The price gap: why food is frequently too cheap and sometimes too expensive

The price of a food product influences our purchasing decisions, our budgets and our understanding of what is ‘valuable’. The price acts as a guide, an indicator of quality and a justification. At the same time, it is often misleading. This is because the price of food rarely reflects the actual societal costs. Damage to the climate and environment, health implications and biodiversity loss have so far been borne largely by the community at large, with the costs being externalised to ecosystems, healthcare systems and future generations. What is paid at the checkout is generally only a small part of the whole picture.

International analyses highlight the scale of this price gap. According to calculations by the FAO¹, the hidden costs of the global food system amount to more than US $ 10 trillion every year – almost as much as the total market value of all food consumed worldwide. In Germany, an analysis by Greenpeace and the Forum for Ecological-Social Market Economy² estimates that meat, sausages and sugar alone generate external costs of around € 50 billion per year. Almost the same amount would need to be raised on top of this to offset the side effects of food production and consumption. 

So, who benefits from these low prices? Certainly not the environment or the agricultural sector. According to the Heinrich Böll Foundation³, the main beneficiaries are powerful market players along the supply chain, while producers often achieve only small margins. At the same time, consumer organisations⁴ are critical of price increases that are sometimes difficult to justify, as well as hidden price hikes in the form of smaller pack sizes or changes to product formulations. It is a fact that food, including essentials, now costs an average of around 30 percent more than in 2021 – a trend that places a particular strain on low-income households.

Dirk Liebenberg, Head of Corporate Engagement at the international ProVeg food organisation, also points to structural distortions: “The market is currently unjust and biased against fair, sustainable products because players in the meat and dairy industries are not required to internalise their external costs.” Therefore, he says, there needs to be greater pressure for regulatory reform.

The results were unequivocal⁵: animal products saw their prices rise sharply. In some cases, sausages and cheese would have had to cost almost twice as much, while the price increase for a vegan schnitzel was only around five percent. At the time of the study, head researcher Tobias Gaugler stressed that the aim was not to moralise but to draw attention to the need for a public debate about the way in which the costs of our food system are being paid elsewhere – just not at the supermarket checkout.

The experiment demonstrated two things: firstly, that price relationships shift significantly once external costs are factored in. Plant-based products appear relatively cheaper; secondly, consumers are highly sensitive to price changes. Around 85 percent of those surveyed thought the ‘true prices’ were too high. Accordingly, sales fell sharply. At the same time, awareness of the environmental impact of foodstuffs rose significantly: following the campaign, around two-thirds of customers indicated that they were more aware of the true costs of food. The research team found it noteworthy that sales of a vegan schnitzel increased despite the price increase – presumably because the price difference compared to animal-based alternatives suddenly became much smaller.

Price parity as a gamechanger

Parallel to the debate about ‘true costs’, the market is already changing from within. Plant-based alternatives are gradually approaching the price level of animal-based products and, in certain cases, are already cheaper.

The 2025 ProVeg Price Study⁶ indicates a turning point for the first time: on average, a standardised plant-based shopping basket in Germany costs around five percent less than a comparable animal-based basket. At certain discounters such as Lidl, the price advantage is as high as 18 percent. In seven out of eight retail formats examined, plant-based products are now cheaper.

The annual study also compares substitute products, such as oat milk and cow’s milk, and vegan mince and beef mince, across different retail channels. Around half of the categories examined now cost less than their animal-based equivalents. Vegan alternatives are often cheaper than meat or cheese, especially when it comes to burger patties and sliced cheese.

For Dirk Liebenberg, this development is crucial: “Plant-based alternatives should be sold at a price no higher than that of animal products – ideally lower. Retailers are increasingly adopting this strategy and selling their own-brand, plant-based products at attractive prices. At the same time,” adds Liebenberg, “There has been an increase in the price of animal products.”

Moritz emphasises that the underlying compensation concept is explicitly about change: “A company must first credibly show why it cannot reduce its emissions any further before a financial remedy can be offered.” The funds are then channelled into regional renaturation and climate-adaptation projects. For example, to mitigate heat in cities such as Stuttgart or to support regenerative agriculture.

Price as a driving force for protein transformation

Price is increasingly becoming a strategic lever for the food revolution. On the one hand, true-cost initiatives show just how distorted prices are today. On the other hand, price parity is bringing plant-based alternatives from the margins into the mainstream.

Nevertheless, the price alone is not enough. Consumer decisions are still emotional, culturally influenced and highly habitual. There is growing pressure on the political and economic worlds to factor external costs into prices systematically, for example, through carbon pricing or by phasing out subsidies detrimental to the climate. An increasing number of initiatives and organisations can demonstrate how to do this: without maximising profits but with corporate responsibility for the environment, health and the future.

Ultimately, this is about price consistency, i.e., prices that reconcile economic competitiveness with environmental realities. Only when consumers see more sustainable or plant-based products not as an expensive exception, but the obvious choice will the food system begin to shift fundamentally. Only then will the price of food no longer be just a market price. Then it will be a reflection of its true value.