A new in-depth study by the Food and Agriculture Organization (FAO) reveals that the hidden costs embedded within global agrifood systems amount to a staggering USD 12 trillion annually. The bulk of this cost- around 70%, or USD 8.1 trillion- can be attributed to the rising health burden from unhealthy dietary patterns, particularly linked to non-communicable diseases (NCDs) like heart disease, stroke, and diabetes. These health-related costs far surpass the expenses incurred from environmental degradation and social inequalities.
The FAO's State of Food and Agriculture 2024 (SOFA) report refines the understanding of these hidden costs by adopting a true cost accounting approach. It identifies the full spectrum of costs and benefits beyond market prices, including those related to human health, environmental damage, and social inequities. By analyzing these “hidden costs,” the report reveals that the scale of the issue is even more alarming than previously understood, with health-related costs emerging as the largest contributor.
Health Costs and Dietary Risk Factors
The health impacts of modern agrifood systems are particularly concerning. The FAO's report highlights 13 dietary risk factors that contribute to rising health costs. These include:
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Inadequate consumption of essential foods like whole grains, fruits, and vegetables.
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Excessive intake of sodium and processed foods.
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High consumption of red and processed meats.
The costs associated with these unhealthy dietary patterns are widespread and have significant implications for both individual and public health. The report draws attention to how these dietary habits vary across different types of agrifood systems, shedding light on how systemic factors influence food choices globally.
Role of Agrifood System Types
The study classifies agrifood systems into six distinct types to better understand the specific challenges and opportunities within each:
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Protracted Crisis Systems: Often affected by prolonged conflict, instability, and food insecurity.
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Traditional Systems: Characterized by low productivity, limited technology adoption, and shorter value chains.
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Expanding Systems: Emerging economies with growing agricultural demand.
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Diversifying Systems: Transitioning from traditional methods to more modern agricultural practices.
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Formalizing Systems: Incorporating more structured and regulated agricultural practices.
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Industrial Systems: Highly mechanized, large-scale operations typically found in wealthier nations.
By using this typology, the report provides valuable insights into how hidden costs manifest in various agrifood systems. For example, in protracted crisis systems and traditional systems, insufficient fruit and vegetable intake is the primary concern. In contrast, industrial agrifood systems face mounting issues related to high sodium intake and the increased consumption of red and processed meats.
Environmental Costs: A Growing Concern
Beyond health, environmental costs are also a significant hidden burden. These costs arise from:
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Nitrogen runoff
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Deforestation and land-use changes
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Water pollution
Countries with diversifying agrifood systems, particularly those experiencing rapid economic growth, face environmental costs estimated at USD 720 billion. This is compounded by unsustainable agricultural practices that can degrade ecosystems, harm biodiversity, and contribute to climate change. Even in formalizing and industrial systems, the environmental costs remain substantial, often resulting in lasting damage to natural resources.
The report emphasizes that countries dealing with protracted crises, where instability hampers the development of sustainable agrifood practices, bear the highest relative environmental costs—up to 20% of their GDP.
Social and Economic Inequalities
The social costs of agrifood systems are also a matter of concern. These include:
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Poverty
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Undernourishment
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Food insecurity
Social costs can represent a significant portion of GDP-8% and 18% in regions with traditional agrifood systems or those suffering from protracted crises or those suffering from protracted crises. This underscores the urgent need for comprehensive, integrated approaches to address both humanitarian and development challenges in these areas.
A Call for Agrifood System Transformation
SOFA 2024 stresses that achieving sustainability, equity, and resilience in global agrifood systems requires a value-driven transformation. The hidden costs tied to the current systems cannot be overlooked if we are to secure the future of our food supply while also protecting public health and the environment.
Key Recommendations for Change
To address the growing challenges within global agrifood systems, the FAO offers several key recommendations for policymakers, businesses, and consumers alike:
1. Incentivizing Sustainable Practices: Governments and regulatory bodies should provide financial incentives and regulatory frameworks that support sustainable agricultural practices across food supply chains. This would help reduce power imbalances and encourage more equitable outcomes across stakeholders.
2. Promoting Healthier Diets: Policies to make nutritious, affordable food more accessible can significantly reduce the health costs associated with poor dietary habits. This includes improving food environments and providing consumers with clear information on the health impacts of their food choices.
3. Encouraging Environmental Responsibility: Reducing the environmental footprint of food systems requires incentives for the reduction of greenhouse gas emissions, nitrogen runoff, and harmful land-use practices. Certification schemes, labeling initiatives, and industry-wide due diligence standards can drive progress.
4. Empowering Consumers: Providing clear, actionable information to consumers on the environmental, social, and health impacts of their food choices is essential. Policies should also ensure that even vulnerable populations have access to sustainable, nutritious foods.
5. Leveraging Institutional Purchasing Power: Institutions like schools, hospitals, and government agencies can play a significant role in shaping food supply chains by prioritizing sustainable food procurement practices, reshaping food environments, and driving systemic change.
6. Inclusive Rural Transformation: Policymakers must ensure that rural transformations avoid worsening environmental and social disparities. This requires policies that support inclusive growth, minimize harm to vulnerable populations, and empower communities to embrace sustainable agricultural practices.
7. Strengthening Governance: Effective governance and robust civil society engagement are essential for accelerating innovation in sustainable agrifood systems. This includes fostering partnerships between governments, businesses, financial institutions, and local communities to support change.
Path Ahead: Collective Action for Change
As emphasized by the FAO Director-General, Qu Dongyu, the decisions and priorities we establish today, along with the actions we take, will shape the future we all share. The transformation of global agrifood systems is not just an environmental or economic challenge- it's also a moral imperative. Achieving the Sustainable Development Goals (SDGs), including those related to food security, nutrition, and climate action, will require global cooperation, inclusive policies, and concerted efforts across sectors.
The FAO's study serves as a powerful reminder that the true costs of our food systems—those hidden from market prices—must be recognized and integrated into decision-making processes. Only by addressing these costs can we hope to build more sustainable, resilient, and inclusive agrifood systems for the future.
