The Food and Agriculture Organization of the UN (FAO) has published a study of hidden costs of global agrifood systems. Of the annual total of approximately USD 12 trillion, around 70% (USD 8.1 trillion) is linked to unhealthy diets, giving rise to non-communicable diseases (NCDs) such as heart disease, stroke, and diabetes, according to the 2024 State of Food and Agriculture (SOFA) report. These costs far exceed the costs associated with environmental degradation and social inequalities.
Themed, ‘Value-driven Transformation of Agrifood Systems,’ the 2024 edition of FAO’s annual flagship builds on SOFA 2023. It uses true cost accounting to estimate the full range of costs and benefits related to food production, distribution, and consumption, including “hidden costs and benefits” that are not reflected in market prices. Providing a more refined picture, SOFA 2024 divides updated cost estimates by agrifood system types and charts a path for agrifood systems’ transformation.
The study identifies 13 dietary risk factors, including insufficient intake of whole grains, fruits, and vegetables and excessive sodium consumption, and divides agrifood systems into six groups: protracted crisis; traditional; expanding; diversifying; formalizing; and industrial. This categorization enables the development of policies and interventions tailored to the unique challenges and opportunities inherent to each system.
According to the report, in more industrialized agrifood systems in upper-middle-income countries (UMICs) and high-income countries (HICs), global hidden costs are mainly driven by health hidden costs, followed by environmental hidden costs.
The report attributes a significant share of environmental hidden costs to unsustainable agricultural practices. These include costs associated with greenhouse gas (GHG) emissions, nitrogen runoff, land-use change, and water pollution and are particularly high (an estimated USD 720 billion) in countries with diversifying agrifood systems, marked by rapid economic growth alongside evolving consumption and production patterns.
The study finds that social costs, such as poverty and undernourishment, are mainly prevalent in traditional agrifood systems and agrifood systems affected by protracted crises.
SOFA 2024 calls for a value-driven transformation to make agrifood systems more sustainable, resilient, inclusive, and efficient. This, it argues, requires going beyond traditional economic measures like gross domestic product (GDP) to reflect hidden costs. By utilizing true cost accounting, decision makers can make better policy choices, acknowledging agrifood systems’ critical role in food security, nutrition, biodiversity conservation, and cultural identity.
“The transformation of global agrifood systems is fundamental to achieving the SDGs and securing a prosperous future for all,” said FAO Director-General QU Dongyu.
The report presents a set of recommendations to transform agrifood systems through collective action by primary producers, agribusinesses, governments, financial institutions, international organizations, and consumers. These include:
- Providing financial and regulatory incentives to advance the adoption of sustainable practices along the food supply chain and to limit power imbalances between agrifood systems stakeholders;
- Promoting healthier diets by enacting policies that make nutritious food more affordable and accessible and reduce health-related hidden costs; and
- Incentivizing reductions in GHG and nitrogen emissions, harmful land-use change, and biodiversity loss through labeling and certification, voluntary standards, and industry-wide due diligence initiatives.
Ensuring inclusive rural transformation and strengthening governance and civil society for sustainable and equitable agrifood systems are also among the report’s recommendations.
SOFA 2024 was released on 8 November, in advance of the UN Climate Change Conference (UNFCCC COP 29) taking place in Baku, Azerbaijan. [Publication: The State of Food and Agriculture 2024: Value-driven Transformation of Agrifood Systems] [Report In Brief] [Publication Landing Page] [FAO Press Release] [UN News Story]