True Cost Accounting of Food Using Farm Level Metrics: A New Framework

Abstract

The application of true cost accounting (TCA) at farm level requires a common framework and metric for measuring, capturing and valuing sustainability. We propose such a framework and farm metric that build on the four capitals—natural, social, human and produced—that are essential for sustainability. The framework is developed by reviewing the scientific and technical literature on various approaches and tools that have been used to measure farm sustainability. We use quantifiable aspects of sustainability in the farm metrics. The farm sustainability metrics comprise four capitals with 11 categories and 33 indicators. These indicators can be assessed using bio-physical assessment, descriptive or quantitative methods. Once this information is compiled for a farm, then some of the categories can be monetised to reflect all the costs and benefits of using state-of-the-art TCA. There is a need to establish benchmarks and standards for each of the four types of capitals and indicators for the comparison of food systems. We believe the use of this comprehensive framework and farm metrics will help to correct several deficiencies of the current food system. We conclude by highlighting the benefits and limitations in the use of farm metrics. Measuring all positive and negative externalities at farm level can shift global food systems towards sustainability.

True cost accounting in agri-food networks: a German case study on informational campaigning and responsible implementation

“…Another important aspect for the general public's acceptance of TCA is that their moral values will not be taken advantage of for profit: it is paramount to emphasize once again that TCA must not be understood as a practice where solely the market prices for final consumers would rise; it is not conceptualized to merely lead to increasing consumer costs (SI). In its best manifestation, its methodological conception entails the Polluter Pays Principle and, where possible, the general avoidance of creating costs in the first place (Holden & Jones, 2021). As expressed by customers and interviewed TCA practitioners alike, suitable areas for application of TCA up to now are mostly focusing on its communicational capacities.…”

“…There previously has been some scientific engagement in the topic of TCA within the assessment of foodstuff. Sandhu et al (2021), for example, present a framework for a TCA along with farm sustainability metrics. Pieper et al (2020) calculate external climate costs of different foods while Michalke et al (2021) assess true food costs based on full life cycle analyses (LCA).…”

The true cost of food waste: Tackling the managerial challenges of the food supply chain

“…Michalke et al (2022) assess the communication properties of TCA and conclude that consumers might be willing to pay the "true" price when this is backed by a legal framework. Sandhu et al (2021) apply TCA to farm level metrics and calculate the social and sustainable impact of farming. Also, Gemmill-Herren et al ( 2021) illustrate the role of public policy in incentivizing the transition to more sustainable food systems.…”

“…In its broadest sense, it refers to the integration of positive and negative impacts of food production systems by means of the systemic coordination of processes at all levels-product, organization, geography and sector-to improve the transparency and accountability of the costs and value provided by all stakeholders in the value chain. Given the importance and urgency of measuring sustainability externalities across the value chain, several frameworks and methodologies have been developed (Sandhu et al, 2021;Jerneck et al, 2011;Spangenberg, 2011). The relatively novel approach of TCA offers one possible methodology for measuring, valuing, and adopting sustainability.…”

Sustainability Science Communication: Case Study of a True Cost Campaign in Germany

“…Additionally, it is important to recognize greenwashing as a possible negative effect of communicating TCA [44,45]. The diverse existing TCA approaches [46][47][48][49], as well as its recognition as a method and communication tool by the Food and Agriculture Organization (FAO) [50], underscore its relevance in the pursuit of sustainability goals [51].…”