IN 1972, ALEXANDER HAMILTON HELPED FOUND the Society for Establishing Useful Manufactures and constructed the nation’s first industrial park at the Great Falls of New Jersey’s Passaic River. There, a succession of industries utilized the river’s energy to build everything from textiles to steel, Colt pistols to locomotives. These companies capitalized on nature. They depended on energy generated by the Passaic and saved money by dumping waste directly into the river. Externalizing natural resource costs led to lower prices and greater profits, at least for a time.
Those companies have since vanished, but the steps they took to produce cheap goods left a lasting legacy; the river is now one of the most polluted waterways in America, transformed from a symbol of American entrepreneurial spirit into a Superfund site.
Many Americans now buy their food from the same stores that sell them tube socks and lawn chairs, but cheap food comes at a cost, one that’s hidden from most consumers. Helping the public understand the consequences of their purchases is perhaps the greatest obstacle to mending our broken food system. Everything costs money. You pay at the checkout stand or you pay in other, more oblique ways. External costs are hard to see. In fact, sometimes they’re only visible to future generations. Just ask anyone living in central New Jersey.
IN 1833, A BRITISH ECONOMIST NAMED WILLIAM FORSTER LLOYD introduced a principle: if a community shared a common resource like a pasture, and if farmers were motivated by self-interest, they’d prioritize their individual short-term needs over those of the group, grazing their animals as much as possible to get the maximum benefit from this shared resource until no grass remained.
Nearly 150 years later, Dr. Garret Hardin further popularized a concept, which he termed the Tragedy of the Commons, saying, “an unmanaged commons in a world of limited material wealth and unlimited desires inevitably ends in ruin.”
The same can be said for our food system. Basic economics teaches us that supply feeds demand, and that producers grow what consumers want. For the past fifty years, what consumers have wanted is increasingly cheaper food, and the food industry has proven staggeringly efficient in meeting that challenge.
Not long ago, people spent nearly 30% of their disposable incomes on food. Today that number is under 10%. We’ve grown accustomed to markets that efficiently deliver goods at the cheapest price, but what if the “cheap” food we’re buying isn’t really cheap, but instead the trigger for long-term consequences consumers pay for elsewhere: to clean up waterways polluted by factories and agricultural runoff, to pay higher healthcare costs that treat uninsured workers, to pay taxes that support social services for workers who cannot afford to raise their families? When you add these health, social and environmental costs back into the price of cheap food … it suddenly isn’t so cheap after all. “At some point, we have to recognize that what we pay for food at the supermarket counter is not the true cost,” noted Fred Kirschenmann, Distinguished Fellow at the Leopold Center for Sustainable Agriculture. “But determining the true cost of cheap food will be difficult given the food industry’s lack of transparency.”
Dr. Garret Hardin might’ve called this conundrum the Tragedy of the Supermarket.
We live in a world where two economies operate in parallel. The first is extractive. It depletes our natural resources for the sake of production, taking without giving back. Conventional agriculture would be an example of an extractive industry. Farmers who once grew for nutrition now grow for yields, planting commodity crops that depend on fertilizers and pesticides while using practices that deplete topsoil.
The second type of economy is generative. In this economy, people work together to conserve and even generate new resources. They create, restore, and sustain. They build community. “That’s the future we’re moving toward,” Kirschenmann predicts. “We’ll probably go through a painful transition — some of us will continue to insist on using the extractive economy to enhance our own personal wealth — but when the ecosystem services of our natural communities and the social services of our communities can no longer support us, the world is going to become increasingly dysfunctional.”
HOW DID CHICKEN COME TO BE CHEAPER, pound for pound, than bread?
The answer has everything to do with how most chickens are now raised. In fact, the ubiquity of chicken as a relatively inexpensive global source of protein serves as an apt metaphor for the downfall of an industrial food system.
