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Food systems are about much more than just food. What’s on your plate or in your bowl is important, of course, but food is linked with everything from labor rights and healthcare to social justice and the climate crisis.
But when consumers buy a cluster of tomatoes on the vine or a carton of eggs, the price does not necessarily consider that inter-tangled web of connections. These external impacts of food production—on human health, animal welfare, workers, biodiversity, waterways, or soil—aren’t always reflected in the market price.
The movement to calculate, value, recognize, and pay down these costs is known as True Cost Accounting (TCA), and we’ve talked about it before. But in a landmark report just published, the U.N. Food and Agriculture Organization took on the massive task of analyzing virtually the entire world’s food system through the lens of TCA.
This report estimates that the global quantified hidden costs of agrifood systems is approximately US$12.7 trillion.
It’s almost like a debt the food system owes to the world—a debt that, so far, it’s not making payments on.
This report is phase one of a two-part assessment of the global food system using TCA. This analysis, which spanned 154 countries, aims to understand the huge impact of these unaccounted-for costs. The second phase of the research, which will be published next year, will highlight specific sectors and value chains to give policymakers a more detailed roadmap.
To help us break down that US$12.7 trillion number—and understand what it means—Food Tank reached out to some smart folks in the food system.
“This report from the FAO is a startling call to action,” Lauren Baker, the Deputy Director of the Global Alliance for the Future of Food, told Food Tank. “The return on investment is high and exponential. True cost accounting is a decision-making approach to create healthy, resilient food systems fit for the future.”
The report’s TCA estimate includes environmental hidden costs from GHG and nitrogen emissions, water use and land-use change; health hidden costs from losses in productivity due to unhealthy dietary patterns; and social hidden costs from poverty and productivity losses associated with undernourishment. There are still several factors, however, that were excluded. The cultural value of food, for example, is hugely important but difficult to monetize. Other costs associated with pesticide exposure, antimicrobial resistance, food safety, and land degradation were omitted because of gaps in the data across countries.
A majority—73 percent—of these costs are associated with non-communicable diseases linked with particular dietary patterns. This doesn’t mean we can ignore environmental concerns: The foods that are better for our bodies tend to be better for the planet, too.
Joao Campari, the Global Food Practice Leader at WWF, phrased it well. He told Food Tank: “It is striking that nearly three quarters of all hidden costs are related to consumption and diet. This too-often-ignored element of food systems transformation needs urgent attention and underscores the importance of countries taking a systemic approach. We can only halt and reverse nature loss, and build healthy and resilient food supplies, by transforming our food systems from farm to fork and bait to plate.”
True cost accounting not only reveals these hidden costs, but it can also be used to help us understand the right actions we can take to transform food and agriculture systems for the better. We can more successfully compare which interventions are the most effective and sustainable.
It looks at first like a scary-high dollar amount—but, it shows how much good we can do for the world by embracing TCA.
The benefits of understanding and accounting for these externalities mean better health, more delicious food, higher standards of animal welfare and worker well-being, and even less expensive food.
Yes, seriously: Less expensive food. These external costs should not be passed on to consumers. This was an important takeaway from The Rockefeller Foundation’s own report on TCA in 2021.
“We think most of (our) report is about redirecting the way money gets spent by governments and private companies, versus increasing the cost of food at grocery stores,” Roy Steiner, Senior Vice President for the Food Initiative at The Rockefeller Foundation, told Food Tank a couple years ago.
The responsibility is on food producers—the entities creating the contexts for these expensive environmental and health challenges—to pay the true cost. This is called the polluter pays principle, said Patrick Holden, a farmer and the founder of the Sustainable Food Trust.
“The absence of the application of the ‘polluter pays’ principle has created a disastrous situation,” Holden told Food Tank. Currently, he said, without accountability, “if you produce food in an unsustainable, extractive way, you can make more profit than if you are farming regeneratively, addressing climate change, restoring nature and improving public health.”
Instead, he said, our food system should be “ensuring that those who cause damage are financially accountable for their negative impacts, and hopefully rewarding farmers who rebuild lost soil carbon, restore biodiversity and improve public health.”
What’s so important about TCA is that it both quantifies the scope of these externalities and helps us see the path forward.
“FAO’s new report makes clear that True Cost Accounting is the tool we need to solve national and global challenges,” Jenn Yates, the director of the global network TCA Accelerator, told Food Tank. “By looking at a broad array of impacts, TCA assessments illuminate priority actions government and business leaders can take to maximize food systems’ value for people and nature.”
She applauded FAO for devoting such a significant focus to true cost accounting.
“This is the bold action we need to mainstream this approach and secure a more resilient and nourishing food supply for future generations,” she said.
I think she’s spot-on here—true cost accounting needs to become a mainstream, constant part of food system analysis, and we need to have a full understanding of these externalities if we want to be able to make any sort of successful transformations to the food system.
TCA is about both accounting and accountability, and, as analysis from the Scientific Group of the UN Food Systems Summit shows, it’s in everybody’s best interest.
Businesses can use TCA to minimize and even reverse some of their negative impacts, and to strengthen their value chains. In financial institutions, TCA can aid risk assessment and impact-investing. Policymakers can incorporate the data into legislation and budgeting at local, national, or regional levels—already taking place in countries from Brazil to India to Kenya to Thailand. Farmers can have better information to fine-tune their agricultural practices, and consumers can become more aware of the broader impacts of their purchases.
We’ve written a lot about true cost accounting at Food Tank, and our friends at the Sustainable Food Trust have some really accessible explainers and videos. I hope you’ll take time to learn more about TCA yourself, and then share what you learn with others. And with me—I’m at email@example.com, and I’m always around to chat and connect Food Tankers with resources.
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Photo courtesy of Mael Balland, Unsplash