The Transformative Value of True Cost Accounting in Agrifood Systems

By Marta Sas — May 30, 2025

4 MIN READ

The True Cost Accounting approach provides a transformative perspective for understanding the actual value and impact of economic activities, particularly within agrifood systems. Unlike traditional accounting methods, TCA aims to uncover the hidden costs and benefits of food production and consumption, encompassing economic, environmental, and social dimensions. TCA draws from the four capitals framework of the UNEP’s TEEBAgriFood initiative—natural, human, social, and produced capital—offering a comprehensive view of value creation and loss.

In the words of Jenn Yates, True Cost Accounting director, True Cost Accounting is a proven strategy for systems transformation. By expanding the lens beyond conventional metrics, TCA helps uncover both the hidden costs and hidden benefits of our food systems, enabling better decisions for people and the planet.

Uncovering the Hidden Costs of Cheap Food

While lower food prices are often championed as a strategy to alleviate hunger and improve social policies, beneath these low retail prices there is a complex landscape of environmental degradation, public health crises, social inequality, and long-term economic harm. According to the European Commission publication The True Cost and True Price of Food “The current externalities were estimated to be almost double (19.8 trillion USD) the current total global food consumption (9 trillion USD). (…) This means that food is roughly a third cheaper than it would be if these externalities were included in market pricing.”

The TCA aims to develop a methodology for evaluating the complete impacts of food systems, encompassing both beneficial and detrimental effects that are not reflected in market prices. The goal is to encourage changes in policies and practices to promote sustainability.

Enhancing Resilience in Olive Oil Production

The resilience of the agrifood supply chain depends on the capacity to anticipate, absorb, and recover from disruptions. A comprehensive evaluation of costs and benefits can contribute to enhancing food system resilience through the implementation of regenerative agricultural practices, the prioritization of local sourcing, and the diversification of supply chains. By recognizing the value of ecosystem services and social capital, it is possible to establish systems that are less dependent on susceptible monocultures and linear supply chains.

Moreover, incorporating the identification and quantification of environmental, social, and governance (ESG) risks, through a TCA-based approach, into procurement and investment strategies strengthens risk management and facilitates proactive mitigation efforts.

In the context of olive oil production, TCA offers guidance for directing investment towards high-quality, sustainably produced oils that are less susceptible to commodity price fluctuations. Among the challenges faced by olive oil production, including climate change, soil degradation, water scarcity, and market volatility, TCA can be a valuable tool for assessing the true costs and benefits of production.

A recent study in MPDI Sustainability demonstrates that incorporating Life Cycle Assessments into True Cost Accounting (TCA) frameworks allows for the quantification and monetization of positive and negative externalities linked to oil production and consumption, including olive oil. This integration helps analyze trade-offs and supports informed decision-making that favors long-term sustainability over immediate profits.

Conclusion

True Cost Accounting is far more than an accounting method, it is a strategic framework that redefines how value is understood and created across the agrifood system. By embedding full-cost transparency into supply chain decision-making, TCA equips stakeholders with the insight needed to foster resilient, risk-aware, and future-ready food systems.

True Cost Accounting is a key tool for making agrifood systems more resilient. By revealing and incorporating hidden environmental and social costs, it encourages practices that restore ecosystems, support rural communities, and improve economic stability. Ultimately, global collaboration is indispensable for accelerating the scale-up of these solutions, safeguarding the long-term sustainability and global competitiveness of agricultural products in a rapidly evolving world.

 


Marta Sas

Marta Sas Castilleja

Marta is a Sustainability Specialist at Certified Origins, where she leads initiatives to enhance environmental and social responsibility throughout the extra virgin olive oil (EVOO) and agri-food value chain, with a strong focus on amplifying positive impact at every stage.

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