True Cost Accounting and Food Policy with Paula Daniels

In this episode of Repast, Diana Winters interviews Paula Daniels on Los Angeles food policy, the L.A. Food Policy Council, which she founded, the Center for Good Food Purchasing, and a forthcoming book, True Cost Accounting for Food: Balancing the Scale, that she edited and in which she has a chapter.  Paula and Diana discuss true cost accounting, which Paula distills with the following Oscar Wilde quote:

“What is a cynic? A man who knows the price of everything and the value of nothing.  And a sentimentalist . . . is a man who sees an absurd value in everything and doesn’t know the market price of any single thing.”

For more on true cost accounting, listen now.

 
 Diana Winters is the Deputy Director of the Resnick Center for Food Law & Policy at UCLA Law.

Paula Daniels is Co-founder and Chair of the Center for Good Food Purchasing, a social enterprise non-profit founded in July of 2015 as a national spin-off from the Los Angeles Food Policy Council, which Paula founded in 2011.  

 You can pre-order True Cost Accounting for Food here.   
 
Music by Ike Winters.

Transcript

Michael Roberts 0:07

Hello. Welcome to Repast, a food law and policy podcast from the Resident Center for Food Law and Policy at UCLA Law. I'm Michael Roberts, the Executive Director of the Resident Center.

Diana Winters 0:19

And I'm Diana Winters, the Assistant Director of the Center. The Resident Center performs cutting-edge legal research and scholarship in food law and policy to improve health and quality of life for humans and the planet.

Michael Roberts 0:33

Each month we'll bring you an interview with thought leaders transforming food law and policy.

Diana Winters 0:55

Thank you for being here, Paula. It's my pleasure. Thank you for inviting me. Today we'll talk about, not in this order, but we'll talk about your role in LA food policy, the Los Angeles Food Policy Council, the Center for Good Food Purchasing, and a new book coming out in May, in which you have a chapter. It's called True Cost Accounting for Food, Balancing the Scale. And we'll talk about what true cost accounting is. It's hard to know where to start with you and your impact on food policy in the Los Angeles region. You are a lawyer and a public policy leader. You've served as senior advisor on food policy to Mayor VR Ragosa of Los Angeles. You are a Los Angeles Public Works Commissioner, a commissioner with the California Coastal Commission and the California Water Commission, and an appointed board member of the California Bay Delta Authority. You've received many awards, too many to list, including the Resident Fellowship at the Bellaggio Center of the Rockefeller Foundation in 2016, the Pritzker Environment and Sustainability Education Fellow at the UCLA Institute of Environment and Sustainability in 2015, and many, many more. So we are we're delighted to have you, Paula. Thanks again. So let's start with True Cost Accounting and the book coming out in May. It's exciting. Can you talk about true cost accounting and what it means in the context of food?

Paula Daniels 2:23

One quick way to think of how true cost accounting can be thought of, or a more expansive definition of value, is uh from Oscar Wilde. Yeah, it's a quote from Lady Windermer's fan. Here it goes. What is a cynic? A man who knows the price of everything and the value of nothing. And a sentimentalist is a man who sees an absurd value in everything and doesn't know the market price of any single thing. So if you look at that as it's a it's a kind of expression of what full cost accounting means. We're currently in a state of cynicism where we know the price of things, but not the values. So full cost accounting is a way to start embedding our deeper societal values into the transactional cost.

Diana Winters 3:10

That makes a lot of sense.

