Bill Totten's Weblog

Wednesday, April 11, 2007

The Real Costs of Modern Farming

Pollution of water, erosion of soil and loss of natural habitat, caused by chemical agriculture, cost the Earth.

by Jules Pretty

issue 205

Recent decades have seen the growing globalization of the world food system. Annual trade flows in the 1990s amounted to some US$4,000 billion, of which the food and drink market was $250 billion. Between sixty and ninety percent of all wheat, maize and rice is now marketed by just six transnational companies. By the late 1990s, the top ten agrochemical companies accounted for eighty percent of world sales.

Changes in the food system have brought considerable cost to the environment and human health. Such problems have been widely documented over recent decades, but it is only recently that efforts to put a monetary cost on them have begun to emerge. These costs are telling us something fundamentally important about the real costs of modern food and farming.

Many farmers depend upon public finance to survive. Each year, this amounts to about GBP 3 billion in the UK. It has taken fifty years of subsidies for farming to get to this point. It's hardly surprising that policies tend to support one particular method of farming - one that relies upon modern technologies to produce food.

At the University of Essex, we recently completed the first national study of the environmental and health impacts of modern farming. We looked at what are called "externalities" - the costs imposed by an activity that are borne by others. These costs are not part of the prices paid by producers or consumers. And when such externalities are not included in prices, they distort the market. They encourage activities that are costly to society even if the private benefits to farmers are substantial.

A heavy lorry that damages a bridge, or pollutes the atmosphere, externalizes some of its costs - and others pay for them. Similarly, a pesticide used to control a pest imposes costs on others if it leaks away from fields to contaminate drinking water. The types of externality encountered in the agricultural sector have four distinct features:

1. their costs are often neglected;

2. they often occur with a time lag;

3. they often damage groups whose interests are not represented; and

4. the identity of the producer of the externality is not always known.

Our study, published in the journal Agricultural Systems, sought to put a cost on these externalities in the UK. Although we recognized that there are some positive side-effects of conventional agriculture, we concentrated on the negative ones - in particular the environmental and health costs. See Table at .

Two types of damage cost were estimated:

1. the treatment or prevention costs incurred to clean up the environment and restore human health to comply with legislation or to return these to an undamaged state and

2. the administration costs incurred by public agencies for monitoring environmental, food and health implications.

We conservatively estimate that the total costs are GBP 2.34 billion for 1996 alone in the UK. Significant costs arise from contamination of drinking water with pesticides (GBP 120 million per year), nitrate (GBP 16 million), Cryptosporidium (GBP 23 million) and phosphate and soil (GBP 55 million), from damage to wildlife, habitats, hedgerows and drystone walls (GBP 124 million), from emissions of gases (GBP 1,113 million), from soil erosion and organic carbon losses (GBP 96 million), from food poisoning (GBP 169 million), and from BSE (GBP 607 million).

Water is an interesting case. 25 million kilograms of pesticides are used each year in farming - and some of these get into water. It costs water companies GBP 120 million each year to remove pesticides - not completely, but to a level stipulated in law as acceptable. Water companies do not pay this cost - they pass it on to those who pay water bills. This represents a hidden subsidy to those who pollute.

Some of the costs are straightforward to measure, others more difficult. How do we know about the effects of the greenhouse gases methane, nitrous oxide and carbon dioxide produced by farming? Economists have been able to put a GBP per tonne cost on these gases based on agreed estimates about the effects of future climate change. We have been very conservative, using lower estimates of costs. But still the costs are great.

Each of these costs should provoke questions about how they could be reduced or even removed. Take carbon for example. British soils have on average diminished in organic matter content by about a half in the past twenty years. Effectively, farmers have been converting the capital of soil fertility into the income of yields. This cannot go on forever. Worse is the conversion of the carbon in organic matter to carbon dioxide. However, farmers who farm to increase organic matter are creating a "positive externality". Every kilogram of carbon locked up in soil organic matter is one less in the atmosphere. Carbon sequestration may indeed become a key source of money for farmers. A group of Iowan farmers have just been paid several million dollars by Canadian utility companies to use their soils as a carbon sink. And soils with organic matter are better for farmers too.

