For food, read energy

25^th November 2015

The issues surrounding energy are now well understood. We have growing needs yet realise that our historical energy sources are not as cheap – or abundant – as first appeared. This has lead to a re-pricing of energy and the development of new technologies, including for energy preservation and storage. Facilitated by such technologies, more individuals and communities are now meeting what energy needs they can locally.

The parallels with food production are striking. Just as the past century saw power stations displace stoves and mills, so industrial food production displaced local farmers and smallholders. Globalisation has driven down costs for end-users while introducing both growing import dependency and greater volatility (both markets peaked during the first decade of this century before dropping off again this decade). But with demand only set to grow – from population growth if nothing else – no-one is expecting prices to remain low forever. Combined with a growing focus on security of supply and environmental resources, this is causing many to question whether ‘business as usual’ can meet future demand.

The differing options for energy are now the subject of daily debate – but what will they be for food? While some politicians worry about security of supply, the public tends to focus on consumer choice in areas such as organic and non-GM produce, health labelling, and animal welfare. As with energy, the market is happy to provide such ‘ethical’ alternatives at a premium, while regulation also exists to curb the worst excesses of the food industry. But both regulation and premium products are marginal improvements. Neither goes to the heart of food sustainability in the way that energy market reform is intended to for energy production.

I want to suggest a more fundamental approach to food production, also borrowed from energy reform; that of externality costs. The transformation of energy markets has meant pricing in ‘externalities’ which had previously been passed onto the environment or governments, such as carbon emissions and nuclear clean-up costs. The result has been highly revealing of the true cost of different energy sources (notably the enormous cost of Hinkley Point C, which for the first time includes spent fuel costs). Yet while the energy sector – and indeed many manufacturers – have steadily begun to absorb externality costs, industrial farming has remained stubbornly resistant.

And many of its externalities are truly massive. The flooding of the Somerset Levels two years ago was – or should have been – one high-profile example. Although much blame was attached to the Environment Agency for ‘re-wilding’ the watercourses, the volume of water entering those channels was partially caused by increased soil erosion from industrial farming (particularly maize). Part of the bill from flooding should rightly be counted as an externalised cost of those cheap maize crops – and probably one that far exceeded the value of the harvests themselves. An arguably even greater externality cost was the amount of soil irreplaceably lost to the sea. There could not be a greater example of robbing the future to pay for the present – spending our ‘natural capital’ rather than living off the interest – than letting soil wash into the sea to keep prices low.

Even where soil is retained, the exhaustion of nutrients represents a further waste of natural capital. By contrast, acreage placed under natural methods such as crop rotation or strip farming retain such natural assets, while also minimising the externality costs of agricultural chemicals (including biodiversity loss and polluted water systems). Recent studies have shown that the ‘yield gap’ between organic and non-organic methods is lower than once thought – currently standing at 20% for some crops, while others already enjoy parity. Yet when externalities and the long-term erosion of natural capital are taken into account, that 20% yield gap may instead start to look like a net gain.

But the externalities of the food industry are not simply environmental and financial. The prophylactic use of antibiotics in intensive pig farming is leading to the world-wide growth of deadly, antibiotic-resistant bacteria. Available data from the US indicates 23,000 people died from such infections in 2013 alone. If genetic mutations occur in bacteria which are more widely present, it will mean diseases which are now easily treatable once more becoming deadly – leading some to talk of a ‘post-antibiotic era’ for medicine. That would be a catastrophic outcome which, once again, far outweighs the value of the initial savings.

At the same time, cost of living – including food poverty – is climbing the political agenda. As a result, balancing the ‘true cost’ of food production against demand and affordability is one of the most complex issues we face. Yet ensuring enough food for future generations will not simply rely on increased regulation. Like energy, it will require a sophisticated combination of new market mechanisms and new technology – including production, packaging, distribution and recycling – supported by intelligent incentives and penalties. The aim should be to create something akin to a ‘smart grid’ for food, aiming – like the energy grid – to encourage local production, better demand matching, lower waste, and the preservation of natural capital.

However food also has one significant advantage over energy. A home heated from renewable sources is not immediately distinguishable from a traditionally heated one. But the benefits and joys of fresh, locally produced food are immediate – connecting local communities, reducing commercial traffic, and improving both health and family life. Meanwhile the country as a whole stands to gain from both increased resilience and increased natural capital across areas ranging from healthier soil to more beautiful landscapes.