2
Reality Cheques
Jules Pretty
The Real Costs of Food
When we buy or bake our daily bread, do we ever wonder about how much it
really costs? We like it when our food is cheap, and complain when prices rise.
Indeed, riots over food prices date back at least to Roman times. Governments
have long since intervened to keep food cheap in the shops, and tell us that
policies designed to do exactly this are succeeding. In most industrialized coun-
tries, the proportion of the average household budget spent on food has been
declining in recent decades. Food is getting cheaper relative to other goods, and
many believe that this must benefit everyone as we all need to eat food. But we
have come to believe a damaging myth. Food is not cheap. It only appears cheap
in the shop because we are not encouraged to think of the hidden costs of damage
caused to the environment and human health by certain systems of agricultural
production. Thus we actually pay three times for our food. Once at the till in the
shop, a second time through taxes that are used to subsidize farmers or support
agricultural development, and a third time to clean up the environmental and
health side effects. Food looks cheap because we count these costs elsewhere in
society. As economists put it, the real costs are not internalized in prices.^1
This is not to say that prices in the shop should rise, as this would penalize the
poor over the wealthy. Using taxes to raise money to support agricultural develop-
ment is also potentially progressive, as the rich pay proportionally more in taxes,
and the poor, who spend proportionally more of their budget on food, benefit if
prices stay low. But this idea of fairness falters when set against the massive distor-
tions brought about by modern agricultural systems that additionally impose large
environmental and health costs throughout economies. Other people and institu-
tions pay these costs, and this is both unfair and inefficient. If we were able to add
up the real costs of producing food, we would find that modern industrialized
systems of production perform poorly in comparison with sustainable systems.
This is because we permit cost-shifting – the costs of ill health, lost biodiversity
Reprinted from Pretty J. 2002. Reality Cheques, in Pretty J. Agri-culture. Earthscan, London.