“Today’s food system is unfair, ineffective and operates beyond ecological limits,” Mark Lee says, via email.

“Unfair in that some 925 million are malnourished…

“Ineffective in that there are enough calories out there to feed everyone, but we fail to do so (and if we fail to do so for 7 billion, how will we cope with 9-10 by mid-century?)…

“Beyond ecological limits in too many ways too count – freshwater use, soil degradation, climate impacts, you name it.”

Mark is not an environmental activist. He’s the executive director of SustainAbility, a think tank and strategy consultancy that has worked with such food industry clients as Chiquita, Coca-Cola Kellogg’s, Mars and McDonald’s, Nestle, Starbucks and Unilever. He approached me because Sustainability recently released a report called Appetite for Change, about the food industry and how to fix it.

I’ve been writing a lot about food lately because it interests me, because food and agriculture matter a great deal if you care about climate or global poverty or health, and because there’s so much debate about what the path forward should be. Organics? Farmers markets? Genetically engineered crops? Vegetarianism? Local? 

This 41-page report, based on interviews with about two dozen business people, environmental experts and government officials, finds an emerging consensus, inside and outside the industry, that “the food system needs to be dramatically transformed.” The report says:

We need a food system that produces enough, for everyone, within ecological limits, while treating all players fairly.

With a bit more specificity, SustainAbility defines a sustainable food system as “one that is reliable, resilient and transparent, which produces food within ecological limits, empowers food producers, and ensures accessible, nutritious food for all.”

But, while big companies and small are experimenting, sometimes creatively, with new approaches,  there’s no agreement on how to get from here to there.

I talked the other day with Mark and Jennifer Biringer, a SustainAbility director and an author of the report, and they pointed me to a few areas where business and environmental imperatives are coming into alignment.

To insure a secure supply chain, big companies are increasingly builder closer ties with small farms in poor countries, working with them to improve their environmental performance, their efficiency and their business viability.

Starbucks has worked for more than a decade with Conservation International to develop ethical sourcing guidelines that reward coffee growers who conserve water and energy and protect biodiversity. Mars is working with academic partners to sequence the cacao genome, hoping to improve yields and lift the standard of living for coffee farmers. (See my 2010 blogpost, The man who would save chocolate.) Costco has had a pilot program in which it sources fresh produce from smallholder farmers, such as green beans from Guatemala [PDF, download] for its U.S. stores.

And then, of course, there’s Walmart, which among other things, is seeking to buy more local produce for its stores. “I do see Walmart as a disruptor,” Jennifer said. The giant retailer is bringing pressure on food manufacturers to get a better handle on the environmental footprint and to drive transparency down their supply chain.

Companies that aren’t in the food industry stand to profit from some of these trends, the report notes. More than six million people in India, China and Indonesia have become subsribers to Nokia’s Life Tools [PDF, download], a subscription service designed for mobile phones in emerging markets that provides agricultural information (weather, market prices) as well as education and entertainment. IBM, which sponsored the SustainAbility report, along with Nestle and Sodexo, has a technology platform called Smarter Food that can trace food from “farm to fork” which both promotes food safety and environmental accountability.

One obvious problem with the food system, as the report notes, is that food policy and politics “are driven by who is in power” and  aren’t designed to promote sustainability or healthy eating. Experts interviewed by Sustainability

listed new and better policy as prerequisite to progress before closing. Distressingly, few are optimistic that improvements will come without major disruptions to the food system occurring first, sharing a perception that we likely will stretch the current system to (or beyond) its limit before acting.

For a variety of reason, the price of food at the supermarket doesn’t reflect its true cost. [See my 2010 blogpost, The high cost of cheap food] Farm price supports, cheap energy and cheap water all drive down the prices of commodity crops (corn, soy) and meat. Meanwhile, few subsidies go to vegetables and fruits. Farm subsidies and trade barriers also make it hard for farmers in poor countries to compete with those in the U.S. and EU. “Government does a huge amount to pick winners and losers,” Jennifer said.

In today’s New York Times, food writer Mark Bittman has a provocative article arguing that the U.S. should tax “bad” foods (like sugary sodas and fatty, salty fries) and use the money to subsidize fruits and vegetables and provide nutrition education. He quotes a study that found that

a penny tax per ounce on sugar-sweetened beverages in New York State would save $3 billion in health care costs over the course of a decade, prevent something like 37,000 cases of diabetes and bring in $1 billion annually.

I’m not inclined to favor more government intervention in markets–just the opposite–but this idea is worth considering, I think, because it’s a way of adjusting the price of food to reflect its true costs. [See my 2010 blogpost, The high cost of cheap food] Big companies, of course, hate the idea of a “junk food” tax. While Coca Cola and PepsiCo offer healthy options, they also benefit from corn subsidies and want to maximize sales of sugary soft drinks. The trouble is, particularly as medical expenses become socialized through Medicaid and Medicare, all of us are paying the costs of the obesity epidemic.

The food system is so broken that maybe it’s time to think about radical fixes.