Unhealthy dietary patterns drive $8 trillion in annual hidden costs of global agrifood systems | FAO News

Rome – A refined study by the Food & Agriculture Organization of the United Nations (FAO) involving 156 countries confirms that hidden costs within global agrifood systems amount to approximately $12 trillion annually. Of this figure, around 70 percent ($8.1 trillion) arise from unhealthy dietary patterns & are linked to alarming non-communicable diseases (NCDs) such as heart disease, stroke, & diabetes, far exceeding the costs related to environmental degradation & social inequalities

The State of Food & Agriculture 2024 (SOFA), builds on the 2023 edition to provide an even more in-depth analysis, utilizing true cost accounting to expose the full range of costs & benefits associated with food production, distribution, & consumption, including those that are not reflected in market prices – the so-called “hidden costs & benefits”. The report updates those cost estimates, divides them by agrifood system types, & charts a course for transformative change in our agrifood systems.

The study details how global hidden costs are largely driven by health hidden costs, followed by environmental hidden costs, in more industrialized agrifood systems in upper-middle- & high-income countries.

In examining health impacts, the report identifies 13 dietary risk factors. These include insufficient intake of whole grains, fruits, & vegetables; excessive sodium consumption; & high intake of red & processed meats, with notable differences across various agrifood systems.

Hidden costs vary depending on the type of agrifood systems

Historically, agrifood systems have transitioned from traditional to industrial, each with varied outcomes & hidden costs. For this reason, the report explores how hidden costs manifest themselves in different agrifood system types worldwide.

To facilitate analysis, the research introduces a typology that categorizes agrifood systems into six distinct groups: protracted crisis, traditional, expanding, diversifying, formalizing, & industrial. This framework allows for a targeted understanding of the unique challenges & opportunities inherent to each system, enabling the development of tailored policies & interventions.

For instance, while diets low in whole grains are the leading dietary risk factor across most agrifood systems, in protracted crisis systems (those experiencing prolonged conflict, instability, & widespread food insecurity) & traditional systems (characterized by lower productivity, limited technology adoption, & shorter value chains), the primary concern is a low intake of fruits & vegetables.

High sodium intake is another significant concern, exhibiting an upward trend as agrifood systems evolve from traditional to formalizing, peaking in the latter & then decreasing in industrial systems. Conversely, high consumption of processed & red meat steadily increases throughout the transition from traditional to industrial systems, where it ranks among the top three dietary risks.

Beyond dietary risks, the environmental impact of unsustainable agricultural practices contributes substantially to the hidden cost burden.  Costs associated with greenhouse gas emissions, nitrogen runoff, land-use changes, & water pollution are particularly high in countries with diversifying agrifood systems – where rapid economic growth is coupled with evolving consumption & production patterns – reaching an estimated $720 billion. Formalizing & industrial agrifood systems also face significant environmental costs. However, countries facing protracted crises bear the highest relative environmental costs, equivalent to 20 percent of their GDP.

Social costs, including poverty & undernourishment, are most prevalent in traditional agrifood systems & those affected by protracted crises. These social costs represent 8 & 18 percent of GDP, respectively, highlighting the urgent need for improved livelihoods & integrated humanitarian, development, & peacebuilding efforts.

SOFA 2024 underscores the importance of adapting to local contexts & capturing stakeholder priorities. This is illustrated through case studies representing diverse countries & agrifood system types, including Australia, Brazil, Colombia, Ethiopia, India, & the United Kingdom.

A call for collective action

Overall, the report calls for a value-driven transformation of agrifood systems to make them more sustainable, resilient, inclusive, & efficient. This requires going beyond traditional economic measures like GDP by utilizing true cost accounting to recognize hidden costs. With this approach, decision-makers can make more informed choices that enhance the societal value of agrifood systems, acknowledging their essential roles in food security, nutrition, biodiversity conservation, & cultural identity. Achieving this transformation also demands bridging sectoral divides, aligning policies across health, agriculture, & the environment, & ensuring that the benefits & costs are equitably shared among all stakeholders.

‘’The choices we make now, the priorities we set & the solutions we implement will determine our shared future. Real change begins with individual actions & initiatives, supported by enabling policies & targeted investments. The transformation of global agrifood systems is fundamental to achieving the SDGs & securing a prosperous future for all,” said FAO Director-General QU Dongyu.

The report stresses that this transformation requires collective action, involving primary producers, agribusinesses, governments, financial institutions, international organizations, & consumers. While addressing hidden costs will result in uneven impacts across stakeholders, countries, & timeframes, supportive policies & regulations can help minimize disruptions, particularly for small-scale producers & agribusinesses, by promoting early adoption of sustainable practices & protecting vulnerable social groups.

Key recommendations include:

• Providing financial & regulatory incentives to advance the adoption of sustainable practices along the food supply chain & to limit power imbalances between agrifood systems stakeholders.
• Promoting healthier diets by enacting policies that make nutritious food more affordable & accessible & reduce health related hidden costs.
• Incentivizing reductions in greenhouse gas & nitrogen emissions, harmful land-use change & biodiversity loss through labelling & certification, voluntary standards & industry-wide due diligence initiatives.
• Empowering consumers with clear, accessible information about the environmental, social & health impacts of food choices, while ensuring even vulnerable households can benefit from change.
• Harnessing the significant purchasing power of food procurement through institutions to reshape food supply chains & improve food environments, combined with comprehensive food & nutrition education.
• Ensuring inclusive rural transformation that leapfrogs certain historical patterns avoiding the worsening of environmental, social & health hidden costs during transitions.
• Strengthening governance & civil society to create an enabling environment to accelerate innovations for sustainable & equitable agrifood systems

About SOFA

The SOFA report is a comprehensive annual overview of topics related to FAO’s mandate. It lays strong emphasis on emerging development areas, such as agrifood systems & digital technologies in agriculture.

This is the first time the flagship publication focuses on the same theme for two consecutive years, highlighting the urgent need for agrifood system transformation to ensure a sustainable future.