Lithuanian farmers will soon complain much louder: What our food costs - the real price of a cookie

Lithuanian farmers complain that it is too dry or too wet, that the EU demands nature protection, but gives too little money for it. Realistically arranging food quality, production and delivery will cost much more than you think. 

“The food system must become sustainable. That means making hidden costs visible. What they are made of - and why companies should consider them out of self-interest. 

 

Climate change, extinction of species, over- and undernourishment, inequality - these are just the most well-known human problems for which the world food system is partly responsible. Its hidden cost to man and nature is $ 19.8 trillion annually, more than twice the total financial value of food consumption in the world. 

 

The Scientific Advisory Board of the United Nations Nutrition Summit, which came to an end on Friday, estimates this to be the case. A large part of the greenhouse gases emitted can be traced back to the food supply. In order to achieve the 17 sustainability goals, UN Secretary General António Guterres believes it is essential to reorganize the food system over the next ten years. Scientists see potential in this to come significantly closer to all 17 goals. The World Economic Council for Sustainable Development (WBCSD) therefore calls on business leaders to take a more holistic view of their business. In their decisions, they should consider the “true value of food” (TVoF).

 

The hidden costs and benefits - economists speak of externalities - do not adequately reflect the final price of food. These include effects on the environment, health and social conditions. 

 

For example, a biscuit (see graphic) costs 0.55 dollars for the end customer in the supermarket. This includes production costs of 33 cents. If you take the hidden costs into account, however, according to the council, there are 56 cents on top - the total costs increase to 89 cents. The hidden costs are made up of environmental pollution, health costs and socio-economic costs, which result primarily from poor working conditions.

In the example, the latter are mainly worn by workers on cocoa plantations in Ivory Coast. In addition, there may be other socio-economic costs that arise if the biscuits are not eaten, but end up as waste. Health care costs are borne by social security and taxpayers. They arise here from consumers who are becoming overweight and from the polluted air effects that production and delivery contribute to. The environmental impact - for this example, CO2 emissions and water consumption have been taken into account - affects society as a whole.

Quick calls for boycotts

In this example, the hidden costs make up 63 percent of the total costs. According to the Council, the hidden costs of a portion of oatmeal with apple and peach pieces, on the other hand, only make up 35 percent of the total costs. The end customer price for this example is also 55 cents. However, only 19 cents of hidden costs are added to production costs of 36 cents: 12 cents in socio-economic costs, 3 cents at the expense of the environment, 4 cents in the health sector. The fact that the hidden costs of the examples mentioned differ so greatly is mainly due to three factors: The crops grown for the ingredients need different amounts of water, the nutritional value of the muesli is more beneficial for health, and the working conditions in the production process are significantly better because of that all ingredients come from Europe.

The World Economic Council sees global regulations that reduce the hidden costs of nutrition as making the most sense. Nevertheless, he calls on companies to orientate themselves towards it now. One reason for this is that more and more consumers are asking for sustainably produced food, according to the organization. In addition, investments in the food tech industry and new regulations, such as CO2 levies or sugar taxes, are changing the competitive environment. In addition, negative reports about products and companies are spread quickly, and boycotts are called for more frequently than before.

In order to align the business with the “True Value of Food”, the Council refers to materials from the “Donut of Social and Planetary Boundaries Framework” of the Capitals Coalition, the Value Balancing Alliance and the Natural Capital Toolkit. It is important to be at the forefront of the movement with strong partners instead of just reacting to changes."