Much of our food is too cheap because environmental and social costs are not taken into account when it’s being produced and are not visible to consumers. As a society, we need to start communicating the true price of food in the store, right there in the store shelves. Then it will become clear to consumers that organic, sustainably produced food is ultimately less costly than food produced in the usual manner.
Eosta, the company I founded in 1990, is currently the leading distributor of organic fruits and vegetables in Europe, based in the Netherlands.
Starting in the spring of 2016, the pears, grapes, pineapples, oranges and lemons we sold were displayed with cards that show the true cost of food.
Stores in Sweden, Germany, UK, Belgium, Denmark, Finland, France and the Netherlands are participating. The cards show a flower with six petals showing in euro's the social costs of climate, water, soil, biodiversity, social cohesion and health.
The flower displays both the costs for the organic fruit, as well as for the conventional equivalent, enabling a direct comparison.
This information is critical so consumers can make more informed decisions. Consumers are currently getting an inaccurate picture of the actual cost of food production when the entire social impact is taken into consideration.
Hence, they cannot make a sustainably aware choice when they are shopping.
Take the production of pears in Argentina (many pears in the UK come from Argentina). Artificial fertiliser and pesticides are used in the cultivation of conventional pears in Argentina. These are made with fossil fuels, which lead to carbon dioxide emissions. At the same time, farmers are not required to compost to keep the soil fertile, so less carbon dioxide is stored in the soil.
In 2014, the Food and Agriculture Organization of the UN, in conjunction with FiBL, the Swiss research institute for organic agriculture, developed a method to calculate the hidden costs of food production.
Results from the investigation were included and show how the costs of water use, water pollution, greenhouse gas emissions and other factors could be calculated. In this way, the FAO links the emission of one kilo of greenhouse gas to a specific amount that shows the cost of the resulting global warming.
Using this method, Eosta has calculated that the hidden costs of climate change for an acre of a non-organic pear orchard in Argentina amount to US$1,287 per year (£999).
The hidden water costs connected to pollution by pesticides and water use, for example, total US$307 (£239)per acre. The cost of erosion is estimated at US$476 (£369).
Taxpayers ultimately pay the costs that the government incurs for water purification and irrigation water subsidies, or those costs get pushed into the future when subsequent generations will have to pay them – with interest.
There are also hidden costs in relation to organic pear cultivation in Argentina, but these have turned out to be considerably lower.
Eosta has calculated the hidden costs for the orchard of one of its organic growers, Hugo Sanchez in the Rio Negro Valley.
In total, the organic pears deliver a social advantage of at least US$1,817 (£1417) per acre of orchard – hidden costs for biodiversity and social effects not even included in this figure.
Per kilo, the organic pears deliver an advantage of at least 11 cents per kilo despite a 17% lower production per acre.
Billions in hidden costs
For many years, NGOs and research organisations have been bringing out reports, which demonstrate the hidden costs of the non-organic manner of food production.
In 2005 David Pimentel of Cornell University published the first scientific article about the hidden costs of pesticide use in the US. He estimated this to be US$10 billion, including US$1.1 billion for health and US$2 billion for water pollution.
This “true cost accounting” has taken off in recent years, as corporations wish to be profiled as sustainable.
But one thing has still not taken place anywhere: The figures of the true costs have not been shared with consumers. Companies prefer to keep the results hidden in thick reports from the sustainability department. The underlying calculations and the methods used are secret. As a result, the true cost for consumers is locked inside a producer’s black box.
Thanks to the method developed by the FAO, every organisation can now work out the hidden costs per product, if the CO2 footprint, water footprint, and erosion for the product are known.
With the figures in the shops, consumers will learn quickly that sustainably produced products are not expensive but that food that is not produced organically is too cheap.
In addition, an unjust characteristic of our current economy is revealed: consumers who spend more on sustainable products and thereby save society money must still contribute to shifted costs through the tax system.
By making the hidden costs of food transparent, we can start to change this and create a level playing field.
To be able to determine the true long-term profits and value of a company, the loss in value for the means of production – humans and the planet – should be included.
I expect that in the coming years this will become an integral part of the relationship a business maintains with society – it’s licence to operate responsibly.
*** Volkert Engelsman is founder and general manager of Eosta, an international distributor of fresh organic fruits and vegetables. Eosta launched the True Cost of Food campaign under its trademark name Nature & More.