That double cheeseburger, cold can of soda and bag of salty corn chips you ordered cost a lot more than you may have thought: a new report finds the true costs of agrifood systems to our health and planet are staggering.
The "hidden costs" of industrial agriculture and food systems come to at least US$10 trillion a year or roughly 10% of global GDP, according a new report from the Food and Agriculture Organization.
“Hidden behind the price of food are costs that we all pay, not at checkout, but through impacts on the environment, society and health,” FAO economist Theresa McMenomy said. “Revealing food’s hidden costs is critical because it helps set priorities for change.”
Markets generally reflect the upfront costs of food production – seed, fertilizer, transportation, labor and production, among others – plus the supply and demand. The new report uses "true cost accounting" to look at the costs that get left out when someone buys a loaf of bread or a can of tomatoes.
“By revealing the true costs of food we can transform agrifood systems to be more efficient, inclusive, resilient and sustainable,” said McMenomy.
The global quantified hidden costs of agrifood systems are approximately US$12.7 trillion a year, at purchasing power parity in 2020, the report estimated. But after "taking uncertainty into account," it concluded, there's a 95% chance those costs exceed US$10 trillion a year.
"This includes environmental hidden costs from greenhouse gases and nitrogen emissions, water use, and land-use change; health hidden costs from losses in productivity due to unhealthy dietary patterns; and social hidden costs from poverty and productivity losses associated with undernourishment," it said.
Getting beyond 'conventional metrics'
In July, U.N. Secretary-General António Guterres told a summit at Rome, where the FAO, World Food Program and International Fund for Agricultural Development are headquartered, that "global food systems are broken – and billions of people are paying the price.”
He pointed to more than 780 million people worldwide who are going hungry while almost one-third of all the food that's produced globally is lost or wasted. Meantime, almost 3 billion people can't afford healthy diets.
"Broken food systems are not inevitable. They are the result of choices we have made. There is more than enough food in the world to go around," he said.
Developing countries face additional challenges, as limited resources and debt burdens prevent them from investing fully in agrifood systems that can produce enough nutritious food across the social spectrum.
Unsustainable food production, excess packaging and consumption also are a major factor in the nature and climate crises, driving major biodiversity losses, a third of all greenhouse gas emissions and 70% of the world’s freshwater usage.
True cost accounting is a practice that reflects the external costs – environmental, social and economic factors – generated by a product's creation. In this case, it shows how food systems impact the global economy, environment and society.
“Policymakers must start accounting for these hidden costs," said Jenn Yates, director of the True Cost Accounting Accelerator, a global network backed by philanthropic foundations. "We need to go beyond conventional metrics like crop yields and understand the value of the whole system inclusive of its health outcomes and environmental impacts."
The main environmental costs of agrifood systems are the water runoff that's polluted by agricultural chemicals and animal wastes and the emissions of carbon, methane and other warming gases released into the atmosphere.
Land use changes and water usage also figure in, as well as weather uncertainties tied to climate change. The key social costs are poverty, undernourishment and food insecurity, which are not generally factored into the price of food.
Low income for growers and other workers in the agrifood sector in less-developed countries drive poverty and undernourishment. Hidden food costs can account for more than 25% of GDP in these developing nations, and the FAO said incomes need to increase substantially to help guard against hunger and food insecurity.
The high cost of junk food
Of the three primary hidden costs in food production – environmental, social and health – the largest come from unhealthy diets filled with cheap fats and sugars that go into producing ultra-convenient, ultra-processed foods that lead to heart disease, cancer, chronic respiratory disease, diabetes and other noncommunicable diseases, or NCDs.
But the consequences of rising obesity and preventable diseases remain largely unconsidered when people buy and consume lunch meats, chips, candy bars and other highly processed foods.
Those consequences include costly and preventable hospitalizations, premature deaths and lost labor productivity. NCDs remain the leading cause of death and disability worldwide, responsible for nearly three-quarters of all deaths.
Most are preventable and many are driven by unhealthy foods. Tobacco and alcohol use, air pollution and physical inactivity are also factors. NCDs also are often both a cause and a result of poverty, impacting lower-income populations and adding to the stress on already overburdened and often insufficient public health-care systems.
In their quest to maximize profits and expand markets for processed food, companies exploit the often lax health and dietary regulations of developing nations. At the same time, productivity losses linked to NCDs and unhealthy diets remain a major hidden food cost in higher-income nations, such as in the United States and across Europe, where millions of people suffer from untreated high blood pressure and die prematurely from strokes and heart attacks.
FAO Director-General Qu Dongyu urged governments to fix the world's agrifood systems, particularly as global challenges mount from climate change, biodiversity loss, economic woes, rising poverty and other overlapping crises.
"One of the most glaring findings is the disproportionate burden of these hidden costs on low-income countries," he said in the report's foreward. "Here, hidden costs account for, on average, 27% of gross domestic product, primarily due to the impacts of poverty and undernourishment."
That compares with 11% in middle-income countries and 8% in rich countries.
His organization plans to follow up next year with a second study considering ways that policymakers might be able reduce the unwanted impacts of these largely under-the-radar costs, such as through taxing unhealthy foods, reforming agricultural subsidy policies and issuing dietary guidelines and regulations.
