FOODCoST researchers involved in supermarket campaign showing real food prices

Introduced in all 2150 German stores of the supermarket chain, this campaign was created with the aim of starting a broader-based discussion about food prices. Throughout the week, PENNY will charge the “true costs” calculated by researchers as the sales price for selected items and donate the difference between the current store price and the true-cost price.

How were these “true costs” determined? That’s where FOODCoST researchers come in. The team led by Prof. Tobias Gaugler and Dr. Amelie Michalke, also including researchers Benjamin Oebel and Lennart Stein, added the impact of supply-chain factors such as soil, climate, water, and health to the final sales price of nine selected private-label products.

Including environmental costs in sales prices

All climate-damaging emissions produced by farms were covered to determine the true impact in the final price, including methane produced as part of cows’ digestive processes and carbon dioxide produced by diesel-powered tractors. Harmful substances that have a negative impact on the quality of groundwater or other water sources and reservoirs were also contemplated – they include nitrogen from fertilizer that disturbs the nutrient balance of water, as well as the impact of pesticides that flow into water.

Additionally, the use of land to produce agricultural goods played a role in the calculation of true costs, considering, for example, the use of natural land areas for farming purposes. Finally, all impacts on health were considered, since not only the consumption of food but also the production of it has an impact on the health of human beings: the use of pesticides releases hazardous substances that can cause health problems, particularly in farmers who come in contact with the chemicals, and the increased production of fine particulate matter during farming practices has a harmful effect on human respiratory systems.

Prof. Gaugler highlights the importance of including such environmental factors in the final price of foods for a more conscious way of consuming: “The true costs, i.e., the pricing of the external ecological costs, provide more tangible and comprehensible information on complex contexts and create transparency. They are designed to make people reflect and maybe consume more consciously”.

Conventional and organic products included

The nine selected items include both conventional and organic dairy products, such as cheese and yogurt, as well as sausages and a vegan meat alternative. “We (…) distinguish between organic and conventional production and, as a rule of thumb, external costs of organic products are lower than conventional ones, due to the more natural production methods in organic farming”, clarifies Dr. Michalke.

The examined organic products were shown to have environmental consequential costs totaling an average of 1,15€ extra, whereas the conventional products totaled an average of 1,57€ added to their conventional sales price. The vegan meat alternative was considered to have the least added environmental consequential cost, with a 14-cent increase to its original price.

This is not the first time PENNY has partnered with the researchers in a campaign. In fact, the concept of “True Costs” had already been presented to the general public in September 2020, with a similar attention-grabbing campaign as part of the opening of the PENNY Sustainability Experience Market in Berlin.

With this newest campaign, the researchers hope to gather more data that will allow them to better characterize consumers’ response to true-cost pricing: “We will receive comprehensive data about the campaign week and about comparable weeks as well as socio-demographic information. In the process, we will certainly gain valuable insights about consumer purchasing behaviour and acceptance of the issue”, said Prof. Gaugler. “We are hoping to generate strong momentum so that we can discuss and view food prices in a different and more just (causer-related) form”, added Dr. Michalke.

More information regarding the “Wahre Kosten”/ “True Costs” campaign can be found on the official campaign website, available here.

About FOODCoST

Every form of production and consumption has an impact on the environment. These hidden consequential environmental costs – or “true costs” – are unavoidably generated along supply chains but are not reflected at all or only to a limited degree in the final sales price of products, services and food.

Considering this, True Cost Accounting (TCA) methods look to include the direct production costs in the price of a food, but also the food’s impact on environmental and social systems, converting this impact into monetary units. TCA methods inform consumers about the real price of their food – not only at the supermarket checkout counter, but also elsewhere, helping them gain an understanding about which products have a long-term impact on the health of the planet.

The FOODCoST project is supporting the transition towards more sustainable food systems by proposing a harmonising TCA methodology to calculate climate, biodiversity, environmental, social and health externalities along the food value chain. The project will provide a set of improved and harmonised analytical instruments for valuation and internalisation of all of these externalities, in order to assess their direct and indirect impact in food prices. Throughout the project, the goal is to co-create solutions and provide guidance to policymakers, businesses, and other actors in redefining the value of food.