There are still many gaps in the analysis. So, the true costs are likely to be higher. Some costs are known to be substantial underestimates (for example acute and chronic pesticide poisoning of humans; monitoring costs; eutrophication of reservoirs; restoration of all hedgerow losses). Other costs are limited to certain geographic areas of the UK (water company returns are for England and Wales only). Some costs cannot be calculated (for example dredging to maintain navigable water; flood defences; marine eutrophication; poisoning of domestic pets). In addition, treatment and prevention costs may be underestimates of the true costs. Similarly, the true costs of biodiversity loss are significantly underestimated. In this study we have included neither the cost of research nor public subsidy for farming, nor are the many environmental and social costs associated with getting food from the farm gate to consumers' plates.

So we actually pay three times for our food - once, over the counter; twice, through our taxes, which are used largely to support one type of farming; and thrice, to clean up the mess caused by this method.

Where does this leave us in policy terms? Already, we are beginning to think about the next round of Common Agricultural Policy reform in 2006. Is it conceivable that we could evolve sustainable agriculture systems that maximize their production of positive externalities - goods that the public enjoys and is willing to pay for - as well as minimizing the environmental and health costs?

The answer is clearly yes. We know enough about sustainable methods of farming to be confident. Now with these cost estimates, we can begin to identify priorities. But we need cost-effective ways of proceeding. Organic farming has substantially lower negative externalities than conventional farming. We roughly estimate these to be no more than a third - perhaps GBP 60 to GBP 70 per hectare. Organic farming also has higher positive externalities - the other side of the equation.

Equally, local food systems are a way forward. Jack Kloppenberg coined the term "foodshed". Foodsheds are defined as "self-reliant, locally or regionally based food systems comprised of diversified farms using sustainable practices to supply fresher, more nutritious foodstuffs to small-scale processors and consumers to whom producers are linked by the bonds of community as well as economy".

Foodsheds tend to do two things:

1. They shorten the chain from production to consumption - so eliminating some of the negative transport externalities;

2. They favour the production of positive externalities over negative ones, leading to the accumulation of renewable assets throughout the food system.

There are several practical ways to help such foodsheds to emerge:

* Enhance the direct links between producers and consumers - such as through farm shops, farmers' markets, community-supported agriculture, veg-box schemes and other forms of direct selling;

* Support local food shops - developing the interdependence of small retailers, producers and consumers creates a dense food web that provides more employment, good quality food and wider social benefits;

* Build community co-operatives as alternative structures for both producers and consumers - including the Japanese community sanchoku groups or Spanish co-operatives, such as the large Mondragon Co-operativa or smaller La Verde Oliva (a network of worker co-operatives and family-owned organic farms in Andalucia);

* Enhance home and urban food production - there are 300,000 allotments in the UK, covering some 12,000 hectares, yielding 215,000 tonnes of fresh produce every year, contributing some GBP 561 million in value to household consumption.

The substantial external costs of the modern agricultural and food system pose great challenges for policy makers, farmers, food companies and scientists. A range of policy reforms could do much to internalize some of these costs and benefits in prices. The challenge is to develop more sustainable farm practices that produce enough food as well as maximize the positive external benefits of agriculture. Attention needs to be paid to the social and institutional processes that encourage farmers to work and learn together. Policy integration is vital. In recent years, there have been an increasing number of policies seeking to link agriculture with more environmentally-sensitive management. These need to be strengthened.

In Europe, most stakeholders agree that the Common Agricultural Policy should be further reformed by decoupling payments from farm productivity. A policy that integrates support for farming together with rural development and environment could create new jobs, protect natural resources and support rural communities. Such reforms need to be supplemented with policy on regionalized food systems.


Jules Pretty teaches at the University of Essex in Colchester. He is the author of The Living Land (Earthscan, 1998) and a government adviser. He will teach a course at Schumacher College (tel: 01803 865934) in November 2001.

Bill Totten


Post a Comment

<< Home