Hidden costs of global agrifood systems worth at least $10 trillion
Our current agrifood systems impose huge hidden costs on our health, the environment and society, equivalent to at least $10 trillion a year, according to a ground-breaking analysis by the Food and Agriculture Organization of the United Nations (FAO), covering 154 countries. This represents almost 10 percent of global GDP.
The State of Food and Agriculture 2023
According to the 2023 edition of The State of Food and Agriculture (SOFA), the biggest hidden costs (more than 70 percent) are driven by unhealthy diets, high in ultra-processed foods, fats and sugars, leading to obesity and non-communicable diseases, and causing labour productivity losses. Such losses are particularly high in high- and upper-middle-income countries.
One fifth of the total costs are environment-related, from greenhouse gas and nitrogen emissions, land-use change and water use. This is a problem that affects all countries, and the scale is probably underestimated due to data limitations.
Low-income countries are proportionately the hardest hit by hidden costs of agrifood systems, which represent more than a quarter of their GDP, as opposed to less than 12 percent in middle-income countries and less than 8 percent in high-income countries. In low-income countries, hidden costs associated with poverty and undernourishment are the most significant.
More tracking to drive effective mitigation
The report makes the case for more regular and detailed analysis by governments and the private sector of the hidden or ‘true’ costs of agrifood systems via true cost accounting, followed by actions to mitigate these harms.
There have been other attempts at measuring the hidden costs of agrifood systems, producing similar estimates as FAO. The new FAO report, however, is the first to disaggregate these costs down to the national level and ensure they are comparable across cost categories and between countries.
For the first time ever, FAO will dedicate two consecutive editions of The State of Food and Agriculture to the same theme. This year’s report presents initial estimates, while next year’s will focus on in-depth targeted assessments to identify the best ways to mitigate them. Governments can pull different levers to adjust agrifood systems and drive better outcomes overall. Taxes, subsidies, legislation and regulation are among them.
A call to action
Commenting on the publication of the report, FAO Director-General QU Dongyu said, “In the face of escalating global challenges: food availability, food accessibility and food affordability; climate crisis; biodiversity loss; economic slowdowns and downturns; worsening poverty; and other overlapping crises, the future of our agrifood systems hinges on our willingness to appreciate all food producers, big or small, to acknowledge these true costs, and understand how we all contribute to them, and what actions we need to take. I hope that this report will serve as a call to action for all partners – from policymakers and private-sector actors to researchers and consumers – and inspire a collective commitment to transform our agrifood systems for the betterment of all,”
The report urges governments to use true cost accounting to transform agrifood systems to address the climate crisis, poverty, inequality and food security. It notes that innovations in research and data, as well as investments in data collection and capacity building, will be needed to scale the application of true cost accounting, so it can inform decision-making in a transparent and consistent way.
Switzerland: high costs relating to the burden of disease
The figures set out in the report reveal that Switzerland’s climate cost are proportionately comparable with other Western European countries. The hidden costs on our land are lower (1% compared with 4% Western European average) but nitrogen costs are higher (12% compared with 8%). Switzerland’s hidden social costs, just like other European countries, were calculated to be minimal, but costs resulting from the burden of disease due to dietary patterns were higher than the global average (84% compared with 73%), calculated to be in the region of 18,781 million each year.
The Food and Agriculture Organization (FAO) is a specialized agency of the United Nations that leads international efforts to defeat hunger. Their goal is to achieve food security for all and make sure that people have regular access to enough high-quality food to lead active, healthy lives. With 195 members – 194 countries and the European Union, FAO works in over 130 countries worldwide.
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