True Pricing in Limburg: potential in company catering

The real costs of food production are not adequately expressed in the market price. For example, costs of water purification or environmental damage are largely not incorporated into the selling price, but are indirectly passed on to society. True Cost Accounting (TCA) makes all costs transparent, helping the buyer and consumer to make a better considered choice. The Province of Limburg started a project to gain insight into the market potential of TCA in Limburg.

Determining the real price: a major challenge

It is not so easy to make all the costs transparent. It often concerns long-term effects that are difficult to attribute to a particular activity of a company. What is the impact of that one farm or factory on soil and water quality? How do you measure that within a complex environment where many other factors also influence? And how do you put a price tag on that specific impact? The Province of Limburg started a project to gain more insight into this and into the market potential.

Potential in corporate catering

The Province of Limburg had students of the Hotel Management School Maastricht research the market potential of the TCA principle among companies when it comes to the purchase of company catering. Buyers at 96 Limburg companies with 75 or more employees were questioned about this. The results showed that there is particular potential among companies that place sustainability and a socially responsible purchasing policy above price and convenience. Important preconditions for successful implementation include transparency and practical applicability of the TCA principle and communication about TCA to the end user.

Five Limburg entrepreneurs start with TCA

In addition, Soil & More Impacts has done a project with five Limburg companies to test True Pricing. The approach is to determine a 'fair' price of food and to investigate whether the user appreciates the added value of a sustainably produced Limburg product. Five ambitious entrepreneurs discussed their business and social contribution. They are People's Farm (Maasbree), fruit and hop grower Roger Wouters (Reijmerstok), fruit grower Lion Kniest (Baarlo), bioteler Bioverbeek (Velden) and dairy farm Guido van Hoven (Eckelrade). These leaders not only supply food, they also indirectly provide services for the landscape and society. In doing so, they have an impact on soil fertility, soil water management, CO2 storage and biodiversity in the surrounding area. For the consumer, however, this is not yet visible and therefore cannot yet appreciate the distinction from other companies.

Discussion about price

Soil and More Impacts has made the cost calculations per hectare. If these costs would be calculated back to a price per product you come out quite high, which would reflect an unrealistic 'market' price of vegetables, fruits and milk from Limburg. The calculation method according to the TCA principle is still under development. What is becoming clear is that negative externalities can now be quantified even better than positive ones.
The Province of Limburg is one of the first provinces to start working with this. Commissioner Hubert Mackus of Agriculture wants to explain the importance of this in The Hague and Brussels. Mackus: "The discussion about price must be held by all of us, only then can we really make progress."

Continued speed dating

From the study it has once again become clear that all the costs incurred in producing food are not proportional to the price paid by purchasing organizations and ultimately the consumer. The system is no longer sustainable and will have to change.
As a next step, the Short Chains Working Group will start organizing speed dates between caterers and sustainably producing agricultural entrepreneurs.

Take part

Would you like to know more about these speed dates? Please contact Sanne Minten (sljn.minten@prvlimburg.nl) or Niek Theunissen (niek.theunissen@liof.nl) from the Working Group Short Chains.

Read more about TCA here >