The production and consumption of food generates external costs that are not taken into account in the price calculation. These include environmental degradation, animal suffering, biodiversity loss, negative health effects and social injustice. So who will pay for the consequences of our diet? One solution is the introduction of the true cost of food. The model takes into account the real costs of food production and thus creates a fair, realistic price structure. If we were to calculate prices in this way across the board, local organic vegetables would become cheaper, while meat from factory farms would become much more expensive in reflection of the true costs behind the product. The true price of a product is: market price + environmental costs + social costs = true price
Who calculates the "True Cost of Food"?
The Dutch company True Price is working on a database that lists estimates for the true price of more than 100 food, fashion and other products from around the world.83 In this way, True Price wants to show companies how the environmental and social costs of food production can be priced in. This is intended to be an incentive to make healthy and sustainable food more affordable and profitable for the company itself
In Germany, the discount retailer Penny is leading the way. It has put two price tags on some of its products: one shows the price customers have to pay at the checkout and the other shows the price that takes into account the costs of nitrogen, greenhouse gas emissions, energy and land use changes incurred in manufacturing the product. Calculations by the University of Augsburg are the basis of the labelling system. Gouda should be 88 per cent more expensive than it is and a kilo of minced beef should cost 173 per cent more. The differences are smaller for fruit and vegetables: plus 19 percent for bananas, plus 12 percent for tomatoes, plus 8 percent for apples.
Why do we need the "True Cost of Food"?
Political decisions can also influence manufacturers’ and retailers’ pricing. For example, the state can use taxes, subsidies or other financial instruments to incentivise sustainable practices and prevent environmentally harmful practices. A CO2 tax, for example, would reflect the environmental costs of meat production in its price. Subsidies for local, sustainable agriculture could encourage farmers to adopt more sustainable practices. Labels and clear markings would help consumers to find the products they want quickly and easily.
Introducing a true cost of food has the potential to create sustainable food systems – environmentally friendly, fair, socially just. If the social and environmental costs of food production and consumption are also taken into account, this will have a significant impact on food security, animal welfare and labour law. This would include paying farmers adequately and treating them fairly.
Learn more about the possibilities of a sustainable food system and download the European Food Trends Report 2023 free of charge from our website.