True Cost Accounting for Food

Abstract

This book explains how True Cost Accounting is an effective tool that we can use to address the pervasive imbalance in our food system.Calls are coming from all quarters that the food system is broken and needs a radical transformation. A system that feeds many yet continues to create both extreme hunger and diet-related diseases, and one that has significant environmental impacts, is not serving the world adequately. This volume argues that True Cost Accounting in our food system can create a framework for a systemic shift. What sounds on the surface like a practice relegated to accountants is ultimately a call for a new lens on the valuation of food and a new relationship with the food that we eat, starting with the reform of a system out of balance. From the true cost of corn, and water, to incentives for soil health, the chapters economically compare conventional and regenerative, more equitable farming practices in food system structures, including taking an unflinching look at the true cost of cheap labour. Overall, this volume points towards the potential for our food system to be more human-centred than profit-centered and one that has a more respectful relationship to the planet. It sets forth a path forward based on True Cost Accounting for food. This path seeks to fix our current food metrics, in policy and in practice, by applying a holistic lens that evaluates the actual costs and benefits of different food systems, and the impacts and dependencies between natural systems, human systems, and agriculture and food systems.This volume is essential reading for professionals and policymakers involved in developing and reforming the food system, as well as students and scholars working on food policy, food systems, and sustainability.

Full‐cost accounting and redefining the cost of food: Implications for agricultural economics research

“…The first step to address externalities is to expose them and redefine the value of food. This can be realized by true cost accounting (TCA), a tool for the systemic measurement and valuation of environmental, social, health, and economic costs and benefits to facilitate sustainable choices by governments and food system stakeholders (Baker et al., 2020; Gemmill‐Herren et al., 2021). TCA can serve different purposes for different actors: Governments can integrate TCA into local, national, or regional policy and budgeting. Businesses can use these structured assessments to minimize negative impacts and enhance positive benefits across value chains. Financial institutions can use TCA for reporting, impact investment, and risk assessment. Farmers can use TCA as a means to account for the costs and benefits of their agricultural practices. Consumers can be users of TCA—for instance, when food is labeled accordingly—to become aware of the environmental and social externalities embedded in the food they buy. …”

“…The first step to address externalities is to expose them and redefine the value of food. This can be realized by true cost accounting (TCA), a tool for the systemic measurement and valuation of environmental, social, health, and economic costs and benefits to facilitate sustainable choices by governments and food system stakeholders (Baker et al, 2020;Gemmill-Herren et al, 2021). TCA can serve different purposes for different actors:…”

“…Problems of externalities created in food systems include preventing societies from achieving their full potential by distorting the information about the value of food conveyed by market prices (Gemmill‐Herren et al., 2021). As the financial returns of companies are based on expected profits, the financial value of investments does not reflect the actual societal benefit that these investments may have (Serafeim et al., 2019).…”

Un‐yielding: Evidence for the agriculture transformation we need

“…140 A significant portion of agriculture's positive and negative externalities are not reflected in agricultural products' prices, and indeed may even exceed their current market value. [62][63][64] This suggests there may be a role for supply management 65 and higher farm gate prices, which have mixed effects but are likely to reduce global poverty in the economic long run. 66 Other mechanisms include replacing traditional subsidies for agricultural inputs with green payments, especially to small farmers, and providing additional economic pathways out of poverty that are not restricted to agriculture, such as through payments for ecosystem services programs (although the evidence base on the effectiveness of such programs, particularly their effects on equity and justice, is still limited).…”

“…There are many proposed mechanisms that seek to tackle the sustainability crisis through re‐examining and redesigning the economics, and the inherent inequities of the economics, driving the crisis 140 . A significant portion of agriculture's positive and negative externalities are not reflected in agricultural products’ prices, and indeed may even exceed their current market value 62‐64 . This suggests there may be a role for supply management 65 and higher farm gate prices, which have mixed effects but are likely to reduce global poverty in the economic long run 66 .…”