When you talk to folks who haven’t yet switched to organic, one of their most oft-stated reasons is the price. “I just can’t afford to buy organic food,” they’ll say. “It’s too expensive.”
And we get it – we really do. When you’re feeding a large family – or even just yourself – switching from conventional to organic food can be a real adjustment. Sometimes, choosing organic over conventional can be the difference between going on vacation, buying a new pair of shoes, or even going to the movies in a given month.
But a new study from sustainability consultant Soil & More might change that perception: this company worked with accounting firm EY and organic fruit specialist Eosta to take a look at the true cost of food, and the results show that while the price tag of conventional may make it look cheaper in stores, the actual price of organics is far less – not just when it comes to agriculture and the environment, but also with regard to consumer health.
“Intensive farming – from monoculture to the large-scale use of pesticides – has led to a depletion of natural capital,” explains a news release from Eosta, “while current production methods continue to damage social capital, i.e. the welfare of communities.”
The UN Food and Agriculture Organization estimates that the hidden negative impact of food production on natural and social capital amounts to over $5 trillion every year.
There’s More to the Price of Organic Food than Meets the Eye
The study, entitled “True Cost Accounting in Food, Farming, and Finance,” looked at nine different products from all over the world, including apples and pears from Argentina, citrus from South America and Africa, and pineapple from Costa Rica. Accountants calculated the true cost of the food, including the cost of water pollution, pesticide exposure, greenhouse gas emissions, and soil erosion, with data provided by the European Food and Safety Authority, Danish scientist Peter Fantke, and the EcoInvent database as well as the World Health Organization.
“We have developed a practical dashboard for small and medium-sized enterprises in the food, farming, and finance sectors that monetizes the hidden impacts of food production on people and plants,” explains Volkert Engelsman, CEO of Eosta.
While conventional often seems cheaper in stores, once these other factors were introduced, organic produce was the less pricey option – in every single comparison made. Specific results were often astounding, with a Argentinian apples demonstrating the largest true price difference: organic apples had a 19 Euro cents/kilo advantage over conventional.
So What’s Next for True Cost Accounting?
This is, of course, an interesting social experiment, but the folks at Soil & More and Eosta hope to take it further.
“We need True Cost Accounting to put a conscience in our economy,” says Alexis van Erp, Web and Sustainability Coordinator at Eosta. “In our current economy, companies are rewarded if they keep the cost of negative impacts on natural and social capital out of the books and out of sight of the consumer and deflect it to other places and future generations.
“On the other hand, companies who have a more positive impact are not rewarded by banks, but rather punished, because they seem to have higher costs, though they actually don’t; they just don’t externalize them.”
This new way of looking at things brings the negative impacts of conventional agriculture into the limelight, presenting it more clearly to consumers.
“Natural capital and social capital are basically invisible to accountants,” says van Erp. “True Cost Accounting is a way to make the impacts on natural and social capital visible, a way to take the hidden costs of production into account.”
Industry experts and European governments have applauded these new methods, with HRH Prince Charles congratulating Eosta on the groundbreaking new report at the Harmony in Food and Farming Conference held in mid-July. The Prince has long supported such a tack, noting that the current obsession with the bottom line is not the most advantageous way to approach the cost of food production. The Prince first called for the inclusion of the “true cost” of products in profit calculations in December 2013.
“The financial market needs to adopt True Cost Accounting and reward producers who have a positive effect on planet and people and create a level playing field,” says van Erp. “Otherwise it will continue forcing us to slide down on a path of ugly exploitation, and think about ridiculous escapes such as fleeing off to Mars; while in fact we are perfectly capable of creating a more beautiful earth, enhancing nature, and creating an environment we love to live in. It’s possible, as many organic and biodynamic farms are showing us.”
Nature & More has already put True Cost information about specific products on its customer website, and some supermarkets began displaying information cards showing the true price of food in the UK last year.
Engelsman notes that the next step will be to take this pilot program and apply it more broadly: an ambitious task, but one that seems unlikely to pose too much of a challenge, as companies are already “lining up to apply this method to their own businesses.”
“True Cost Accounting changes the definition of profit and tackles perverse incentives,” said Peter Bakker, President of the World Business Council for Sustainable Development, in a press release. “I predict that it will seriously affect the valuation of companies and their access to capital within a few years.”
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