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In a comprehensive analysis conducted by the Food and Agriculture Organization of the United Nations (FAO), it has been revealed that the global agrifood system carries hidden costs exceeding a staggering $10 trillion annually. These concealed expenses account for nearly 10 per cent of the entire global GDP, emphasising the substantial impact of our current agrifood systems on various aspects of life.
According to a 154-country study titled The State of Food and Agriculture (SOFA), more than 70 per cent of hidden costs are driven by diets high in ultra-processed foods, fats, and sugars, which lead to obesity and non-communicable diseases, as well as associated labour productivity losses.
Environmental concerns compound the complex agrifood equation, accounting for one-fifth of these hidden costs. Nitrogen emissions, greenhouse gases, land-use changes, and water usage impacts collectively comprise the environmental burden. However, it is essential to note that the FAO acknowledges the likelihood of underestimation due to limitations in data availability for assessing the ecological repercussions of our food choices.
The geographical distribution of these hidden costs paints an intriguing picture. While 75 per cent of them are generated in high and upper-middle-income countries, low-income nations bear a disproportionate burden. In impoverished nations, these costs represent a staggering 25 per cent of GDP, compared to approximately 11 per cent in middle-income countries and less than eight per cent in high-income nations.
For instance, in the United Kingdom, nearly 80 per cent of these hidden costs are linked to health-related issues, with the remaining 20 per cent attributed to environmental impacts. This pattern mirrors the findings in the European Union and the United States, with most food system-related hidden costs being health-related.
However, lower-income countries face a different scenario, with higher environmental costs intertwined with hidden expenses related to poverty and undernourishment. These findings underscore the need for a nuanced approach to addressing agrifood system challenges on a global scale.
FAO director-general Qu Dongyu urged governments to consider the costs associated with agrifood systems to address better the climate crisis, poverty, inequality, and food security.
"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," he said.
"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,"
This report arrives on the heels of revelations from the World Benchmarking Alliance, highlighting the shortcomings of significant food and agriculture companies in environmental protection and equitable food production. With over 90 per cent of these companies falling short in their sustainability efforts, it becomes evident that transformative action in the agrifood industry is imperative for a healthier, more equitable future.
Moreover, the study comes just weeks after more than 70 organisations signed an open letter calling on all Parties attending the COP28 Climate Summit in Dubai next month to "acknowledge the critical role of food systems - including food production, consumption and waste, land use change and nutrition in achieving the Paris Goals".
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