November 7 – They say that politicians should know the price of a carton of milk, or a loaf of bread. Not hard, you might think. But what about the true cost of these everyday items? That’s something many of us would be less sure of.
Access to food is a right. It is something we need to survive. It is integral to the everyday human experience. Food has shaped cultures and civilisations. It has made some countries and regions rich. It unites families, features in religious rituals and is a strong current in politics, whether that’s the strength of the farm lobby, the concentrated market structures in key food-producing countries or the destabilising power of consumers unhappy about soaring prices.
We know food, and the farming that produces it, is important. And if we watch our household budget, or are aspiring politicians, we’ll know precisely how much a carton of milk costs. But we don’t often think about the true cost of our agrifood systems.
Markets are efficient and smart, but also imperfect and incomplete. They don’t price and can’t value everything. The tag on a loaf of bread reflects the inputs – the cost of wheat and the fertiliser used to grow it; production in the factory; transport from farm to food store; marketing and packaging. It also reflects how much people want bread (the demand) and whether there is enough to go round (supply).
But what is not priced in is the impact of the production of this food on the environment, or the societal cost of unhealthy foods. Furthermore, prices don’t take into account the need for workers in the agrifood system to earn a living wage, whether that’s packing shelves in a warehouse or toiling in the fields.
A man eats a burger in a shop in Tokyo. Over 70% of hidden costs associated with food are driven by unhealthy produce. REUTERS/Yuya Shino Acquire Licensing Rights
The United Nation’s Food and Agriculture Organization’s report, the State of Food and Agriculture 2023, attempts to value these things properly and reaches a staggering conclusion: the hidden costs in our global agrifood system are at least $10 trillion. That’s around 10% of global gross domestic product every year. Just take a moment to reflect on that. It’s quite a lot for a politician to miss.
The vast majority – over 70% – of those costs are driven by unhealthy foods, ultra-processed, high in fats and sugars, which lead to obesity and non-communicable diseases. These cause labour productivity losses and are particularly large in high- and upper-middle-income countries.
More than a fifth of the total hidden costs are environmental, from greenhouse gas and nitrogen emissions, land-use change and water use. We’re possibly most familiar with these costs, not least because the green movement has called our attention to the impact of farming on our countryside and average global temperatures. They’re probably underestimated, because of limitations in the data, and the conceptual and technical difficulty of putting a value on nature. But we know they affect us all, and are growing.
Low incomes in the agrifood sector are another hidden cost, particularly in less-developed countries, where they are driving poverty and under-nourishment. In these countries, hidden agrifood system costs represent more than a quarter of their GDP, and the human toll is huge.
In middle-income countries, the hidden costs of agrifood systems represent less than 12% of GDP, and in high-income countries it’s less than 8%. But that is still a lot. And, now that we know the magnitude of these hidden costs, it would be unwise not to do something to address them.
Farmers tends to a rice field in Kampong Chhnang province, Cambodia. Low incomes in the agrifood sector are a hidden cost, particularly in less-developed countries. REUTERS/Chor Sokunthea DCS/CN Acquire Licensing Rights
Our report uses what is known as true cost accounting to assess the overall scale of hidden costs. It is the first study to do this at a national level for 154 countries, enabling comparisons and paving the way for country-specific solutions. Next year’s report will use in-depth, targeted evaluations to determine the best measures for policymakers to take to reduce the unwanted impacts of the agrifood system, and promote positive social, environmental and health outcomes instead.
Options they might consider include subsidy reform, taxes on unhealthy foods, dietary guidelines, labelling or regulation. These could promote people’s health, but also support ecosystems and encourage strategic investments. Critically, this does not mean that the price of all food will go up. Indeed, prices may, in some cases, become a better signal of true value and as a consequence reduce these costs. Spending patterns might change but overall household budgets won’t necessarily need to increase.
True cost accounting can also highlight when action will be cheaper than inaction. For instance, investing in proper information on soils, smart fertiliser products and proper training for farmers is less costly for society than the impact of nitrogenous pollution linked to over-application of farm inputs. These solutions are already supported by the UN Food and Agriculture Organization, in collaboration with many countries, but showing their true benefits is critical to motivate decision-makers around the world
True cost accounting can also increase access to healthy diets, if policies align with the true costs of unhealthy foods, and this could reduce the 3.1 billion people who don’t have access to healthy diets today. We hope this will be a turning point for how we think about the cost of food: not just what it says on the label but what it’s really worth. And that such a holistic view will guide better decisions, in all our interests.
