Finding the ‘True Value’ of Food Can Drive Innovation Across Sectors

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The best social sector solutions are the ones that address multiple challenges at once. Food systems transformation touches on many different global crises: climate, health, nutrition, economic self-determination, even the pandemic. However, for decades, the cooperatives, social entrepreneurs, small farmers, and government agencies working to build sustainable, healthy food systems have been doing so with one hand tied behind their backs. We are competing in a skewed marketplace with misguided incentives, to produce the most possible food at the cheapest price, regardless of the impacts on climate, health, workers’ rights, or equitable distribution.  

“True Cost Accounting” (TCA) helps to level the playing field, as well as serving as proof of concept that food systems transformation can accelerate progress across a host of global challenges. True Cost Accounting is a decision-making approach that captures the positive and negative impacts that food systems have on the economy, the environment, and society. TCA has its origins in ecological economics, which emerged in the 1970s, and expands traditional economic accounting systems of aiming to identify externalities, including cost-benefit analysis.

With growing awareness about the need to measure and count the hidden costs of our food systems in full, it has become possible to calculate the true cost and value of food, a policy and business-making approach that could scale impact and drive innovation across diverse sectors. What we’ve learned from 10 years working to develop TCA, and from our assessment of food systems initiatives around the world, is that transformation is already happening, and True Cost Accounting is a tool to make it visible.

You Can’t Count What You Don’t Measure

Industrial food systems are some of the largest drivers of climate change, habitat destruction, biodiversity loss, displacement of Indigenous peoples, disease, and the double burden of malnutrition. In many parts of the world, food production directly drives conflict, poverty, and mistreatment of workers. But as “costs,” such externalities are mostly unaccounted for. A recent report by The Rockefeller Foundation showed that the health and climate consequences of the American food system cost three times as much as the food itself. A paper prepared by the UNFSS scientific committee estimated that the current externalities of food systems are almost double ($19.8 trillion) the current total value of global food consumption ($9 trillion).

Governments, businesses, and world economic and governing bodies are only beginning to track these costs. The most commonly used metrics for food production around the world are still volume and price: yield per acre and price per unit. You can’t count what you don’t measure: If the negative externalities of unsustainable, unhealthy, and industrial or ultra-processed foods are never considered in decision-making, innovators and changemakers can never compete. The same old approaches will continue to be put forward. Poor outcomes will continue to be incentivized while better, less damaging practices will be unable to thrive.

A Tool That Tracks Change 

We need frameworks to help us think more systemically. A fuller understanding of the connections between humans, the environment, and food systems—as well as the multiplier effect these connections have on health, well-being, social justice, and livelihoods—can be harnessed for ever-more positive impacts across food systems and sustainability as a whole. True Cost Accounting provides that holistic understanding of the relationships between agriculture, food, the environment, and human well-being. Already in use by a plethora of countries, organizations, and businesses, TCA provides a systemic approach to assess, measure, and value all externalities—the positive and negative impacts—of food systems.

The results are already promising. Over an eight-month period, our organizations undertook an exhaustive study in collaboration with six diverse food systems actors from around the world, applying a true cost accounting evaluation to each initiative. The report, True Value: Revealing the Positive Impacts of Food Systems Transformation, focused on diverse qualitative data for each organization. All six were pushed beyond their usual evaluative approaches and data and encouraged to think about their work in more holistic and systematic ways than ever before. From Lagos, Zambia, the Philippines, Malawi, India, and the Americas—spanning farmer collaboratives, food banks, government agencies, researchers, and social enterprise—the report showed significant benefits: reduced health costs due to lower disease burdens as a consequence of reduced pesticide use; improved crop yields as a result of reintroducing traditional knowledge and agroecological farming practices; and increased local food security thanks to the sharing of Indigenous seed varieties through seed banks, and helping farmers to adapt to changing climates and gain financial independence by transitioning away from synthetic fertilizers.

These impacts do not register in a market defined by yield per acre and price per unit. Only by using a “true value” lens could we see them.

The story of these impacts is not abstract.  percent: that’s the increased food quantity for participating farmers in India’s Community Managed Natural Farming Initiative, which has helped 86 percent of growers improve living conditions and cut emissions by 55 percent. $426,656,078: the total value of sustainable farming practices undertaken by COMACO, a social enterprise in Zambia that supports the local community to adopt agroforestry, put an end to poaching, and address food insecurity. True Cost Accounting allowed the Lagos Food Bank to better understand the impact of its volunteer program. It helped MASIPAG in the Philippines better track and understand the positive effects of collective decision-making and local ownership in farming communities.

