Love bananas? Bananas are the world’s most traded fruit, with an export value of $ 10 billion a year. 10 billion! They are an essential source of income for many thousands of families. But how much do these families actually earn? What is the real price of a banana? And how can you calculate this? True Price has researched the true price of bananas on behalf of Fairtrade International. Results are presented at the Rode Hoed bar in Amsterdam, 19:30 Tuesday 30th May.
A recently published report on palm oil demonstrates how natural and human capital accounting can be used to understand and reduce the environmental and human impact costs of palm oil production. Palm oil is the world’s most popular vegetable oil, widely used in the food, personal care, chemicals and energy sectors. Over 56 million tonnes of palm oil was consumed in 2013 and this is expected to double by 2050. Its popularity is due to palm oil’s high productivity, low market price, and versatility compared to other vegetable oils.
However, the rapid growth of palm oil production in some countries is having serious environmental and social impact costs due to carbon dioxide emissions and air pollution from using fire to clear rainforest and peatland for new plantations, water pollution and harm to health from applying fertilizers and pesticides to crops, methane released from palm oil mill effluent processing facilities, land property rights violations during land expansion and substandard wages and working conditions.
The report was commissioned by TEEB as part of a series of studies for its agriculture and food (TEEBAgriFood) project. True Price and Trucost worked together with TEEB on this report to improve business decision making. Read the full report here.
Read this interesting blog ‘the road to a true price’ by Reinier de Adelhart Toorop and Eise van Maanen from True Price (in Dutch): http://nederlandvoedselland.nl/artikel/op-weg-naar-de-echte-prijs
The content, in short: As far as sustainability policy goes; what is counted, counts. For example: meat tax, flight tax, payment for the use instead of ownership of a car. To be able to achieve this, calculations are necessary. The ‘true price’ can help with this; what would the true price be if all natural and social externalities were taken into account.
What are the societal effects of the food we eat? Now it’s possible to calculate it with a new model made by True Price and Wageningen Economic Research, on behalf of the ministry of Economic Affairs. We held a symposium on January 12th to present the results of a research project that shows positive and negative societal effects of food in a transparent and comparable way.
We can differentiate 37 impact categories for food, divided over six ‘capitals’: financial, produced, intellectual, natural, social and human. With financial, produced and intellectual capital there are mostly positive effects of food, such as employment, contributing to the economy and knowledge production. With natural capital we see mostly negative environment impacts. With social capital we take into account animal welfare for example, and positive and negative health impacts with human capital. The researchers can determine the average effects of food, but also zoom in on specific products. Furthermore, they can show the scores per product in relation to the average.
WUR-researcher Willy Baltussen and director of True Price, Adrian de Groot Ruiz, presented the first results of the model with very Dutch products: potato, green bean, milk and minced meat. The results showed that the societal effects of the potato and the green bean were very similar. Baltussen: “Both (products) deliver average financial positive effects (contribution to the economy, lower natural negative effects (which have little influence on the environment) and a lot of positive effects on health). Milk has more natural negative effects (water, air, climate), more social negative effects (underpayment of farmers due to low prices). The human capital scores of milk are both positive (nutrition) and negative (fat). Minced meat has a similar score to milk.”
“The goal of the model is to give insight to governments and nutrition companies to the positive and negative impacts of nutrition, so that the positive effects can be increased and the negative impacts can be diminished’, says Adrian de Groot Ruiz of True Price. “The outcomes make it possible to have a discussion with stakeholders in the food sector. For example, about underpayment of African cocoa farmers for the production of chocolate, but also about low wages of Dutch dairy- and pig farmers.”
How does the true price of organic agriculture differ from conventional agriculture?
Adrian de Groot Ruiz gave an interview about organic versus conventional agriculture on Business News Radio (in Dutch). You can listen to the whole interview, in response to a statement of Louise Fresco, the President of Wageningen University and Research. (His part starts at 22 minutes) here.
Read a summary of the questions and answers below:
Interview on BNR Duurzaam
Adrian de Groot Ruiz as an expert on this statement:
“Organic agriculture is less productive than conventional agriculture”
Journalist Frederique Mol is the interviewer.
The real costs are not included in the price consumers pay. Who pays for these?
Society pays. For example, when CO2 emissions go up, there will be more floods. We will need to build more dams and the productivity of agriculture will go down. These are costs which are real, but the person enjoying the piece of chocolate does not pay for it.
Which information do you need to judge the statement?
Environment is the most interesting, because the advantage is that organic agriculture is better per hectare. There is less use of pesticides and herbicides, there is less loss of soil quality and less CO2 emissions per hectare. The disadvantage is there is less produce per hectare.
How do you calculate the real price?
Multiply the costs per hectare with efficiency. With the use of pesticides and herbicides, you determine the loss of species and value the different species. With CO2 you take the societal costs. We calculate 110 euros for a ton of CO2.
Does organic agriculture perform better than conventional agriculture?
The most leading studies show that the yield is about 20 percent lower.
That sounds like bad news for organic agriculture. Can we put a price on it?
No, and that is the interesting part. This is what we should measure, but it differs per continent and per product. To be fair, we don’t know. So it’s important that everyone measures and reports their true price. For example, an organic trader, Eosta, reports their costs per hectare, but we would like to see the costs per product and then: may the best farmer win!