Rising Food Prices: The True Cost of Beef Production

The surge in food prices has become a pressing concern for many, particularly as it disproportionately impacts individuals with lower incomes who allocate a larger share of their monthly earnings towards groceries. As food costs climb, more families are forced to tighten their budgets or rely on food banks.

However, an honest discussion around food pricing must also address the unsustainable nature of current food consumption and production practices in both Germany and globally. The prices of meat and dairy products do not reflect the substantial environmental, climate, and health costs associated with high meat consumption. It is anticipated that meat prices will rise significantly, necessitating a fundamental shift in dietary habits.

On a positive note, transforming our dietary choices could not only benefit the climate, environment, and public health but also help stabilize basic food prices and promote greater social equity, provided that policymakers and industry leaders heed the lessons learned.

The agriculture sector's reliance on carbon-intensive practices is a major contributor to this issue. Producing animal-based foods demands significantly more land and resources, such as water, compared to plant-based alternatives. Currently, approximately half of the Earth's arable land is used for agriculture, with a staggering 77% of that dedicated to livestock production, which only provides 18% of the caloric intake for humans.

Globally, food production is responsible for a quarter of all greenhouse gas emissions, equivalent to the emissions produced by all forms of transportation combined, including cars, planes, and trains. As the world's population continues to grow, particularly in developing nations, the burden on our climate and health systems will only increase.

Given these trends, it should come as no surprise that prices for meat and dairy are projected to rise sharply. The current prices consumers pay for meat and dairy in supermarkets do not adequately reflect their true economic and environmental costs. Our current consumption patterns are being financed at the expense of future generations.

According to a study from the Boston Consulting Group, agriculture in Germany generates an annual economic output of EUR21 billion, representing just 0.7% of the country's total economic performance. However, it simultaneously incurs external costs--those not reflected in product pricing--estimated at nearly EUR100 billion each year. This includes EUR90 billion in externalities and an additional EUR10 billion in government subsidies.

From both an economic and ethical standpoint, market principles dictate that prices should encompass the full range of costs associated with production. This approach would promote more efficient and sustainable use of finite resources such as land, nature, labor, and capital. If external costs were incorporated into food pricing, especially for meat, the costs would soar dramatically; beef prices could potentially quintuple, while pork prices might increase two to threefold.