World agrifood systems impose huge hidden costs

The world agrifood systems impose huge hidden costs to an estimated $10 trillion a year, according to a report by the Food and Agriculture Organization of the United Nations release on Monday.

The report, covering 154 countries, indicated that those hidden costs - accounting nearly 10 percent of global GDP - focus on human health, environment and society.

According to report, the biggest hidden costs - more than 70 percent - are driven by unhealthy diets, ultra-processed foods, fats and sugars, leading to obesity and non-communicable diseases, and causing labor productivity losses.

It also revealed that 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.

According to the report, low-income countries are 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.

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, said Qu Dongyu, FAO's Director-General.

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.

"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," he added.

"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,"he said.

The report urges governments to use true cost accounting in hopes of transforming 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.