The 'true cost' of food: German chain adapts prices to climate impact

Fish, meat, cheese and milk would be far more expensive, while dairy alternatives and regional fruit and vegetables would stay the same or become cheaper.

Prices in supermarkets around the world would look very different if they reflected the impact of food products on the environment through methane emissions, groundwater pollution and carbon footprints.

One German supermarket chain, in an effort to raise awareness about the impact of food production, temporarily raised its prices for products that damage the environment, while charging less of a surcharge for food with a minor impact, such as organic goods.

The "True Cost" experiment by the retail chain Penny, which took place in January over the space of a week, saw the cost of cheese and sausages shooting up by 94% - almost doubling the price.

However, researchers accompanying the experiment found that a surprising number of shoppers kept buying the same products they usually buy, even at nearly twice the usual price.

Researchers had expected that the pricing changes would lead to a sharp drop in sales figures for more highly priced meat and dairy products.

And yet these did not fall as steeply as expected, say scientists from the Technical University of Nuremberg and the University of Greifswald, in Germany.

The "true" prices applied to nine selected products and were based on what on calculations of what consumers would actually pay if all the environmental damage caused by its production were taken into account.

One reason that the sales figures did not fall as sharply as expected came down to the fact that the retailer communicated that it was donating the scientifically calculated cost added on top of products.

The supermarket itemized the extra parts of the price, from climate-harming emissions to soil damage, pesticides and groundwater pollution.

After the campaign, the retailer donated the additional revenue - topped up by a company donation of €50,000 ($54,000) - to a climate protection project and to support family farms in the Alps.

Some 84% of customers who bought the products despite the higher price said they were strongly persuaded by the fact that the extra money was being spent on climate projects and helping family farms.

The retailer hailed the campaign as a success, having raised more than €370,000 ($400,000). The pollsters also noted that shoppers became more aware of the true costs of food production.

Environmental activists have long been lobbying for food prices to begin reflecting their real-world impact as part of efforts to make food consumption more sustainable.

Land degradation, water pollution, destruction of ecosystems, biodiversity loss, resource exploitation and climate impacts are among the factors not being reflected in food prices around the world, according to climate organizations like World Wildlife Fund (WWF).

And yet despite the rise of so-called True Cost Accounting campaigns for prices to also reflect social and environmental impact, Germany's Penny retailer is not planning a similar campaign in the near future, the company says.

Although researchers said they were surprised at how little sales figures fell, the sales of the more expensive products did nevertheless fall overall nationwide due to the higher price, according to 85% of the 2,255 people polled.

Sales also fell more in the country's poorer east, while the sales drop was less pronounced in the generally wealthier west and south. These regional differences may be due to income or interest in sustainability, say the researchers who ran the poll.

More than half the chain's consumers (64%) said they were aware of the campaign, the researchers said, and one in two said it made them conscious of the true cost of food. However, almost half (46%) were sceptical and said the campaign was merely marketing and had no positive impact.