These more systemic measures of progress are central to the success of these initiatives, and to their social and economic impact. But if you never ask the question, you never get the answer.

Debating True Value

This approach has been the subject of debate, perhaps not surprisingly, given the sharp break it represents from the wholly profit-based model by which we normally measure and understand “success” in agriculture and food systems. Big agriculture performs poorly on social, environmental, and human metrics. For example, in the recent SSIR essay “Heroic Accounting,” Andrew A. King and Kenneth P. Pucker levied a number of concerns about true cost and true value accounting methods. But their wide-ranging scepticism overlooks the extent to which “True Cost” and related methods are already enabling social enterprises to grow and scale. And we would assert that characterizing TCA as “heroic” is misleading: TCA is grounded in advancing integrated, systems-based, representative, participatory, and equitable decision-making.

For a start, King and Pucker claim that “impact accounting” requires centralized decision-making, laborious estimation, and ultimately will remain unverifiable. But the United Nations Development Programme’s TEEBAgriFood Evaluation Framework is already in use in more than 80 countries across the world, dispelling these concerns. And there are many other frameworks and tools available in the pipeline to support this kind of “impact accounting,” from indexes to open data sources. Harmonization work by a diverse set of advocates, stakeholders, and communities of practice is already underway to collaboratively create clear guidance, standardization, and metrics, TCA can function like any other business or policymaking tool.

More concerning is the argument—both in “Heroic Accounting” and in a recent Nature piece—that TCA “dilutes the economic power of individual choice,” that "centralizing choice," as put it, weakens the ability of consumer choice to shape the market.

In response, we would argue that individual choice over food is not a universal phenomenon. Hunger and malnutrition do not come down to choice, but to economic power and access. People often don’t have enough money to buy healthy food, while food environments are the cultural and socio-economic contexts that shape how accessible, affordable, desirable, and convenient this food is. Furthermore, today’s accounting obscures the climate impact of industrial food production, and their hidden impacts on global health. If companies disclose their climate- and nature-related impacts, consumers, investors, and decision makers can understand the full impact of a company, unedited, and decide for themselves.

One leading company already lets its customers do just this. Eosta, one of Europe’s largest importers, packers, and distributors of sustainable, organic, and fair-trade fruits and vegetables, uses a sustainability evaluation tool to monitor the performance of growers against ecological and social indicators. In 2017, Eosta launched a “True Cost of Food” campaign, which assessed and attached a price tag to compare conventional farming versus organic farming. “Buy organic apples and save 27 sick days (per hectare and year),” stated a cheeky campaign ad in which a grocery consumer was shown reaching for an apple from a hospital bed. When the pandemic hit, they instituted a “living wage” policy recognizing how important this was to resilience across their supply chains.

The campaign has been a hit, growing the company’s market share and brand positioning, and educating millions of consumers.

Which Way Forward?

Valuing these true costs of food systems so that we can mitigate harmful externalities and amplify positive externalities is no small feat. It is a significant break with the industrial status quo, and, as such, it’s something those with vested interests in the current way of doing business will challenge. But it is essential if we are to progress on climate, food, health, and other issues of global significance.

As an opportunity to integrate economic, natural, social, and human accounting into a unified framework, True Cost Accounting offers a powerful path forward to the social enterprise sector. New frameworks for assessing the cost, value, or impact of food systems are proliferating, as a product of the inadequacy of the old ways of measuring progress. However, not all approaches are created equal.

The most significant issue in fully implementing True Cost Accounting is achieving a global consensus about the needs and standards for application. Governments have so far been virtually absent from the TCA landscape. Although they have agreed on frameworks like the UN Sustainable Development Goals for national development, moving towards the Goals remains trapped within old-fashioned institutional structures.

Progress Is Happening Now

In September, the first-ever UN Food Systems Summit yielded a global coalition—not yet a commitment, but a start—to carry forward True Cost Accounting on a global scale. In Germany, a study by the Federal Ministry for the Environment determined that TCA increased support for agroecology and sustainable agriculture. In Sweden, a TEEB study resulted in the government adopting a bill on a Swedish strategy on strengthening biodiversity and ecosystem services, which the parliament adopted in 2014.

These are inspiring, important, and necessary signs of progress. And in 2020-21, the pandemic showed our collective capacity both to change and to take urgent action. Our research shows that food systems initiatives around the world are central to that action, simultaneously feeding and uplifting communities and enhancing economic and social resilience. Their work, and their positive impact counts, and feeds the world.

Read more stories by Alexander Müller & Ruth Richardson.