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Think Tank on True Cost Accounting, True Value & Fair Pricing
Background & Context
Since its creation in 2012, SOAAN has initiated and successfully completed two major projects:
1. The Best Practice Guideline for Agriculture and Value Chains, which has become one of the Organic Landmarks.
2. The booklet Organic 3.0, out of which IFOAM – Organics International wants to make an Organic 3.0 landmark through a global GA decision.
With that, SOAAN established itself as a leading think tank in the Organic Movement with the purpose of identifying relevant issues, to distill the essence of broad discussions and to develop concept clarity. The results – a synthesis of many think tank efforts - are handed over to IFOAM Organics International for feeding into the democratic decision making processes.
While the above mentioned achievements provide a solid basis for going forward, more specific guidance and tools are needed to help improve practices toward ecological and societal health. The SOAAN Steering Group concluded at its meeting on 24 November 2015 that focusing its think-tank efforts on the Organic 3.0 feature of True Value and Fair Pricing should be its next priority.
There is a broad consensus in the organic movement that we need to account for the real costs of the things we grow and consume including compensation of negative external effects to the society (polluter pays principle). And we need to reward positive external effects such as ecosystem services.
It is not only the organic sector that holds this opinion. There is increasing interest in understanding how production and consumption patterns affect the availability, quality, and future of natural and human capital. Life Cycle Analysis and related True Cost Accounting methodologies have been under development for some years now by a variety of institutions for instance the FAO, UNEP, civil society organizations, research bodies and operators. The organic sector’s vision and objectives have much in common with these efforts and there is opportunity for collaboration and learning.
However, the concepts and their implications are highly complex and extremely diverse depending on context and value chain, and progress is very political. The terminology used is very technical and most people outside a small circle of specialist immediately loose track in discussions. That is a main reason why the organic movement did not manage to advance the topic despite above-mentioned high agreement and relevance.Therefore, a think tank that manages to get concepts and strategies clear, that identifies practicable measure for operators and that is able to explain the concepts in simple language to use in communications is extremely useful and relevant for the advancement of the goals of organic 3.0. Hence, this paper proposes to SOAAN members how to go forward and calls for pledges to support the action.
Overall Goal, Objectives, and Project Strategy
The overarching goal of the project is to support implementation of Organic 3.0 through moving the concept and practice of True Value and Fair Pricing toward becoming an essential organizing principle both within and beyond the organic sector.
The project objective is to propose in a well designed and easy to understand way an implementable strategy for the organic sector to visualize and advocate for true value and fair pricing.
The model and the strategy developed should be scientifically sound and based on widely agreed principles and criteria. It should be broadly understandable, implementable by producers, and easy to catch for consumers and policy makers explaining the facts in a very easy to understand, attractive and convincing way. The model should be tried out in various cases and ready for others to apply. The SOAAN product will published in an attractive booklet.
Strategically, the project will follow three main guidelines:
(i) The scope and content are technically comprehensive to adequately address truly sustainable production and consumption, i.e. accord with the Principles of Organic Agriculture, the Best Practice Guideline, and the intentions of Organic 3.0;
(ii) There is broad stakeholder engagement and proactive discussion of these technical aspects; and
(iii) The practical applications of the model are fit for the purposes of scientists and researchers, policy makers, producers and consumers.
SOAAN will progress in stepwise fashion in order to develop the outputs mentioned above:
Step 1) Review existing science and actions: An overview or survey of the existing science on the topic, including a discussion of the limitations of scope, empirical data, and their reliability and applicability to the organic sector’s understanding of best practice;
Step 2) Actors engagements: Identification in both public and private sectors of the institutions and individuals active on the topic and their respective roles and networks, so that SOAAN and the organic sector then moves to engage them, along with think tanking activities;
Step 3) Think tank: Development of the model, the strategy and promotional/advocacy tools through think tank efforts including piloting cases to gain experience and showcase practicability;
Step 4) Synthesis: Publication of the results, tools and recommendations.
Assuming that steps 1 and 2 yield overview and ways that true costs for defined products and production methods are identified, the project also showcases how the data can be used for advocacy and consumer communication purposes. The project contributes to help increasing transparency that can lead to increased consumer awareness and readiness to pay for value, to political pressure to governments to award positive externalities and apply polluters pay principles, and to private sectors to internalize costs and benefits.
Relevance and Potential Use of Results
An indicator of SOAAN’s success in creating relevant output would be that scientific bodies and operators are able to continue to interface with the new assessment tool(s). At the same time, advocacy and consumer communication organizations get the means and words to explain the issue simply and clearly as well as being able to build the issues into their working content. The project has the further ambition that the model, strategy and tools that SOAAN develops are usable by a variety of value chain interests, such as:
• Enterprises seeking to benchmark their performance and plan ongoing improvements;
• Sector-wide studies of specific practices and/or whole-system approaches to compare their costs and benefits, as a way to promote ongoing improvements across value chains more generally;
• Contribute to more commonly relevant reporting and accountability frameworks, e.g. in terms of metrics and/or indicators;
• Clarify and streamline marketing messages that can affect consumer behavior;
• Influencing institutional and consumer purchasing behaviors to show preference for more sustainable (lower cost) practices;
The experiences gained through practical use of a scientifically vetted system can help reform governance and policy in terms of:
• Revising how subsidies are allotted to producers, and how different practices are taxed across the value chain;
• Influence the evolution of production standards so that they guide producers toward increasingly sustainable practices;
• Refining public education regarding what are best practices of production systems (and accounting for them), and how to make them more widespread;
• Studying the effects different practices and production systems have on society-wide challenges such as public health (and health insurance, whether it is publicly or privately provided), climate change mitigation, job creation and family income, etc.
The project is proposed to take two years beginning in spring 2016 culminating in dissemination activities at Biofach in Nuremberg, Germany in February 2018.