The true price of chocolate?
Chocolate prices generally do not incorporate many of the environmental and social externalities, costs which are incurred as the main ingredients such as cocoa and sugar move from farms, to factories to consumers. Nor do prices reflect the benefits of non-conventional production and alternative modes of governing supply chains. Most costs occur at farm level, although manufacturing the ingredients and creating end products such as chocolate bars also brings with costs to nature and society. As corporate and consumer social responsibility has risen up business, political and social agendas, business cases are being made to change the status quo. Prices are starting to reflect economic as well as environmental and social costs. Identifying and agreeing how to measure both costs and benefits can aid decisions about who, where and how such externalities are borne.
INTRODUCTION: WHAT'S IN A PRICE?
Prices are generally derived from market transactions, indicating the value of goods and services. A price can be seen as an 'objective' measure of value when markets are competitive, mirroring the values that individuals place on commodities. In reality however, not all products have a price, and if they do, different societal groups perceive value differently. Rudolf Steiner coined the concept of true price in 1905, seeing it as when a person receives, as counter-value for a product they have made, sufficient to satisfy their (and their dependants) whole needs, until they produce a like product (1). The more recent concept of true cost economics addresses the costs and/or benefits of externalities in pricing. Externalities can be direct or indirect to the environment and to people other than the consumer of that product. Often these externalities are hidden, leaving a footprint which has led to economic distortions and inefficiencies, causing and contributing to many of wicked global problems such as biodiversity loss, climate change, pollution, poverty and inequality (2). The assumption behind both true price and true ...