Paula Daniels 3:12

Yeah, I think we're living in a time where we have an incomplete relationship with what things cost. We've been looking at things in terms of their dollar value, but not in terms of their full value for so long. And that's true in so many domains. Folks are looking at clothing and the slave labor that's gone into manufacturing clothing, but more to the point of this conversation, we've been looking at what happens in the transaction of purchasing food. So we have an artificial suppression of food prices in this country. There's a lot of subsidy that goes into food prices for highly commoditized and processed food. So the amount of subsidies, I think, reach around $50 billion for a market of around $1 to $1.5 trillion. That's a lot of investment in food production. But what has that led to? It's led to economies of scale following the notion of price and economic value just in terms of monetary. But it's also had these consequences that are born outside of the cost of that transaction of food. So the consequences that we've seen over the last half of a century are impacts on public health because you have this very cheap food that's readily available to folks, but it's highly processed and sometimes laden with too much sugar and salt. And it's more available in lower-income communities because that's what they can afford. So in many areas, you have an increasing, an alarming increase in the rate of cardiometabolic disorders, which also, by the way, are the comorbidities toward COVID. There's a recent study that came out from Tufts that showed that the link between cardiometabolic disorders and COVID is significantly tied to nutrition. So the unavailability of nutrition at an affordable price in low-income communities is significant and has created this public health problem. So, in that example alone, if you have a artificially suppressed cost of a good that creates a health problem, the transactional cost then is externalized and is borne by the public. So an example, I think an easy example, a clear example of that is sugary beverages, which are a leading contributor to cardiometabolic disorders and the rise of obesity among teenagers. So those are very accessible from a cost standpoint. It doesn't cost too much to buy a sugary soda, but the public health costs are really significant. So in that end to that extent, then the public health costs are externalized. The same is true in environmental terms. So if you look at meat, factory farm meat, which has, when you think about it, has an artificially low price. If I go to the store now to buy, I like to eat a lot of fish. I will say I am an omnivore, but I do choose my meat products carefully and rarely. But if I go to buy fish, a fish is expensive. It's like sometimes $25 a pound for a wild-caught fillet of fish, whereas you could buy a pound of hamburger for much less, or even a pound of fillet, I think is much less than what you would get for fish. So why is that? You know, so the fish is bearing its true cost. There's nothing suppressing. There's no subsidies involved in the fish. It's wild caught. You're paying for every interaction along the way. But the beef has been not only subsidized to the level of the water that goes into the food, the tax breaks for certain types of transactions, but the economies of scale that are embedded in that meat product, the factory farming conditions, and then the highly consolidated processing, the vertical integration of that system has led to it being affordable. But the consequences of having factory farm meat are a higher rate of nitrate pollution, a lot of greenhouse gas emissions, and all those impacts from nitrate pollution, uh having to clean up the groundwater, greenhouse gas emissions, contributing to climate change, those are borne by society. Those are the externalized costs. So we're living in a time when we it's time to reconcile those ideas. And that's the idea behind the book, True Cost of Accounting and Food. So we set about, I'm one of the editors on the book as well, to bring together the different studies that are looking at what the true costs are of different food products, including corn and other food products. And then how do we then take the idea of a knowledge that is conveyed by looking at more dimensions to the cost of something and the benefits of something? How do we turn that into policy? And when I say, you know, what are the different dimensions? There are different methodological frameworks that would set out how a society can figure out what those costs are, which would include not only the transactional cost, which they refer to as produced capital, but what are the social costs? What are the impacts to society in the way that I mentioned? Public health. And what are the human costs? What about the cost of labor? Much of what makes highly processed food or even food coming from a vertically integrated system more affordable, is that the cost of labor is very low, right? So when you're in that situation, that makes things cheaper. But what are you doing to the well-being of the people who are helping to produce that food? So the human cost as well as the environmental dimension, all of that uh embedded into thinking and including that into the thinking about how we address the true cost of food.

Diana Winters 9:13

This is so interesting. Um, and when you talk about the different frameworks, it brings to mind the Center for Good Food Purchasing, which you founded as an outgrowth of the Los Angeles Food Policy Council in 2015. And I know that the Center for Good Food Purchasing is, among other things, a way to begin embodying this true cost accounting into the way our institutions purchase food and then bring that true cost accounting to society. Um, can you talk about the center and about the pillars of good food purchasing, which I think resonate with those uh frameworks you were discussing?