Pasture-raised poultry lead healthy lives with ample time spent outside. When chickens are organic, their feed is grown without the use of synthetic pesticides. Factory-farmed poultry, on the other hand, are raised in intensely crowded conditions, usually inside warehouses. Their feed is made from crops, like corn, that depend on industrial farming practices whose pesticides and fertilizers degrade our biodiversity, soil, and water. Waste from factory-farmed poultry operations often pollute groundwater and waterways and contribute to aquatic dead zones. They can also emit huge amounts of ammonia into the atmosphere, which affects the air we breathe and contributes to climate change.
Meanwhile, crowding poultry into warehouses increases the likelihood of sickness and infection, which often requires the use of preventive antibiotics. When humans eat industrially grown chickens, they can develop infections resistant to these very same antibiotics, which can lead to serious health problems. Our own taxes help support many of these farming practices through agricultural subsidies. When you add up all these hidden costs, cheaper chicken isn’t so cheap after all.
Yet it isn’t so simple to place blame.
Food producers are stuck in an economic system that only rewards companies that provide us food at the cheapest price. Walk down the aisle in any supermarket and you’ll find that this story repeats, from carrots to peas, milk to cheese. Even with breakfast cereal. Our food system has two prices: the one you pay now, and the one society collectively pays later. At some point we need to ask ourselves… Why do we support such a destructive system?
As Patrick Holden, founding director of the UK’s Sustainable Food Trust, notes, “The food we eat is cheap because it’s a commodity grown in a completely rigged economic system. If you grow food in a way which exploits natural capital, diminishes soil fertility, causes emissions that lead to climate change, pulverize biodiversity, and causes rainforest destruction, you don’t pay for any of that damage. However, farmers who deliver positive benefits to health and the environment, create jobs, reduce emissions while building soil carbon, and produce food which coexists with biodiversity get no financial reward.
How can consumers break up such a “rigged” food system? To start, they can become more aware of what things really cost. “Smart” shoppers reward themselves by looking for the best deal. When they see two similar products, they resort to purchasing decisions based on “value”, which they define as the cheapest price. What if “value” was defined not in terms of cost but in terms of human, social, or environmental values that benefit all of us and contribute to the world we want to see? With that in mind, the Sustainable Food Trust has defined six straightforward ways both consumers and producers can help build a more equitable, sustainable food system.
rBST IS A SYNTHETIC GROWTH HORMONE used to increase milk production by dairy cows. A number of well-documented consequences of its use—ranging from increases in clinical mastitis to infertility in dairy cows exposed to these hormones—led a host of nations to ban its use, including Canada, New Zealand, Australia, Japan, and all 27 member countries of the European Union. Today, the US is the lone remaining country in the developed world that still permits its sale.
While the FDA maintains that “no significant difference has been shown between milk derived from rbST-treated and non-rbST-treated cows,” consumers have already learned about rBST’s ill effects. They read news articles, noticed the strange term written on a milk carton, or overheard a conversation at a farmers’ market. In short, consumers became educated, upped their food literacy, and reached their own conclusions about which milk to buy.
Want proof? Scan the refrigerated case at Costco, Safeway, Walmart, Kroger, Publix, and a hundred other supermarkets: you won’t find any milk made using rBST. Consumers learned a simple term, paid a little extra at the cash register, and shifted an entire industry through the power of words.
“For decades consumers walked down the supermarket aisle, encountering brand after brand, only seeking out the ones they were loyal to,” observes Ken Cook, co-founder and president of Environmental Working Group. “What we’re seeing now is a different kind of habit-forming among consumers. They’re starting to ask questions. They don’t necessarily seek out their favorite brand. Instead, they consider other factors: ‘Didn’t I read somewhere that this food might lead to concerns about allergies in my family?’ ‘Didn’t I hear that if I buy this food I’m going to be contributing to pollution?’
When provided with tools and knowledge that demystify the food industry, consumers can make value-based choices that force industries to change their practices, just as we’ve seen with cage-free eggs, antibiotics in meat, and rBST milk.
IN GLOBAL SUPPLY CHAINS, FOOD BUYERS base their purchasing decisions on finding the lowest price. To achieve profits within this model, producers concentrate on higher yields. Transactions in this “high yield / low cost” paradigm mostly happen against the backdrop of opaque (or blind) supply chains; buyers see commodities at low prices while any associated externalities that negatively impact livelihoods, the environment, the welfare of workers, and our climate remain hidden.
