The Hidden Costs Of Agrifood Systems


According to analysis from the FAO sourced from across 154 countries, current Agrifood systems pose enormous hidden costs to human and planet health and society with an equivalent to, at minimum, US$10 trillion a year.

The 2023 State of Food and Agriculture (SOFA) edition revealed that the most significant hidden costs, equalling over 70 percent, are propelled by unhealthy diets, which are highly constituted by ultra-processed foods, fats, and sugars. This has had direct implications for populations and economies globally, leading to obesity and non-communicable diseases and labour productivity losses, which are predominantly high in high and upper-middle-class income countries.

A staggering one-fifth of the costs were shown to be environment-related from greenhouse gas and nitrogen emissions, land-use changes and water use, which affects all countries, the scale of which has been likely to be understated due to data limitations.

Disproportionately, low-income countries take the most significant blows from the hidden costs of the agrifood system, which accounts for more than a quarter of their GDP compared to 12 percent in middle-income countries and less than eight percent in high-income countries.

In low-income countries, hidden costs are associated with poverty, and undernourishment is the most significant.

Other reports and attempts have been made to measure the hidden costs of agrifood systems, which have produced similar results. However, the new FAO report is the first to separate and organise these costs at the national level, making sure they are comparable across cost categories between countries. The FAO will dedicate two consecutive editions of The State of Food and Agriculture to the same theme, where the 2023 report presents initial estimates, while 2024’s report will have a detailed, targeted assessment to discuss the best solutions to employ to mitigate these costs.

The report pitches the idea for more frequent and in-depth government and private sector analysis into the hidden or ‘true’ costs of agrifood systems achieved through true cost accounting and decisive actions implemented to minimise these harms. Governments have the power to leverage and adjust agrifood systems to drive for better outcomes overall through taxes, subsidies, legislation and regulation, to name a few.

This report urges governments to employ true cost accounting to revolutionise the agrifood system to address the global issues facing countries, including the climate crisis, poverty, inequality, and food security. True cost accounting notes innovations in research and data and investments in data collection and capacity building needed to accurately scale true cost accounting to allow for informed decision-making transparently and consistently.