Agrifood systems provide nourishment, sustain economies, and shape cultural identities – at a cost. The 2023 State of Food and Agriculture (SOFA) report proposes an approach to assess hidden environmental, health, and social costs and benefits of agrifood systems to provide evidence decision makers need to correct institutional policy failures and transform agrifood systems for the betterment of all.

An annual flagship publication of the Food and Agriculture Organization of the UN (FAO), the report emphasizes that accounting for agrifood systems costs and benefits is “critical to achieving many, if not all” the SDGs. It notes that agrifood systems transformation can have a significant impact on reducing poverty, eliminating hunger, and achieving good health and well-being because of agrifood systems’ relevance to agricultural productivity, rural livelihoods, health, food security, and nutrition. Transitioning to sustainable agrifood systems, it argues, also implies progress on SDG 6 (clean water and sanitation), SDG 7 (affordable and clean energy), and SDG 12 (responsible consumption and production), as well as the SDGs on climate action and marine and land biodiversity, among other Goals.

The true cost accounting (TCA) approach proposed in the report consists of two phases. The first phase, presented in SOFA 2023, relies on national-level TCA assessments to raise awareness. The second phase includes in-depth and targeted evaluations to prioritize solutions and guide transformative actions. This second phase will be the focus of the 2024 edition of the report, marking the first time FAO dedicates two consecutive editions of the SOFA to the same theme since the series was launched in 1947.

Even with large uncertainty and excluding some impacts, the 154-country assessment estimates the quantified hidden costs of agrifood systems to amount to 10 trillion dollars or more at 2020 purchasing power parity (PPP). It finds that globally, over 70% of quantified hidden costs are driven by unhealthy diets, which lead to obesity and non-communicable diseases and cause labor productivity losses, with such losses reaching particularly high levels in high-income countries (HICs) and upper-middle-income countries (UMICs).

Proportionately, the hardest hit by hidden costs of agrifood systems are low-income countries (LICs), where these costs represent more than a quarter of their gross domestic product (GDP) and where the most significant hidden costs are associated with poverty and undernourishment. In middle-income countries (MICs), this number sits at less than 12% of GDP, and at less than 8% in HICs.

According to the report, one-fifth of the total costs are environment-related, affecting all countries, with the scale likely underestimated due to data limitations.

The national-level estimates presented in the report are a first step in raising awareness, SOFA 2023 argues, acknowledging the need for targeted TCA assessments that also look at the cost of different abatement actions to support decision and policymakers in “leverage[ing] policy, regulation, standards and private capital for a transition towards sustainable agrifood systems.” It also stresses the need for TCA assessments at scale, innovations in research and data, and investments in data collection and capacity building.

SOFA 2023 was launched on 6 November 2023, in advance of the UN Climate Change Conference (UNFCCC COP 28) in Dubai, United Arab Emirates (UAE). In line with its vision of putting nature, people, lives, and livelihoods at the heart of climate action, the COP 28 incoming Presidency has proposed a leader-level Emirates Declaration on Sustainable Agriculture, Resilient Food Systems, and Climate Action to catalyze action to achieve the Paris Agreement on climate change and the 2030 Agenda for Sustainable Development. [Publication: The State of Food and Agriculture 2023: Revealing the True Cost of Food to Transform Agrifood Systems] [Publication Landing Page] [FAO Press Release] [UN News Story]