How do we make eco-friendly food cheaper?

The EAT Forum brought together business leaders, scientists and politicians to discuss and inspire ways to transform our food system so it doesn’t harm our health and is not too much of a burden for the environment. While listening to the talks at the event, I thought: sure, maybe not everyone is a perfect nutritionist, but at least in Sweden it’s the high prices of healthy and organic food that makes quality eating a luxury. Why is food with high environmental and negative health impacts cheap? And how this could be changed, so healthy and environmentally conscious foods become affordable?

Is green food consumption more than rich country hype?

Price difference between fullcorn organic and non-organic rice in a Swedish supermarket. Photo by Katja Bessonova.

Looking at supermarket shelves in Sweden, I am thinking of a good, simple, nutritious and not too fancy meal, which is not a hipster super-food and that is something I can cook without spending three hours in the kitchen. I am going for high standards here. I know that it is not allowed to use antibiotics in meat production for growth promotion or disease prevention in Sweden, so I choose locally produced chicken. I also pick up a package of eco-labeled rice and a bag of mixed salad leaves. And here is a EUR 16 bill for me right there. Were I to choose conventional options my bill would have been at least one third as expensive.

Food produced with considerations for environmental and human health are always more expensive than their conventional counterparts. High quality means high price, right? I buy it because I think that I can afford to care for the environment, because I care for my health, but also because it makes a good conversation with my friends and because it makes me feel better about myself. I am a typical representative of the so called green-consumer group, and maybe there aren’t enough of those to create a demand for this produce.

Digging a bit deeper into consumer behavior, according to a global survey by a New York based consultancy Nielsen, there is a trend of healthy eating, which is primarily linked to weight-loss.  Consumers are demanding more “all natural” foods, indicating it is important for them to eat food rich in protein, grains, vitamins and minerals and with less salt, sugar, corn syrup and caffeine. Environmental and socioeconomic concerns play some role too – 35% of the respondents think sustainably sourced, fair-trade and/or organic ingredients are very important for their purchasing decisions, and more than 26% say local ingredients are very desirable.

It’s also interesting to see that the demand for sustainably sourced ingredients is highest in Asia-Pacific which is closely followed by Latin America. North Americans are not showing any particular preference, except a no-no to corn-syrup. In Europe health attributes are rated highest, while African and Middle Eastern consumers are looking for beneficial ingredients, such as added vitamins.

It turns out I am not so unique in my consumer behavior and that nutrition literacy is not just a Stockholm thing. What’s more, unlike one might have expected and if we trust in supply/demand, it is the consumers in the emerging economies who might be the ones to nudge the food industry into sustainability.

All that looks good, but when it comes to money, only a quarter of the respondents are willing to pay a premium for healthy and sustainably produced food. Indeed, eating eco-friendly food has become an attribute of lifestyle and, obviously, one has to pay for production with care and rigor, but it is not that intensive farming systems do not have to pay for fertilizers, pesticides and antibiotics.

Why is all natural healthy food expensive and why conventional is cheap?

In Sweden, sales of organic food products are beating the records; the producers are reporting that the demand for organic food is hard to keep up with. Globally, the land area under cultivation of the organic agriculture is expanding with Australia, Argentina and the US leading the way. The same report, however, states that in 2013 only 1% of the agricultural land globally was cultivated with organic agriculture and that only 11 countries have more that 10% of their agricultural land devoted to organic practice, large agricultural producer countries are not among them. In other words, even though we hear “organic” on every corner, it is far from a takeover.

There are a number of reasons why food produced in harmony with environmental standards is more expensive. According to the Food and Agricultural Organization of the United Nations, organic food costs more because there is simply not enough supply: organic food production is characterized by very diverse enterprises and it is the reason why creating economies of scale is more challenging than in mono-crop industrial farming. It is also a more labor intensive production process, which, in combination with higher costs for animal welfare translates into a need for higher price to compensate for investment. It is also mandatory to segregate organic from non-organic produce, especially for processing and transportation. All of this together contributes to high prices of organic food.

It’s also worth mentioning that there is lack of regulation for certifiers.  There are specific certifiers who target the lowest standard as a good way to make money through camouflaged conventional agriculture. This has led to low trust to organic labels among the consumers.

