"Ecological and social sustainability means added value".
Constructive Agriculture instead of Depletion of Resources
We are facing an epoch-making challenge in agricultural and food industries. We need a fundamentally different economy based on natural resources.
We have entered a phase in which the risks of inappropriate agriculture are increasingly real. The negative effects on ecology and society are, for example, the increased nitrate levels in drinking water due to the high use of nitrogen fertilizers, the extinction of species due to the introduction of pesticides and nutrients and global warming. The pressure to engage in different economic activities is constantly increasing from the point of view of the real ecological, social and geopolitical situation.
Inappropriate prices, improper incentives
If we were to completely capture the environmental damage and risks of agriculture and food supply, including trade and the processing of agricultural products, economically and include them in our prices, the products that are currently available on the market at low prices would be many times more expensive. In reality, they are only apparently cheap, because all the costs of the resulting damage are not included in the price calculation, but are charged to society and future generations.
But it is not enough just to raise the prices of food; we must fundamentally change the economic approach to business success. Commercial success must be measured by ecological and social sustainability rather than by economic growth with increasing consumption.
Ecologically mindful, economically sound
More organic farming would be a start, because it appears that the ecologically responsible farms are not only the better entrepreneurs in terms of environmental pollution, but also in an economic sense.
Managing ecologically, they avoid losses, damages and risks to the natural assets of their business by integrating ecological and social factors into their operations.
They avoid many of the common consequences of agricultural damage by dispensing with chemical-synthetic fertilisers and plant protection products, by using more extensive and area-based animal husbandry and by promoting biodiversity.
Added expense accounted, value added missing
Sustainable farms also pay attention to the regional origin of resources, to a closed farm organism, to soil fertility and the use of reproducible varieties and accept additional costs for this. This added expense and the associated costs are inadequately reflected in the classic business analysis: the added expense is entered in the profit and loss account, but there is no corresponding entry for the added value created, i.e. for the nutrition quality and the environment. Unfortunately, this added value is only insufficiently reflected in the price of the products.
What sort of future can we look forward to?
In order to solve this problem, those cost factors and services must also be recorded in accounts and balances that have hitherto been ignored by business management and then passed on to the community and future generations. They must be named, evaluated and finally monetarized. This means that sustainable businesses must be positively credited with their services while the risks of damage-causing businesses must be charged to those businesses.
To date, the assets shown in the balance sheet have in no way taken into account the natural resources of the production location, such as the fertility of the soil or the fertility of the crop varieties, even though they form the basis and capital of an agricultural enterprise's economic activity. If a farm takes specific measures to restore soil fertility, the costs incurred are recorded, but the resulting added value for the soil is not credited anywhere.
But it is not only agriculture that must now swiftly assume responsibility for a constructive and climate-friendly economy; trade and consumers also have a duty.
Effective evidence instead of beautiful images
As long as the favourable price is the most important factor, without knowing how it came about, the transition will not succeed. The question must rather be: How was the product manufactured and what impact does it have on the environment and society? Commercial companies must disclose and communicate these phenomena honestly and objectively instead of using beautiful images to create a seductive illusory world.
Ignoring is not the way to achieve the climate goals. The central pivot is the way of doing business, both in practice and in theory. The postulate of constant economic growth has to give way to budgeting with available resources. The economic calculation must match, otherwise the price will end up being unaffordable for everyone and everything.
Christian Hiss, Regionalwert AG (Regional Value PLC) Freiburg