The real price of our groceries

Roughly €3 ($3.50) for half a kilo of meat, €2 for 10 eggs and less than a euro for a liter of milk … international tourists often wonder about the cheap prices in German supermarkets. How can animal products cost so little? 

It's because the true cost of food is hidden, researchers from the University of Augsburg and the University of Greifswald have found. The real price tag would be much higher if the social and ecological impact of production were considered, said Amelie Michalke, a co-author of their report who has been researching external food prices and the true cost of food for the past four years.  

Hidden costs 

Minced meat would cost about three times as much, and the price for milk and gouda cheese would almost double if environmental costs were added, the researchers calculated.  

Michalke and her colleagues looked at four different indicators: land-use change, greenhouse gas emissions, reactive nitrogen and the production's energy demand. Other indicators like the use of pesticides and antibiotics weren't considered for this particular study.   

"The biggest difference that we were able to see between the products was between plant-based and animal-based products, because the animal-based value chains are way more complicated and way longer," Michalke said. "And the highest costs are, of course, for meat products." 

Prices for fruit and vegetables as well as organic produce would not be affected as much, but even they become considerably more pricey: bananas go up 19% (organic 9%), tomatoes and potatoes 12% (organic 5% and 6% respectively) and apples 8% (organic 4%).

Who's to blame? 

Earlier this year, German Agriculture Minister Julia Klöckner blamed discounter supermarkets for their "dumping prices," especially when it comes to meat. She also criticized the double standards of customers, who are often not willing to pay fair prices for their groceries.    

Now one of Germany's discounters, Penny, part of the Rewe supermarket group, has asked the researchers to calculate the true cost of eight of their products. Customers shopping at one of their stores in the Berlin district of Spandau are shown the true cost of these products next to the store's retail price.  

And the result may well be a shock to many of them. The price of meat rises the most, with conventionally farmed products going up 173% and even organic ones more than doubling their cost. Milk also greatly goes up in price, with a 122% rise when coming from a normal dairy and a 69% increase when from an organic source.

Researcher Michalke said the idea behind the experiment is to show that organic produce is actually cheaper in the long run than conventional farming.

"Consumers would be incentivized to buy these products. And then producers would also be incentivized to maybe switch their agricultural practices," she said. 

Few products with true price tag 

However, only eight out of roughly 3,500 products available at the supermarket currently carry that true cost price tag. 

"If we realize the experiment is working, for example because people start buying organic produce more, then as a next step we would have the true costs of more products calculated and roll out the experiment in more branches to increase visibility," Penny spokesperson Andreas Krämer told DW.   

"I believe the trend is that even discount customers want to go shopping with a good conscience and want to know where their food is coming from, how it was produced and whether it harms the environment," he said.  

He also pointed out the goal was not to suddenly raise prices and sell products based on their real costs. "We just want to sensitize our customers. Food has to remain affordable for everyone, so of course we have to think about how we can support people who do not have much leeway in their budget," Krämer said.    

He believes it's a long way until the true cost of food will be implemented.  

Who will foot the bill? 

Michalke believes a CO2 tax would help allocate costs to make all the stakeholders along the value chain pay up — and not just the customers.   

However, she believes educating people is an important first step.   

"People do have to understand that it is not normal to have these cheap prices for food before we can shift the dynamics and shift the system," she said.  

 At the grocery store, some customers have welcomed the initiative.  

Monika Lanzke said she knew food would be a bit more expensive if we cared for our climate, but said she wasn't aware of how huge the difference would be. "But I'd be happy to pay more if this benefits our environment."  

Andrea Leo believes if food were to get more expensive in the future, people may also be less wasteful and buy more consciously. "I come from a large family that didn't have a big budget for food and in those times there weren't all these cheap offers, so we just had meat and animal products on the weekend and that was totally fine," she said.  

Others, like Ingo Jucht, who came to Penny to buy some groceries with his daughter, are worried when they see how much the prices would increase and don't want to change their shopping behavior.  

"I'm a little shocked, because the costs for my shopping would basically triple and that is not nice for an average person. I like the fact that groceries are so cheap in Germany, and I would continue buying the cheaper product if I have the choice," he said.  

High competition fuels price dumping 

Compared to other European countries, Germany's prices are cheaper because of fierce competition between large retailers.  

"We have a comparatively high concentration of supermarkets on the German market and a merciless competition between large retailers, which leads to prices being very low. This competition is further fueled by discounters, where prices play a huge role, which then brings price levels down across the country," Krämer said.  

He admitted that discount supermarkets are part of the problem, but he also believes they can be part of the solution if they give customers more information and alternatives.   

"We don't value food as much as other countries just because it has always been so cheap or it has grown to be so cheap," Michalke said.  

Apart from current research in the Netherlands that's looking into nitrogen emissions from pork production, there isn't a single country in the world that currently factors in ecological and social impacts of food production, according to Michalke. "And that's a conversation that we should be having across the world."