat cells.

So our food production systems produce negative impacts on the environment and for human health but our understanding of these hidden costs is still relatively small and even smaller when it comes to how this information should be used. While some at the conference argued for the inclusion of these costs into retail prices of food, others acknowledged the impact this could have on the poor and hungry, and instead urged the use of such figures in guiding policy making, whose language is predominantly one of economics.

Understanding the true cost of farming

Several projects were introduced at the conference, which aim to increase our understanding of how the true costs of farming can be calculated and communicated.

As Nadia Scialabba, Senior Environment Officer at the UN Food and Agriculture Organisation, explained, the FAO is currently embarking on a project to estimate the full cost of food waste. After coal power generation, agriculture has the highest impact on the environment when measured in monetary terms, and a significant proportion of these impacts are generated through producing food that is not eaten. Some 1.3 gigatonnes of food is wasted each year, the production of which leads to 3.7Gt of CO emissions each year (if food waste was a country it would be the third largest emitter); 250km of water (three times the size of Lake Geneva) and; 1.5 billion hectares of land (30% of total agricultural land). The economic cost of food waste to producers is $750 billion per year, about the equivalent of the GDP of Switzerland or Saudi Arabia. When some of the environmental costs are added, this figure almost doubles. A review such as this does of course raise many methodological issues such as double counting of impacts, data availability, wide estimate ranges and lack of social costs but it is a step in the right direction and we can expect to see the full results by March 2014.

Adrian de Groot Ruiz, Executive Director of True Price Foundation, Holland, discussed the work he is leading on calculating the true prices, true profits and losses, and true investment returns for food. In Zona de Mata in Brazil, a major coffee producing region, a 250g bag of coffee, which fetches a retail price of $2, was found to have a true price of $5.17, when social and environmental costs were included. Interventions such as Fairtrade can close this gap but we need to find ways to close the gap even further, e.g. through increasing yield potentials, redistributing profits and sustainable energy on farms. The goal of this work is not to increase prices but to have better information to drive change and manage risks, and they have a target by 2018 of reducing the true price of a bag of coffee to just $3.79.

Ann Tutwiler, Director General of Bioversity International, introduced the research institute’s work, the Bridging Agriculture and Conservation Initiative, which aims to provide evidence-based solutions to combining these two fields. She explained the extent to which we rely on a very narrow diversity of crops: out of 250,000 globally identified plant species, three (rice, maize and wheat) currently provide 60% of the world’s food energy intake and are grown on almost 40% of global arable land. These three crops also represent half of the research budget of international agricultural research centres. And the genetic diversity and number of varieties of the world’s crops are getting narrower. Of the 3,000 varieties of quinoa available, we eat only two. Of Thailand’s rice growing area, half is planted to just two varieties. Conserving agrobiodiversity in areas where it is high (often coinciding with areas with a high prevalence of poverty) is essential. And it can save households money and increase diet diversity, she explained. Actions we are currently taking to protect biodiversity in agricultural landscapes are insufficient. For example, in Costa Rica, payments for ecosystem services to farmers to protect biodiversity only add up to 10% of the value of that biodiversity as, for example, a source of pollination. Using true cost accounting to redistribute these values is one area of action urgently needed.

The solutions

A number of speakers at the conference, talked about specific solutions.

Prof. Whendee Silver from UC Berkeley, described how sustainable agriculture can be used to provide positive externalities such as climate change mitigation. Reducing greenhouse gas emissions alone will not mitigate climate change. Even with (highly optimistic) emissions reductions, CO2 will remain in the atmosphere and thus will need to be extracted somehow. Looking at the famous graph of atmospheric CO2 concentrations taken at Mauna Loa we can see that atmospheric concentrations increase and decrease yearly (although increasing overall). This variation is attributed to plants drawing CO2 out of the air during the growing season through photosynthesis (causing concentrations to go down) and microbial decomposition releasing CO2 (causing concentrations to go up). By increasing plant photosynthesis relative to microbial respiration, Prof. Silver explained, we can reduce atmospheric CO2. And the best place to store this CO2? In the soil, a major sink for carbon. And the best place for this carbon to be stored? In grasslands, which account for some 30% of the global land surface and where, because of higher rates of water loss, plants tend to have well developed root systems, able to store carbon deep in the soil where it is more likely to remain for the long-term.  And managing soils for greater carbon content also has many positive externalities, increased fertility, greater water holding capacity and soil stability, all of which contribute to increased productivity and sustainability. In recent papers, Prof. Silver and colleagues found that if carbon sequestration and storage in grasslands was scaled to six million hectares (around half the land area of the UK), we could offset all greenhouse gas emissions originating from the livestock sector, a pretty exciting prospect. Of course offsetting activities remain controversial but soil carbon storage appears to provide a win-win answer, a virtuous circle:

