Market incentives, social values, and access to sustainable food production: The role of consumers

The market price of food inputs has significant sustainability impacts including but not limited to contributing to the overutilization of production inputs, resource depletion, habitat loss, and species extinction. In a market driven economy, such as the U.S., the mechanics of the marketplace are credited with efficiently determining the price of an item by implicitly incorporating the costs associated with production. Further, market price has become the indicative proxy for intrinsic value. Therefore, when consumers or producers face low prices for consumption and input purchases, respectively, and the underlying belief is that the price being paid is fully reflective of the cost of the item being purchased, there is less of an incentive for efficient use and higher potential for waste. Price is effectively the measure of a resource’s worth, abundance, and availability. However, the arm’s length nature of the transaction between the consumer and commercial producer of an agricultural or food commodity, distances their mutuality. For each party, price becomes the connecting incentive but for seemingly distinct and inconsistent reasons. The prevailing shortcoming for the consumer is that price may not include social values or environmental quality parameters, instead implicit in the price may be the delegation of these parameters to producers whose incentives are focused on cost minimization and profit maximization. From this perspective, consumer awareness of, for example, the near- and long-term health and quality of life consequences of the externalizing of production costs would be expected to enable conscious consumption, resulting in the inclusion of sustainability into the market model for food.

This paper will review the market-based economic model, assessing the classical economics attribution of values through the lens of the relationship between embedded values and price. The discussion will focus on the significance of the consumer, as the primary channel for what classical economists referenced as “fair” market pricing and will promote the role of conscious consumption based on social values as the catalyst, conduit and governance mechanism for sustainable market dynamics.