1. True Cost Accounting in Food
and Agricultural Policy
Oxford Real Farming Conference 2014

2. True cost accounting in food and farming – 3 UK
examples of the approximate negative costs

Nitrogen fertiliser
£2.9 bn - £15 bn pa

3. True cost accounting in food and farming – 3 UK
examples of the approximate negative costs

Nitrogen fertiliser
£2.9 bn - £15 bn pa

Antibiotic resistance £300 m to £1.1bn pa

4. True cost accounting in food and farming – 3 UK
examples of the approximate negative costs

Nitrogen fertiliser
£2.9 bn - £15 bn pa

Antibiotic resistance
£300 m - £1.1bn pa

Total loss of pollinators
£3.6 bn - £5 bn? pa

5. Example 11 nitrogen fertiliser – costs and
benefits
Ammonium nitrate fertiliser - current price approximately £270 per tonne and
contains 34.5% N
Therefore each kg N fertiliser:

1. All
costs approximately 78p (plus costs of handling and applying)
examples in this presentation are illustrative, and intended only to demonstrate the likely scale of the externalities. The figures are
based on published research, but do not take into account all the factors that need to be considered. Individually most of these
would only make modest differences to the but cumulatively their impact could be more significant. The data to
undertake all the necessary calculations is not readily available at the present time.

6. Example 1 nitrogen fertiliser – costs and
benefits
Each kg N fertiliser:


costs approximately 78p
benefits farmers in the UK and other Northern European countries by £2.50
(less in Southern European countries)
To a wheat grower therefore, using 180 kg N/ha the nitrogen brings a net
benefit of approximately £290/ha (£450 - £160) - £140 for the fertiliser, £20
for handling and spreading (but actual benefit fluctuates with price of
farmgate price of crops as wll as the price of fertiliser.

7. Example 1 nitrogen fertiliser – costs and
benefits
Each kg nitrogen fertiliser:

costs approximately - 78p

benefits a farmer by - £2.50

but costs taxpayers and society - £2.95 - £15.222

However nitrogen fertiliser is easy for farmers to use, greatly increases food
production and keeps down the price of food
2. These calculations do not fully take into account the nitrogen in imported livestock feed or natural deposition
of nitrogen on farmland, part of which comes from transport and industry emissions, part from previous
agricultural emissions and part from natural processes

8. Nitrogen Fertiliser –true costs (c.75% associated
with human health)

GHGs during production, transport & use

Ammonia : production (emissions) & use (volatilisation)

Ozone in the air we breath (from NO, NO2 and N2O) and Particulate Matter
from HN3, NO and NO2

Damage to ozone layer by nitrous oxide

Nitrates in drinking water above 25 mg/l increasing colon cancer incidence

Eutrophication of rivers & coastal zone enrichment

Biodiversity loss

9. Example 1 – Nitrogen Fertiliser - sources
Cost of associated damage in EU27 £34bn - £175bn/yr3,4
(Total costs of reactive nitrogen in EU27: 70-320 billion Euros, c.70% from agriculture, 30%
from power generation and transport)
3. Emissions of NO and NO2 account for a high proportion of the health costs. An arbitrary 50:50 (instead
of 70:30) split has been used for these, to reflect the high emissions from transport.
Examples of negative costs of nitrogen fertiliser use:
Wheat -180 kg/ha- cost £531 - £2,739/ha/yr
Dairy – 260 kg/ha- cost £767 - £3,957/ha/yr
4. Data reworked from - The European Nitrogen Assessment 2011 http://www.nine-esf.org/ENA
EEA 2011 – Revealing the costs of air pollution in Europe

10. Example 2 – Antimicrobial resistance –
the contribution of farming

Current cost to UK estimated £10 billion (c. £5 bn NHS, c. £5 bn societal
costs)5

Farm use contributes to AMR E. coli (c. 50%?), ESBL E. coli (c. 20%?) (MDR
salmonella and campylobacter (more than 50%), MRSA (1-4% but
increasing), VRE and others (unknown. Possible spread of ESBL resistance in
UTIs (from gut bacteria) to gonorrhoea would create major health crisis

Overall maybe 10% of AMR costs i.e. £1 billion pa, maybe more
5. The economic burden of antimicrobial resistance: Why it is more serious than
current studies suggest. Report for the NHS, Smith R and Coast J 2013

11. AMR – the future

Last new major class of antibiotic 1987

Peak antibiotics about 1954!

We currently have the best antibiotics we are ever likely to have

c.40 new antibiotics under development, 5 in phase III trials, but only one
new Gram-negative antibiotic and this only active against one infection

Heading towards breakdown of healthcare systems as we know them : no
safe joint replacements, Caesareans, cancer treatment or organ transplants.
Likely costs to society unknown and hard to imagine

12. Pollinators

Multiple causes of decline:
 Monocultures and biodiversity loss – lack of nectar continuity
 Increasing levels of disease in honey bees due to importation of diseases
and resistance to treatments
 Use of neonicotinoids in food crops attractive to pollinators – now
possibly ended? But other insecticides and some fungicides also possibly
implicated
 Climate change and wet summers
 Maybe also high use of sugar and excessive transport?

13. Pollinators true costs

Globally - pollination worth £128 billion6

UK - worth

Some evidence already of sub-optimal yields in apples and field beans. Fruit
nuts and stimulants very dependent on pollinators. In UK pollinators
£430 million7
However, if we were to lose all or most of our pollinators, costs increase by £3
billion or more (£1.5 billion for hand pollination, £1.5 billion for loss or partial
loss of 90% of wild plants), plus unknown costs due to food shortages.
6.Economic valuation of the vulnerability of world agriculture confronted by pollinator decline,
Gallai et al. 2009; 7. UK National Ecosystem Assessment 2011

14. Policy issues
Defra advises using maximum profitability, based on fertiliser price and
commodity price as the sole criterion for deciding application rates, and
recommends levels up to 360kg/ha for dairy farms with high-yielding cows and
very high stocking rates (4 cows/ha), 370kg/ha for intensively grazed dairy
steers and heifer and some lowland suckler herds and 240 for high stocking
rates on extensive hill and moor land8
8. Defra 2011, Fertiliser Manual RB209

15. Policy Instruments

Most scientists and policy-makers focusing only on:
 Reducing meat consumption, energy, transport and water use
 Using technical fixes to increase efficiency of fertiliser use9
Needs an EU-wide nitrogen tax, calculated to reflect the true-costs
to society of nitrogen usage, part of the income could be used to
provide additional support to those on low incomes.
Fertiliser prices partly kept low by imports from countries where
production of nitrogen is subsidised. It is also claimed that only 3.5
billion people would be on the planet today without nitrogen
fertiliser.
9. The European Nitrogen Assessment www.nine-esf.org/ena

16. Role of the SFT

Our task is to:





explain to consumers the true price they are already paying, and the even greater
price they will pay, if action is not taken to reduce reactive nitrogen emissions
point out the finite nature of natural resources and the issues associated with
nitrogen fertiliser, antibiotics, pollinators and other negative externalities
promote greater use of legumes as a benign and durable alternative to fertiliser,
better welfare systems in relation to antibiotic use and diverse rotations in relation
to pollinators
demonstrate the multiple benefits of mixed and integrated farming systems
bring different groups of scientists and policy-makers together to consider these
issues in a broader context than they usually do when working in silos

17. Please send comments on this presentation
to
Richard Young
Policy Director
Sustainable Food Trust
richard@sustainablefoodtrust.org
www.sustainablefoodtrust.org