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Turning to food waste, Tristram Stuart, author of Waste: Uncovering the Global Food Scandal, outlined one seemingly simple way of minimising food waste, feeding it to pigs. When compared to anaerobic digesters, which could save 143kg CO2 equivalent per tonne of food waste, pigs could save 236kg CO2e. Even better would be to prevent waste, reducing the amount of land needed to produce food (thus reducing greenhouse gas emissions) and using the land to grow trees (which sequester carbon dioxide). But coming back to pigs, if say the EU ban on feeding food waste to pigs and restrictions elsewhere were lifted, there would be less demand for soymeal, which is a major driver of deforestation. And there are other policy measures that could significantly reduce food waste. Recently the UK proposed a new bill which would oblige retailers to share the cost of waste caused by suppliers. Tax rebates for donating food and internalising the cost of waste into the reputation of businesses could also help, something which his campaign, Feeding the 5000, aims to do. More on food waste in the UK and how it is being tackled can be found here.

One speaker explained his vision and reality of sustainable agriculture in Egypt, the results of which had the audience gasping. Helmy Abouleish, managing director of SEKEM Egypt, whose father began a project to reclaim desert soil through ecological agriculture in 1977, explained the fundamentality of compost (or the black gold of agriculture). In Egypt where 40% of food is imported not through a lack of food but rather a lack of water, the SEKEM project has used compost to reduce water needs by some 40%. In one project, Sinai, implemented in 2008, compost was used to transform sand dunes into productive agricultural lands, a task that took only 18 months for the first crop of peanuts to be harvested. As Mr Abouleish explained though, it was not just compost alone, this achievement was the result of many factors: partnerships, transparency, outside investment, an integrated value chain, community investment, female empowerment, religious tolerance, and investments in children and education. Mr Abouleish’s message was of the holistic nature of successful sustainable agriculture but most importantly of the success that could be achieved.

As Pavan Sukhdev, leader of The Economics of Ecosystems and Biodiversity and author of Corporation 2020: Transforming Business for Tomorrow’s World,  explained, integrating true cost accounting into the agricultural and food sectors will be a challenge, not least, as he says, because policy is to some extent driven by corporations, whose main aim may be to drive short term profits rather than focusing on creating sustainable, pro-poor farming systems. Ecosystem services are especially important for the poor. In Brazil, Indonesia and India some 89%, 75% and 49%, respectively, of the poor’s GDP is reliant on ecosystem services. Focusing on the needs of the poor and of small-scale farmers is a must. Small farms, numbering about 525 million, cultivate some 60% of the world’s arable land and an increase in their productivity of 10% could generate a 7% reduction in poverty in Africa and 5% in Asia. Implementing sustainable agricultural practices has in the past increased yields on small farms by between 79% (as estimated by Pretty et al, 2006) and 180% (as estimated by FAO, 2006). If this was scaled up we could produce 40% more food.

And so we come back to where we started, we need to help small-scale farmers to intensify their food production but to do so sustainably. While much of the discussions at this conference were illuminating, surprising and largely hopeful there is a significant battle that still needs to be won. At the moment we live in a world where private profits are sought at the expense of public goods and changing this mind-set is going to be a struggle. Right now the true costs of producing our food need to be communicated far and wide, and if the speakers and participants at this conference are anything to go by, this is happening with increasing conviction and scale.

For more information about the conference click here.



  1. Pretty mentions `agroecology’ a couple of times. This blurred concept was a feature of the major IAASTD 2009 report of global agriculture. A search in the text of the five IAASTD sub-Global reports for mentions of agroecology produced interesting results. The results are, for Sub-Saharan Africa, 2; Central and West Asia and North Africa, 2; North America and Europe, 2; East and South Asia and the Pacific, 8; Latin America and the Caribbean, 151; and the final IAASTD Synthesis Report 22 mentions. It seems that the hundreds of authors of the IAASTD report only thought `agroecology’ valuable for Latin America, and not the rest of the world. Pretty should take this into account and not make a generic appeal for the widespread application of agroecology.
    From my own personal experience of over 21 years living in three tropical continents engaged in agricultural research for development it seems that much of what purports to be `agroecology’ has been fully part of national and international agricultural research for many decades. Cherry-picking bits of this research and trying to establish a new discipline (presumably with new funding going to the proponents of `agroecology’) would seem to be little more than a flash-in-the-pan.

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