Ever since the ‘green revolution' in the mid-twentieth century policy attention has focused on the importance of agricultural productivity.
Ever since the ‘green revolution' in the mid-twentieth century, when moves towards increasing intensification, specialisation and scale in food production led to huge increases in agricultural output, policy attention has focused on the importance of agricultural productivity.
Today, most global food systems are firmly grounded in the economics of efficiency, output and profitability. The UK’s agri-food system styles itself as highly efficient: capable of producing vast quantities of food for human and animal consumption and able to operate effectively within the dictates of free trade and a globalised market.
Correspondingly, the aspiration to keep the retail price of food low has characterised much of UK food policy development since the 1947 Agriculture Act.
However, a newly published report from the Sustainable Food Trust, The Hidden Cost of UK Food, reveals some startling facts about the UK’s food economy, indicating that the food system is in fact cutting a pretty raw deal for taxpayers.
The policy focus on maximum productivity and minimum prices has, this research indicates, given rise to a distorting economics where the low price of food is achieved only by sleight of hand, and the true societal costs of our food system are ignored.
It finds that for every £1 UK consumers spend on food, additional costs of around £1 are incurred. In addition to the £120 billion spent each year on food by consumers, the UK food system generates additional costs of £120 billion - which are passed on to society in a range of hidden ways.
An extra 50p of every £1 spent on food is associated with damaging impacts of intensive production methods, including environmental pollution, soil degradation, biodiversity loss and some health impacts. Food-related healthcare costs linked to poor diets account for an extra 37p.
A relatively low proportion of the total is attributable to farm support payments, which account for only 2.5p in every hidden £1 spent on food.
These extra costs are paid by taxpayers in a number of ways - through general and local taxation, private healthcare insurance, water charges, and lost income.
The food system, it appears, thrives only because it does not account for the true costs of production. How can such a system self-identify as ‘efficient’?
With diet-related ill-health becoming a global epidemic, rising concern about the degradation of soils worldwide, and emerging evidence increasingly demonstrating the extent of biodiversity loss, global warming and resource depletion, the UK’s agricultural policy mix is clearly not working.
The research places monetary values on the impacts associated with some ‘conventional’ farming methods. For example, the degradation of natural assets such as soils, water and biodiversity, which respectively account for £3.21 billion, £1.49 billion and £12.75 billion of the hidden costs identified in this report. It also costs public health issues such as food contamination, antibiotic resistance and colon cancer.
Huge hidden costs are associated with the emergence of a food processing, distribution and retailing industry which invests heavily in the marketing of highly processed, long shelf-life, nutritionally-poor food products.
Overweight and obesity are shown to account for an extra £3.97 billion, with cardiovascular disease, diabetes, cancer and dental caries accounting for a massive additional £22.94 billion.
Rather than being assimilated into the balance sheets of the food businesses, these costs are passed to society. This has shielded polluting businesses from feeling the financial brunt of damaging activities, meaning that there are relatively few incentives driving a shift to more sustainable practices.
Conversely, more sustainable systems, which play a dual societal role - providing agricultural commodities while delivering public goods - do not see any financial remuneration for the value they add.
This represents a significant market failure. Rather than fuelling investment in sustainable food production systems and techniques, the food economy pulls in the opposite direction, creating conditions where it is cheaper to produce food in an ecologically damaging way than in a way which delivers societal benefits.
The good news, however, is that these problems go hand-in-hand with their solutions. The UK’s forthcoming departure from the EU could offer the opportunity to set new parameters for agricultural policy, stimulating the evolution of a food system which safeguards natural capital, protects the environment and enhances public health.
Equally, it could not. Notwithstanding the practical complications of adopting (or abolishing) the circa 4,500 EU regulations relating to food, farming and public health, the future of agricultural funding and policy is a red-hot issue, susceptible to powerful lobbying and pork-barrel politics.
The Sustainable Food Trust is calling for policy action to reintegrate the hidden costs of the UK food system. Primarily, they call for the introduction of a tax on nitrogen fertiliser, which could be introduced at no net cost to the Treasury, with the revenue raised used to compensate farmers for the additional costs involved in adopting practices to increase soil carbon sequestration.
Clearly, there would need to be an appropriate transition period to enable farmers to develop appropriate investment strategies, and to shield consumers from immediate price hikes. This level of interventionism would potentially be met with resistance from some quarters.
But these kinds of financial incentives are not new. The Green Revolution was made possible by minimum market price support for crops, while inputs were highly subsidized.
Environmental taxes are already in operation in the UK. In 2016 the Exchequer raised £47.6 billion by taxing practices which damage the environment, although only £14.7 billion was ring-fenced for environmental protection.
If the UK is to drive investment in new sustainable technologies, sever the food system’s reliance on carbon intensive inputs, and protect environmental and human health, progressive policy intervention is needed. Applying a true cost accounting approach to agricultural policy post-Brexit would be a good place to start.
Emma Rose is a consultant in food and farming policy, including to the Sustainable Food Trust. She previously led the Alliance to Save our Antibiotics - an EU-wide coalition of health, medical, environmental and animal welfare groups campaigning to stop the overuse of antibiotics in livestock farming.