True Cost Accounting to Drive “the Biggest Change in Farming Since the Industrial Revolution”

The global population consumes about US$9 trillion of food each year, but the external cost of that food is more than double that—US$19.8 trillion, according to a June 2021 report by the U.N. Food Systems Summit 2021 Scientific Group. These costs are determined using True Cost Accounting (TCA), which measures the food system’s impact on human and environmental health, including diet-related diseases, contributions to water and air pollution, reduced biodiversity, greenhouse gas (GHG) emissions, and more.

On November 7, food systems experts gathered at the UN Climate Change Conference (COP26) SDG7 Pavilion in Glasgow to discuss using investment and TCA as levers for food systems change.

“We’ve designed a system to really deliver on cheap calories, and it does that extremely well,” says Roy Steiner, Senior Vice President for the Food Initiative at The Rockefeller Foundation, “but it has all of these negative consequences.” TCA is starting to create numbers and methodologies around how decision-makers consider food production.

The Rockefeller Foundation itself did a study applying TCA to the U.S. food system with similar findings: the true cost of food is triple what consumers currently spend (US$3.2 trillion).

While a range of factors contributes to this cost discrepancy, panelists agreed that the nature of global subsidies and the way institutions procure food are major drivers.

“The power of institutional purchasing is that it can drive the supply chain to react,” says Steiner.

For example, when the nation’s six largest school districts announced a switch to antibiotic-free chicken in 2014, suddenly the chicken industry had to quickly adjust production practices. Now, the majority of U.S. chicken is antibiotic-free.

The Good Food Purchasing Program uses TCA to provide a metric-based, flexible framework for large institutions such as school systems to direct their buying power toward local economies, environmental sustainability, valued workforce, animal welfare, and nutrition. This means that not only are children better nourished but institutional demand drives powerful systemic change, Steiner says.

In the private sector, TCA can drive roadmaps and best practices as well as benchmarking, which can fast-track good food solutions in a race to the top. Investors and businesses are now understanding the targets they need to reach, says Maria Lettini, Executive Director of the FAIRR Initiative. “It’s not just about mitigating risk, but also identifying opportunities… I see this entire industry not just as part of the problem but being at the forefront of the solution.”

“You cannot as a business only consider part of your impact and report on that, like we often see with any sustainability reporting,” says Pavithra Ram, Impact Navigator at Tony’s Chocolonely, a Dutch chocolate company. “You can’t half fix the climate crisis.”

While more leaders and organizations are working on TCA-driven solutions, there isn’t yet a universal framework to follow. “If governments, banks, and big food companies are going to get involved, we need a more harmonized global framework for measuring the sustainability impacts, and then we can monetize them and give government the chance to redirect subsidies,” says Patrick Holden, Sustainable Food Trust Founder.

“As a farmer, I can say that if you are farming intensively, right now it actually pays better to farm and produce food in ways that are damaging to the environment and public health,” Holden says, though he chooses to farm regeneratively and sustainably.

“Until we have a common language for assessing the impact of farming systems that everybody can recognize, whether a smallholder farmer in Africa or a large farmer in America, we’re not going to break through,” says Holden. “I think we’re on the edge of it now, I think there’s great cause for optimism. We’re just on the threshold of the biggest change in farming since the Industrial Revolution, and we can make it happen if we apply true cost accounting.”

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