Paula Daniels 9:55

Yeah, and in fact, the origin story of the Center for Good Food Purchasing is that it started in Los Angeles as an initiative. You mentioned Mayor Virargosa of Los Angeles when I was a senior official in his administration, with recognizing the purchasing power of urban centers. Like we are not divorced, we're not really siloed from food. We're part and parcel of the food system because of the choices we make and how we spend our purchasing dollars and that the market signals it sends throughout the agricultural economy. So it rose from an interest in embedding values into our purchasing policies, particularly for public institutions. And the largest provider of food, food service provider in any given region is a school district. They serve hundreds of thousands, in many instances, students. So this was true for Los Angeles. The LA Unified School District has an annual food budget of around $150 million a year, and they serve around 700,000 to 750,000 meals a day, sometimes more, depending on whether they add in breakfast in the classroom or summer lunch program and so forth. And they serve a population of need. So not only students, but you know, demographically, it's a it's a population of high need. So the concept for it was to embed values into purchasing that from these institutions that reflect support for local economies. These are the five pillars for local economies, particularly smaller holder farms, cooperatively farms, family farms, support for environmentally sustainable production practices, support for fair labor practices across the food chain, support for animal welfare, which dovetails really with environmental sustainability, and then support for nutritional health, those purchasing practices and choices that would support nutritional health. And in some ways, folks call it now food as medicine, but supporting that concept of protective foods, foods that actually nourish versus detract from health. So those five pillars became embedded in our program. And what we do is we have a rating system that kind of works in analogy to lead certification for buildings. If you're familiar with that, we look at, we have a rubric, we have a set of standards and a tiered system that has flexible pathways to achieving points. It accumulates into a star rating system along those five pillars of values. And then we take their food purchasing information and analyze it according to that uh rubric and reflect it back to them with the points that they've achieved. So it's a feedback tool. In doing this and in directing the purchasing of institutions toward these values, it's compatible with the concept of true cost accounting and food. And that we are saying we're, you know, have the purchasing of the food from this public institution be directed toward environmentally sustainable food, then you're looking at food that might be more true costed. So, as an example, if a public institution were to buy more organically produced apples from a local farm, they're buying food that is more true costed. It's not having these externalized impacts on the local economy, which is displacement of jobs and so forth. It's not having the externalized impacts of pesticide use, which has its own consequences in terms of biodiversity as well as the health of the workers around the pesticides. So instead of externalized, it's internalized, it's a full-costed food product if they're buying an organic apple or organic oranges, as an example. And we also direct them toward different types of meat. They have a choice of um purchasing organic meat, um, which is produced according to certain standards. So that also would bring it more in line with what I would call a true-costed food system.

Diana Winters 13:54

The Los Angeles Unified School District has adopted these principles. Is that correct?

Paula Daniels 13:59

Yes. The City of LA adopted the Good Food Purchasing Program in October of 2012. LA Unified School District adopted the good food purchasing program in November of 2012. So it was the first large-scale institution to adopt it in the country. We now are in 20 cities around the country and in 54 institutions, mostly public institutions. So we're also in Chicago, New York, San Francisco, Oakland. In in California alone, we're in 15 school districts as well as other municipal entities, including recreation and parks departments, um, correctional facilities, and that's true across the country. We're in Austin, Boston, and many other places around the country.

Diana Winters 14:41

To somebody to whom this is a new concept, to me, I'm hearing true cost accounting and thinking, doesn't this raise the real price of food? And how does that work with school districts, especially and crunched budgets? Have you seen a rise in food costs? And how do they, how do the districts deal with that?

