On December 6th 2013, the Sustainable Food Trust convened an international conference on the theme of ‘True Cost Accounting in Food and Farming‘. Bringing together world-leaders from across food, farming, conservation, research, finance and government policy, the conference aimed at investigating why our current economic system makes it more profitable to produce food in ways that damage the environment and human health, instead of rewarding methods of production that deliver benefits. Our Executive Director Adrian de Groot Ruiz presented a case study on the True Price of Coffee at the Sustainable Food Trust’s Conference.
This piece by Adrian de Groot Ruiz originally appeared on the Huffington Post:
Two weeks ago I spoke at the Conference on True Cost Accounting in Food and Farming, organized by the Sustainable Food Trust (and covered in this blog by Ellen Gustafson). With support of amongst others HRH Prince Charles of Wales, it brought together experts around the world, discussing many serious issues. Afterwards, however, one light-hearted question got into my head and kept lingering ever since: “What if the Romans or the Mayans had known about True Prices?” To refresh your memory: a True Price includes all environmental and social external costs such deforestation, soil erosion, CO2 emissions, underpayment, forced labor, land grabbing, etc.
Economic, Social and Ecological Systems: The Mayans
Since the dawn of civilization, successful food production — and with that survival — has depended on an intricate balance between the economic, social and ecological systems. And it is when this balance gets out of whack, it may even contribute to the collapse of civilizations.
For instance, Jared Diamond argues in his book Collapse that overpopulation relative to the carrying capacity of the environment contributed to the collapse of several ancient civilizations such as the Maya of Central America. So, what if a wise Mayan astronomer/agronomist 1500 years ago consulted one of the six maize deities over his cup of hot chocolate with pepper, and heard that he ought to better manage his sophisticated raised fields and terraces, reduce the external costs and realize True Prices? Perhaps they wouldn’t have vanished mysteriously?
How about the Romans?
More speculatively, Joseph Tainter in his Archeology of Overshoot and Collapse and Steve Hallet in Life without Oil argue that deforestation was one of several contributing factors to Rome’s collapse. It is quite certain that Rome also suffered from serious political troubles. But products in Rome certainly did not have a True Price: they saw large scale soil erosion due to the rapid deforestation as the result of population growth and economic development throughout the empire. And slave labor and land conquest was an intrinsic part of the economic system. Food was a critical concern, as the Roman Empire depended, to a large degree, on agriculture and its capacity to feed the many citizens and soldiers. What if a clever Roman emperor had thought 2000 years ago, “hmm, perhaps having high environmental and social costs is not such a good idea,” and gradually dialed back the dependency of the economy on deforestation, slave labor and conquest? Who knows, perhaps it would have survived.
The Here and Now
Our own economic-ecological-social system could use some rebalancing. Soils and forests and seas, on which we depend to generate our food, are being ‘consumed’. In Africa and Asia, the smallholders and hired workers who produce our food often do not earn a living wage and work under harsh conditions. Even forced labor is still a reality in some parts of the world. Now, the Romans nor the Mayans knew about true costs or True Prices. So, how fortunate are we that we do and have the chance to do it better than our ancestors?
Possibility is Key
Of course, even if the Romans would have understood the concept of True Prices, they would probably have been unable to do something with it: the populace would complain ‘don’t raise the price of my spelt-bread!’, the smart senator would have no way to know the True Price of the many products, the patrician surely would have thought an estate without slaves to be uncompetitive and the farmer would not know how to avoid soil erosion.
So we are truly fortunate: we do have the technology to measure, trace and price externalities. We do know how to avoid soil erosion. We do have governments that can set policies in place to incentivize companies to improve their True Prices. We do have the social media in place with which consumers will stimulate their brands to improve their True Prices. We do have an innovative market economy.
Affordable and Sustainable
This means that companies that will thrive are those who succeed in making (food) products that are both affordable and sustainable. In other words, companies who successfully prices until the retail price is the True Price. How can companies do this? In my view, it starts with measuring the external impacts. With that information, companies can improve the performance and efficiency in their operations and supply chains. By providing transparency on their True Prices (not charging it), companies that outperform their peers in terms of True Prices can attract more customers. This provides companies with the means to invest in innovation, which is crucial. Innovation — product, process and supply chain innovation — is the key to transition to sustainable food production without increasing costs. I am quite positive that as such, we will escape the fate of the poor Romans and Mayans, with markets, science, transparency, IT and innovation being a key part of our way out.
Director of True Price, Adrian de Groot Ruiz is listed number 33 (in Dutch) of the “Sustainable Top 100”, a renowned list of Dutch professionals who are active in sustainability. The list is published every year by Dutch national newspaper Trouw.