If purchasers could identify the various costs associated with cleaning up polluted water, safeguarding the health of food chain workers toiling in dangerous conditions, or simply the economic losses felt by rural communities negatively impacted by the industrialized food system, our food would undeniably cost more, but how much more?
True cost accounting represents an attempt to identify these external costs, then factor them into the price of food to make both food companies and consumers aware of the “long tail” that results from purchasing decisions based on a “high yield / low cost” model. It may also help to explain why a dozen eggs from pasture-raised chickens are closer in true price to a dozen eggs from a factory farm. Until true costs are made visible, getting consumers to pay more for real pastured eggs, organic produce, or grass-fed beef will remain a challenge.
Unfortunately, the cost of data collection required to inform true cost accounting is prohibitive. In the interim, technology can help bridge this knowledge gap by linking otherwise discreet networks across supply chains. For instance, highly sophisticated remote sensing devices can track a wealth of data on food, moving from seed to field to harvest to truck to cold storage to truck to aggregator to truck to processor. This approach, generally referred to as blockchain, integrates data moving through multiple companies and their dedicated technology platforms to make food supply chains traceable. Unfortunately, determining who pays to build this data-integration infrastructure, install and maintain precious sensing devices, and determine who ultimately owns the information that’s captured remains a mystery.
One benefit from assembling value chain awareness tools may be the increased literacy of food purchasers. By surfacing data on a wide range of subjects, from regenerative agriculture to biodiversity, equity to the circular economy, purchasers will be better equipped to ask suppliers the right questions, and reward producers who utilize more sustainable practices.
By participating in a more connected market, producers will be empowered to deliver high quality goods at a fair price. They can therefore support both the communities where food is grown and the global marketplace. Additionally, by becoming a partner in a mutually beneficial value chain, food purchasers can source ingredients that champion a food system aligned with their values – even when ingredients come from halfway around the world.
A connected market is a mindful market.
Produced by Laura Howard-Gayeton
Written, directed, illustrated, and narrated by Douglas Gayeton
Edited and animated by Pier Giorgio Provenzano
The series introduces viewers to the terms and principles that enable them to be more responsible, sustainably-minded consumers. For this series, we’ve worked closely with hundreds of thought leaders from every aspect of our food system to explain the real cost of cheap food, we’ve explored concepts like GMO and Organic, and we have discovered solutions to such challenges as food waste and seafood fraud. By learning these key principles, consumers can do their part to fix our food system.
True Cost Accounting
By considering all the external costs factored out of the cost of food, an economic principle called true cost accounting helps consumers understand the real cost of the food they buy.
The Story of an Egg
Can learning the meaning of a single term actually help change the food system? David Evans and Alexis Koefoed think so. These poultry farmers explain the real story behind such terms as “cage free, “free range” and “pasture raised” so that consumers can make informed decisions when they go to their local supermarket.
Nearly 80% of the antibiotics in this country aren’t used on people. They’re used on animals, animals we eat. And most of them aren’t even sick. Bill and Nicolette Niman share their insights on the growing movement to remove sub-therapeutic antibiotics from American beef.
A Tale of Two Chickens
A short film for the Sustainable Food Trust that explains the real cost of cheap food by explaining what happens when you live in a world where bread is cheaper, by the pound, than chicken. Narrated by Nikki Silvestri.
Hog Farms in Arkansas
What happens when a factory hog farm that produces enough waste as a small town — with none of the waste management infrastructure costs — appears in a rural community in Arkansas?
Agricultural Runoff in Iowa
In 2015, the Des Moines Water Works, Iowa’s largest water utility, filed a lawsuit in federal court against upstream drainage districts in three counties, citing that for years fertilizer runoff on agricultural land had leached into local waterways and polluted the drinking water of nearly 500,000 Des Moines residents. The case was a test. Could a federal law, the Clean Water Act of 1972 and its provisions for safe drinking water (SDWA), be used at the local level to compel farmers to change their farming practices? Would the Environmental Protection Agency join the fight?