Paula Daniels 15:04

So I mentioned that our our program is flexible. So a school district can make choices. So the example I gave of buying organic apples is a hypothetical one. They may be moving in a different direction, but they have the ability through their procurement practices and their bidding program to structure a request for bid in such a way that they could contain their costs if they choose to do so. So by that I mean there's procurement laws that require large institutions to do bidding, public institutions bidding through a public process that is generally geared toward having low bids be the preference. So they can structure their bid process so that they can say, as an example, I have a five-year request for produce. Um, vendors let us know how you're gonna respond to this request. Here's how much I'm ready to spend, me, school district. And I'm embedding the good food purchasing program in my request for bid responses. So show us how you're going to comply with the good food purchasing program and that how you're gonna stay within this cost parameter. So a large school district can structure their bidding process that way and keep costs contained, actually. What that does is it sort of allows for longer-term, high volume commitments along the food supply chain. And many of those uh suppliers along the food supply chain are willing to lower their costs, the cost of their product, the price of their product, in exchange for that high volume long-term commitment because it gives them financial stability. They can quite literally bank on it. They can get financing based on that. In the current market, where it's a global like spot market, where it's on demand, and you know, what the prior practices were is that they might have two weeks' notice that they need apples. Well, they're just gonna go anywhere in the world that they can find the apples. And those prices tend to reflect that fragility and the uncertainty and the high level of risk in that market. So if you can set up the steady stream of purchasing in these long-term multi-year commitments, that can influence price overall. At the same time, you don't want to push it down too much so that you don't have fair prices being given to farmers and to the workers along the food supply chain. So this is an area where there could be potential for reordering subsidies. That's one option. So you can create incentives for food that is more sustainably grown or more climate-friendly, that has less of a green carbon footprint and so forth. There are similar incentives in play right now that came out in the last farm bill and a program called Double Up Bucks. So somebody who's getting supplemental nutritional assistance program benefits, SNAP, also known as food stamp, benefits. If they go to the farmer's market to buy produce, they can get uh an extra dollar for buying produce. It's double up bucks is that program at the farmer's market. So that's a form of subsidy that prioritizes nutrition and prioritizes local economies. So in theory, a subsidy could be reordered that way as well. But in general, to your question, uh the costs can be managed by a school district.

Diana Winters 18:26

Great. And so talking about subsidies, it brings to mind the role of law in good food purchasing and in true cost accounting. It seems that partnerships and cooperation are incredibly important here between industry and stakeholders and government and the entities involved. What do you see as most important, if anything? And how do you see the role of law and policy yourself trained as a lawyer?

Paula Daniels 18:59

You know, I think law is more in the fabric of society than people realize, right? It's it's almost um part of the air we breathe. When you think of law, it's not something separate from uh how we organize ourselves. It's a codification in some instances of how we want to behave with each other. Um, it's a codification that's been interpreted in in many ways through regulations, through case law, but it's it's really, you know, rules of behavior and agreements. So it's it shows up in many ways. I mean, it can show up explicitly in terms of uh legislation, and and definitely in in contracts and bidding awards, those are legal concepts. I think when you understand how how law structures itself and how it tends to help create contours for agreements, it it shows up in in more ways than you even think. Um, definitely shows up in partnerships. There can be partnerships that have memorandum of agreements, uh, different things like that that help people sort out, you know, how they want to manage things.

Diana Winters 20:12

No, I think I the in it's really interesting to think about it as codifying rules of behavior and as and in terms of the law's role in so many different areas of these partnerships. What about our new administration? Do you see opportunities in terms of uh the turnover in Washington for regional, local, as well as federal change and perhaps the incorporation of true cost accounting into food policy?

Paula Daniels 20:42

Yeah, the administration is definitely picking up where it left off in 2016, with uh particularly as it relates to food. We have the reappointment of uh Thomas Vilsack as the USDA secretary. So he was USD secretary under Obama and is now again under Biden. And he's articulated a definite commitment to regionalizing food systems. And one of the things that he's reflected on, I think many of us share this view, is that COVID did reveal the fragility of a highly consolidated food system. And an example is in the meat industry, which I mentioned before, but the meat industry is particularly consolidated. It's consolidated into six multinational companies that control the global meat supply. Um, and that that's a function of 20th century economics and policies that have led to that. But what that also means is that you have this highly centralized and vertically integrated and consolidated meat processing supply chain. And when there were COVID outbreaks in that meat supply chain, those supply chains cut down. Now, the prior administration's view was well, let's prop that up. Let's prop up that continued, you know, um, that the large industrial. Industrialized system. The new administration, and Tom Vilsack has explicitly stated this, wants to see more regionalized food systems. So an example is more regionalized meat processing, more decentralized regionalized meat processing and food distribution. So they're going to invest, I believe, in the infrastructure around regionalized food systems that has been missing. That's the big gap. You can create the market demand that we create through the Good Food Purchasing Program. You can, you already have a number of farmers ready to meet that market demand. What's missing is the distributional infrastructure in between that deliberately serves the local regional food market, particularly in sourcing equitably and sustainably and distributing in that with those same principles. So I do sense that that will be a priority of the current administration. In terms of true cost accounting in food, um, this is a conversation that is reaching its moment, I think. And it's um I want to refer to a couple of quotes, one from that I used in my chapter, and it's um from Robert Kennedy. And the reason I'm making this point is that he made this statement in 1968, but I think it resonates now even more. So in 1968, he said, our gross national product counts air pollution and cigarette advertising and ambulances to clear our highways of carnage. It counts special locks for our doors and the jails for the people who break them. It counts the destruction of the redwood and the loss of our natural wonder in chaotic sprawl. It counts napalm and counts nuclear warheads and armored cars for the police to fight the riots in our cities. Yet the gross national product does not allow for the health of our children, the quality of their education or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials. It measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion, nor our devotion to our country. It measures everything in short, except that which makes life worthwhile. And I think that that thinking from the 1960s is coming around full circle to this time. Then this time and this moment that we stand in in history, I feel like so much more is being understood by many, and in particular for those currently in power in the federal administration.

