Modern intensive agriculture comes with many hidden costs - which mean consumers maybe paying twice as much for their food as they think. [Photo: Bigstock]

Why most of us pay twice for our food

22 November, 2017

It is often said that food has never been cheaper, but a new report has found that UK citizens pay twice as much for food as they realise.

According to the report The Hidden Cost of UK Food by the UK’s Sustainable Food Trust,  for each £1 spent on food in the shops, consumers incur extra hidden costs of £1.

In addition to the £120 billion spent annually on food by consumers, the UK food system generates further costs of £120 billion, nearly 30 times higher than previous composite estimates have indicated. These extra costs are not paid by the food businesses that cause them, nor are they included within the retail price of food. Instead they are passed on to society in a range of hidden ways – meaning that UK consumers are, in effect, paying twice for their food.

Paying for environmental damage

What you need to know

» A new report shows that when downstream effects are taken into account, UK citizens are paying twice for their food.

» The extra hidden costs relate to environmental damage and the healthcare costs linked to poor nutrition.

» Studies in the US have shown similar hidden costs linked to modern intensive agriculture.

» The authors of the report suggest these costs should be shifted to the producers and polluters, for instance by taxing them for harmful practices.

The most significant share of this total is made up by the damaging impacts of intensive production methods, including environmental pollution, soil degradation, biodiversity loss and some health impacts. These account for an extra 50p of every £1 spent on food. Food-related healthcare costs, linked to poor diets account for an extra 37p. A high proportion of these extra costs are paid through general and local taxation, water charges, bottle water purchases, private healthcare insurance, and lost income.

Regulatory, administrative and research costs were found to account for a further 2.7p of every £1 spent on food in additional ways, with food imports to the UK accounting for an extra 7.8p for every £1 spent.

A particularly surprising finding was that taxpayers’ subsidies to farmers were found to be equivalent to just 2.5p of every pound spent on food in hidden ways, an unexpectedly low percentage of the total. The authors make the case for the continuation of taxpayers’ subsidy to farmers post-Brexit, but argue that the funds should be used to incentivise more sustainable methods of food production.

Timely information

The Sustainable Food Trust published these findings in London at a briefing in London attended by senior representatives from the food and farming industries, leading scientists, policy-makers and civil society organisations.

Professor Jules Pretty, Professor of Environment and Society at the University of Essex, who spoke at the event, said: “This report is timely and important. It shows that current UK agroecosystems still produce considerable environmental externalities. They impose costs on others. We have known the concerns, and now we have some critical data. Some of the report’s recommendations are new, some long-standing. At their core is the suggestion that redesign of our agricultural and food systems could be a game changer, setting agriculture on a journey towards sustainability, but with a clearer sense of multiple food and environmental targets and much wider social benefits.”

Perverse incentives for business as usual

The report argues that the failure of the UK food economy to account for these hidden costs has given rise to perverse incentives in the food system; where it is more profitable to produce and distribute food in damaging ways, than in ways which deliver environmental and public health benefits. Many food businesses keep their expenditure to a minimum by passing the cost burden of environmentally-damaging practices to the public sector, with taxpayers picking up the tab.

Patrick Holden, CEO of the Sustainable Food Trust, said: “There is a shadow food economy which we all contribute to without realising it. For every £1 we hand over at the till another £1 is quietly taken from us without our consent. The current UK food system thrives only because it does not account for the full costs of production or consumption, which are paid for in hidden ways.

Those who pollute or degrade do not pay for the damage they cause. Conversely, those who farm more sustainably are forced to cover the higher cost of producing food in more beneficial ways. This means there is no business case for producers to adopt more sustainable approaches. The government can and must factor in these hidden costs and benefits in developing post-Brexit food and farming policies.”

The Sustainable Food Trust is calling for decisive policy action to internalise the hidden costs of food, in order to level the playing field between the most damaging food systems and those which are more sustainable.

Not just the UK

Food systems everywhere harbour hidden costs like these. In the US the Union of Concerned Scientists say that pollution, poorer nutrition, environmental degradation and damage to downstream economies are just some of the hidden costs of the modern food system.

Last year, experts who gathered at the True Cost of American Food heard that for every dollar American consumers pay for food, the country is spending up to two dollars to fight diseases linked to poor food production, worker abuse and environmental harms.

“The bill consumers pay at the grocery checkout does not reflect the true cost Americans are actually paying for food,” said Holden. “We have to recognize this before we can do a better job growing our food, educating society to make informed decisions and incentivizing farmers and sustainable practices – and thereby save both lives and money.”

The new report on the true cost of UK food calls on the government to introduce taxes on the most harmful aspects of intensive agriculture, such as the use of nitrogen fertiliser. This would provide revenue to the state, which could be used to pay farmers to adopt food production approaches which have positive rather than negative impacts, such as practices to increase soil carbon sequestration.