FAO Report Exposes Hidden Costs of Global Food Systems Surpassing $10 Trillion Annually

A new report from the Food and Agriculture Organisation (FAO) reveals that while current food systems play a vital role in nourishing populations and supporting economies, they also impose substantial hidden costs, amounting to at least $10 trillion annually, on health and the environment.

This staggering figure represents nearly 10 percent of the global Gross Domestic Product (GDP) and is outlined in the 2023 edition of the State of Food and Agriculture (SOFA) report. The report introduces the concept of hidden costs and benefits associated with agrifood systems and offers a framework for assessing them, with the ultimate goal of steering global agrifood systems, which encompass food and non-food agricultural production, towards greater sustainability.

FAO Director-General Dongyu Qu emphasizes the urgency of acknowledging these hidden costs in the face of various global challenges, including food availability, climate change, biodiversity loss, economic uncertainties, poverty, and more. Recognizing the true costs and understanding our contributions to them is vital for shaping the future of agrifood systems.

The report highlights that over 70 percent of the hidden costs are driven by unhealthy diets rich in ultra-processed foods, fats, and sugars, which contribute to obesity and non-communicable diseases while causing labor productivity losses. These issues are particularly prevalent in wealthier countries. Additionally, about one-fifth of the total hidden costs are environmentally related, stemming from greenhouse gas emissions, nitrogen emissions, land-use changes, and water usage, impacting all countries.

Low-income nations are disproportionately affected by these hidden costs, with them representing over a quarter of their GDP, compared to less than 12 percent in middle-income countries and less than eight percent in high-income countries. The report calls for more comprehensive and regular analysis of the hidden or “true” costs of agrifood systems through true cost accounting, followed by decisive actions. The FAO report is the first to break down these costs at the national level and ensure comparability across cost categories and countries.

The FAO plans to dedicate two consecutive editions of the SOFA report to this theme, with the current report offering initial estimates. The 2024 edition will focus on in-depth assessments to identify effective mitigation measures, such as taxation, subsidies, and legislation.

The FAO urges governments to adopt “true cost” accounting to transform agrifood systems in response to challenges like climate change, poverty, inequality, and food security, necessitating investment and innovation in areas like research, data collection, and capacity building.