Diana Winters 24:31

That was incredibly evocative. And I think also it again resonates with climate change and with hopefully what we see as the administration's uh renewed commitment to combating climate change. And it is, of course, connected. For our student listeners, do you have any advice for aspiring food policy advocates or for um aspiring advocates in the true cost accounting space, which can reach beyond food policy also?

Paula Daniels 25:08

You know, law is such a great background for so many different roles in society. I think in California, I don't know if this is the current statistic, but at one point in time I noticed that something like 55% of lawyers are actually practicing law, and the rest have a law degree, but are working in many other realms. And that would certainly happen to me. I practiced law for decades, but then moved into a role where I didn't actually need my license, my bar license. I was not officially providing legal advice, but I used my legal training probably every day in ways that I didn't even realize at the time. But I was using the discipline of legal thinking, but also the knowledge I gained from the my legal coursework about how society organizes itself around certain principles, the way laws show up in society, all of that. So the short version then is you know, follow your passion and a path will appear because it can happen in so many ways. Food policy is um there, there are many places where legal training is particularly helpful. So I mentioned the bidding process is one, and that's an area that is ripe for reform. Because as I mentioned before, low cost is how it's organized. The idea was to make sure that public money was well spent and that it's an open process so that it's there's not subject to nepotism. But what we're moving toward is the potential for more best values to be embedded in the bidding process. And there's a need for reform in those laws that we're butting up against. So our values are there. We need to have the laws catch up with that. And there's many other areas where the laws that were written in the 20th century can catch up to what our values are in the 21st century. But um, having a legal background can make you useful in in so many ways.

Diana Winters 27:08

I think that's absolutely right. I also think of our legally trained population as problem solvers sometimes, which I think, you know, we have a lot of problems to be solved. So um thank you. That was that was fantastic. I want to again mention the book to which we will have a link in the description of this podcast, um, True Cost Accounting for Food, Balancing the Scale, in which Paula Daniels has a chapter and also edited the book. Are there any other chapters in the book that you want to call out or discuss?

Paula Daniels 27:44

Um, I think the whole book is pretty good. But if they want to look toward how to apply it in practice, there was a chapter written by Kathleen Merrigan, who's a uh former deputy secretary of the USDA in the Obama administration. Um, she's now head of the Sweetie Center in uh Arizona State University, but she wrote a chapter on the comparison between cost-benefit analysis and true cost accounting and makes the point that uh true cost accounting is really an amplification of cost-benefit analysis, and that's how it can show up in regulatory frameworks. So that's an interesting one to look at it as applied. And there's also a chapter on uh embedding true cost accounting principles in international agreements that might be of interest.

Diana Winters 28:31

Neat. I can't wait to see them. The book comes out in May. Well, thank you so much, Paula. Again, we are honored to have you with us today and to have you as a great partner with the Rasnik Center going forward. So thank you so much. Thank you so much.

Paula Daniels 28:50

Really appreciated the chance to talk about these ideas.