Prince Charles is one of the champions of TruePricing[mfn]https://trueprice.org/consumer/[/mfn] (True Cost Accounting) and organic farming. In the past, he has made explicit statements about the need for True Cost Accounting tools. “We have to find a way of valuing in financial terms the increasing damage done to the earth’s life support systems by our food production. It is the economic invisibility of nature that is the root of the problem. The value of the planet’s ecosystems has not been taken into account fully and consistently in our decision making systems. We should include the true cost in the bottom line of our profit calculation rather than exclude them. Otherwise our capacity to feed the world’s rising population, on the back of an increasingly weakened ecosystem, will lead to conflict and misery on an unimaginable scale.”
What is True Price?
How did it arise? Is it a solution for a more honest and sustainable food system?
The way companies keep their books and define their profits is incomplete, inaccurate and unsustainable. All sorts of costs during the production process affect society, people, animals and nature. They’re called hidden costs. How we currently define profits allows polluters and those who harm earth, people and animals to have a competitive advantage over those who do business in a socially responsible way. True cost ensures that the external costs that companies afflict upon society are factored into the cost price: the polluter pays.
True Price and climate policy are closely related. The concept of True Cost can be seen as the most important instrument for measuring impact and pricing accordingly. An equitable pricing of external costs realizes climate goals. The amount of hidden costs is enormous. The Food&Agriculture Organisation estimates that annual hidden environmental costs total $2,100 billion. Hidden social costs are estimated to be even higher, at $2,700 billion.
It’s a young discipline (state of mind, not age!)
- The notorious report “The Limits to Growth” by the Club of Rome was published in 1972.[mfn]https://www.clubofrome.org/publication/the-limits-to-growth/[/mfn] It examined five major world problems in relation to each other: the growing world population, food production, industrialization, resource depletion and environmental pollution. The alarming conclusion of the report was that if the world continued to consume at the same rate, major problems would arise within a hundred years in terms of population growth and industrial production. The authors were visionaries ahead of their time. The report became the fuel for the emergence of environmental movements worldwide. And from this environmental consciousness, the concept of True Cost was born.
- 1973 saw the publication of a book subtitled: “Economics as if people mattered”: https://en.wikipedia.org/wiki/Small_Is_Beautiful
- In 1988, the United Nations Intergovernmental Panel on Climate Change was born, the IPCC, an institute that conducts research on climate. Slowly, companies, governments, and consumers were realizing that we should treat our environment differently. Al Gore’s 2006 film, An Inconvenient Truth, became a classic and triggered the world to face facts: the way we currently organize and account our economic activity has disastrous consequences for ecology.
- In 2014, another important report, “Food Wastage Foodprint, Full Cost Accounting” was published by the United Nations FAO.[mfn]https://www.fao.org/3/i3991e/i3991e.pdf[/mfn] The principle of Full Cost Accounting, also called True Cost Accounting, was introduced for the first time to a wider audience
- In 2015, the FAO’s second influential report soon appeared. “Natural Capital Impacts on Agriculture.”[mfn]https://www.fao.org/fileadmin/templates/nr/sustainability_pathways/docs/Natural_Capital_Impacts_in_Agriculture_final.pdf[/mfn] The study provided stakeholders with an indication of the true magnitude of the economic and natural capital costs associated with agricultural commodity production, and presented a framework that can be used to measure the net environmental benefits associated with different agricultural management practices. This second report tried to give some practical grounds to the ideas of True Cost. In what way should we measure and value these costs? This exercise is far from complete.
- An important recent report is by the Rockefeller Foundation, published in July 2021 entitled: “True Cost of Food: Measuring what matters to transform the U.S food system.”[mfn]https://www.rockefellerfoundation.org/report/true-cost-of-food-measuring-what-matters-to-transform-the-u-s-food-system/[/mfn] The report quantifies external costs for the first time leading to staggering amounts: ‘In 2019, American consumers spent an estimated $1,1 trillion on food. That price tag includes the cost of producing, processing, retailing, and wholesaling the food we buy and eat. It does not include the cost of healthcare for the millions who fall ill with diet-related diseases. Nor does $1,1 trillion include the present and future costs of the food system’s contributions to water and air pollution, reduced biodiversity, or greenhouse gas emissions, which cause climate change. Take those costs into account and it becomes clear the true cost of the U.S. food system is at least three times as big – $3,2 trillion per year.’
Resolving this doesn’t look appetising!
A 2021 FAO report stated:”‘Some people think that farmers cannot feed the world with agroecology, others contend that it is impossible to feed the world in the future without agroecology’, according to the experts. ‘Today, almost one-third of food produced for human consumption is either lost or wasted, yet different forms of malnutrition coexist in most countries. Globally, around 820 million people are still hungry, about 2 billion are overweight or obese and an estimated 2 billion people suffer from malnutrition caused by micronutrient deficiencies. FAO found that a “business as usual” scenario is likely to lead to significant undernourishment by 2050 even if gross agricultural output increases by 50 percent.”
The good news is during recent years great progress has been made in understanding external costs within food production. The bad news: the models are still complicated. There is little time to adjust our way of calculating and to broaden existing economic profit definitions.
Therefore it’s ‘true reality’ as usual: it’s up to the run-of-‘t-mill punter — you&me — to stolidly lead less courageous behavioural change artists+ politicians+ lobbyists+ big business by our own wee example at the cash register& with good health, into that “brave new world” of win you:win me:win planet — the 3Principles; activities that are functional, adaptable and sustainable at the same, and over, time. Do you have what it takes to put your money where your mouth is; to choose to not feel afflicted, in the words of Paul Brunton, by “the bitterness of anger and the melancholy of unsatisfied desire” — the inevitable result of looking for answers outside my Self and in the world of men?
How can True Pricing help supermarket customers?
- It offers market players insights into their&others’ places in categories’ value chains. On this basis, parties can reduce external costs through innovation (human ingenuity, the highest of challenges).
- It offers more transparency (fair trading practices & level playing field for all beings) to consumers and market players so that they opt for the more sustainable alternative. This leads to an increase in the share of sustainable products and will incentivize market players to decrease external costs.
- It offers consumers or other market parties the opportunity to pay the true price (honesty). With the additional contribution over time, external costs can be reduced.
Let’s face it, status quo & conservancy means building on yesterday’s profit models. In other words expect major push back! But there are tons of resources out there (unspun honest ones too) which we ourselves will have to evaluate either factually or not, regarding the true cost of things. Common sense will get us far; visiting a local farm & asking questions too; most importantly, all this will require us to really train our INTUITION in action.[mfn]ie. guaranteeing you& I are truly NON-“achoosers”…[/mfn]
Also, do have a look at:
source of the majority of what’s directly written/quoted above is https://www.foodinspiration.com/us/the-rise-of-true-cost/