Green Commerce Blog

The true cost of food 2012-08-24 - No Comments

In order to calculate the full environmental costs of everyday products, Trucost analysed three common food products: breakfast cereals, fruit juice and cheese. The analysis assessed all the stages of production, from farm and orchard to the supermarket’s shelves. The environmental cost was calculated according to carbon impact, water consumption, waste generation and pollution. Carbon was calculated according to social cost and water according to the volume of water required to produce the raw material by gathering data on the location of the production and pricing water accordingly.

Concerning the cost of the products chosen, the results of the analysis show that:
-  The cost of a block of cheese should be 18% higher that the retail price, breakfast cereals should be 16% more expensive and fruit juice 6% higher.
-  Water is the most significant natural capital dependency for all of the products, cheese is the most carbon intensive product and fruit juice the most wasteful.

The analysis was based on an average. This means that there can be significant variations when analyzing specific products and brands. Therefore, Trucost analyzed the variation in water use and scarcity across the top 10 production locations in order to demonstrate the scale of risk and opportunity. The natural cost of water consumption was determined by variables such as the availability of water at the production site or the type of water consumed. For example, an area with scarce supplies and over abstraction will have higher water costs than a site with high rainfall and less competition.  The results of this analysis show that the gap between the lowest and highest cast relative to retail price concerning breakfast cereal was 54%.  For cheese it was 14% and for fruit juice 8%. The decrease rate of natural capital leads to a depletion of the resources we rely on.

The analysis concludes that there is a lack of information within food producers and retailers about the environmental impact of their activity: most businesses have limited knowledge or are little aware about the impact of their production on natural capital. If we want to satisfy consumers demand without destroying the ecosystem, this information should be available. Companies could consider natural capital valuation as a tool in the process of decision making as it brings the opportunity to optimize business strategies in line with natural resource availability.

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