If we go back in time, we would find that organic used to be the norm. It changed with industrialization of agriculture, powered by subsidies. This was at least partly done as a security measure to prevent famines which preceded the Green-Revolution. However, now food production is a mature industry with high profits which does not pay a fair price for animal welfare or for the impact of the overuse of antibiotics. Neither does it pay for the ecosystem services or for deforestation or for biodiversity loss. These costs are either left out of the equation or paid by other actors.

Food processing with its added value is a significant part of our food system pyramid. It’s a fantastic business model that makes it possible to price a bag of potato chips at twice as much than a kilo of potatoes. There is also real science behind putting just the right amount of sugar and salt in processed foods, so people eat more of it. Sadly, nutritional value is almost entirely lost along the way, but no wonder the industry can afford to sell this stuff for low prices and make a lot of money.

Stating the obvious, doing what needs to be done

Gunhild Stordalen, EAT Initiative and Johan Rockström, SRC at the press conference during EAT 2016. Photo by Katja Bessonova.

Yes, it seems much easier, less time-consuming and more economical to spray pesticides, add fertilizers and pump in antibiotics than creating integrated agroecological farming systems. However, such agricultural production undermines biological resources which are the foundation of this very system. Depletion of natural resources, in its turn, sets a physical limit on further expansion of food production. Strong rainfalls and droughts which are a consequence of human-induced climate change as well as soil degradation, erosion and desertification, caused by human activity, can virtually destroy farms and the land which may have been used to farm in the future.

In fact, it has already become apparent that persistence in the direction of intensive agricultural production is going to backfire in the form of supply chain destruction and market failure and will drive the food prices up. Draught in California and the havoc left after El Nino and the repercussions it had for food prices and food security are only some of the examples. In this scenario, the food can not only become very expensive, its supply can become unreliable and, bearing in mind the globalized food system web, the businesses will lose a lot of money.

So, as pointed out earlier, there is demand for eco-friendly food, but the supply is too low. The obvious thing to do is to try to match them. Introducing environmental and health regulation and taxes can increase the price of the production for conventional agriculture and make the competition fairer. The ‘polluter pays’ principle is the most obvious and is widely-applied in other industries, the payment for ecosystem services is still under development, but there are examples of successful application. There are also promising cases of the sugar tax in the UK and in Mexico and the strict regulation of antibiotics in livestock and animal production in Norway and Sweden.

Regulation will also force businesses to come up with new solutions within the limited setting, stimulating innovation and efficient use of resources. And this has a benefit for business development, even if the environmental and social value is not at the core of its business model. Johan Rockström, the Director of the Stockholm Resilience Centre and the co-founder of the EAT Initiative says “one wish that I have as a scientist is that business representatives become so convinced by the science that they as business leaders would demand to be regulated, that they would see the opportunity and take responsibility. And that would give confidence to political leaders, who are worried about jobs and economic development”.

Re-assessing agricultural subsidies, which in some countries promote wasteful use of resources and make bad food options cheaper, would be another thing to do. The recent WTO commitment to abolish export subsidies is a promising signal.  Instead, the money from subsidies could be redirected to assist eco-friendly small and medium size businesses and build better quality certification system that could be affordable to producers of a smaller size. The money could be spent on linking environmentally conscious produce to the so-called food stamps system and invested into research. From the global development perspective, according the evaluation made by the Brookings Institute, reducing agricultural subsidies in industrialized countries by only 4% would free twice the money as it is in this sector now for investment in global reduction of hunger.

“Supply and demand are not coordinated, it is a systemic failure, and when providing agricultural subsidies politicians are not necessarily thinking what health outcomes these policies would have. So, in order to change the system, and make the best options affordable and available we need integrated policies and collaboration across sectors”, – says Gunhild Stordalen, the founder and the president of the EAT Initiative.

By no means, transforming food systems is much more complicated than re-assessing agricultural subsidies and putting better regulation in place, but these could be the first steps. Making our agriculture low-impact and our diets healthier will not happen overnight and it will come down to moral decisions about doing what’s right, but we all need food and we are all in it.

We need to realize that destroying biological resources is the same as destroying our economy, and it is particularly true for food production. We need to truly realize that eating badly day after day for years has implications for global economy because people with poor health do not work in their full capacity and malnourished brains do not come up with breakthroughs. If we are to make some progress on our ambitions Agenda 2030 we have got to fix the food. Agriculture is also something that we have been doing since the beginning of times, so we actually have some experience and knowledge about it. Hopefully, when I will be looking at the supermarket shelves in 2030, the healthy food produced with care for the environment would be the most natural choice and healthy diet won’t be a privilege.