The United Nations has recently released a complete analysis shedding light on the profound impact of the world’s food system on our environment and health. Per a document by the Food and Agriculture Organization of the United Nations (FAO), the cumulative concealed expenses linked to the worldwide food system reach a remarkable $12.7 trillion, approximately constituting 10% of the total Global Gross Domestic Product (GDP).

Unraveling the True Costs:

This report meticulously examines the concealed expenses inherent in the current food system. These costs extend to health, environmental consequences, and societal implications. Among these, the most substantial financial impact is observed in the domain of health. Globally, an astounding 73 percent of all hidden costs, as assessed by the FAO, are linked to diets that contribute to conditions like obesity and non-communicable diseases such as heart disease and diabetes. The next substantial financial impact is attributed to environmental factors, accounting for over 20 percent of the quantified hidden costs.

Quantifying the Unseen:

David Laborde, the director of the FAO’s Agrifood Economics Division, emphasizes the significance of this report, stating, “We know that the agrifood system faces a number of challenges, and with this report, we can put a price tag on these problems.”

These hidden costs exhibit considerable disparities from one country to another. In low-income countries, nearly half of these hidden costs are rooted in poverty, which may result from farmers being unable to produce a sufficient amount of food or not receiving fair compensation for their produce. In these nations, the hidden costs of food amount to an average of 27 percent of the GDP, compared to just 8 percent in high-income countries. The FAO’s figures are based on 2020 purchasing power parity dollars, a method used for comparing living standards across countries with varying price structures and incomes.

Interconnected Costs:

The interplay of these hidden costs is interdependent and complex. Take, for instance, the case of cacao, a primary ingredient in chocolate. Cacao is predominantly cultivated in Ghana and Côte d’Ivoire, where farmers often receive inadequate compensation for their crops. Ironically, the bulk of this cacao is consumed by individuals in high-income countries, especially in Europe, often in the form of sugar-laden chocolate bars. Laborde’s proposal involves a transition to lower chocolate consumption in Europe, coupled with fair compensation for a higher-quality product. This change has the potential to diminish health-related consequences in Europe and, at the same time, direct more revenue to West African farmers.

Such cross-border value calculations are multifaceted, as noted by Jack Bobo, director of the University of Nottingham’s Food Systems Institute. Bobo points out the complexity of the EU’s Farm-to-Fork Strategy, which aims to achieve various objectives, including increasing organic farming in Europe and reducing fertilizer use by at least 20 percent by 2030. While these goals may reduce environmental hidden costs within Europe, this may inadvertently influence the overall efficiency of European farms, possibly leading to a heightened need for food imports from nations such as Brazil. This could create an incentive for deforestation and, in turn, contribute to added environmental concealed expenses in those areas.

Challenges in Hidden Cost Accounting:

Bobo, among others, expresses reservations about the true-cost accounting approach employed by the FAO to derive hidden cost figures. He highlights the potential pitfalls of exporting environmental footprints to the world’s most biodiverse countries, which may not necessarily result in a more sustainable system. It is imperative for governments to prioritize tackling the fundamental problems within their food systems instead of shifting their responsibilities globally. Bobo emphasizes that a universal solution is not applicable, as distinct regions demand customized strategies that align with their individual circumstances.

The Diet Dilemma:

In high-income countries, the glaring inadequacy pertains to people’s diets. The FAO’s findings reveal that over 80 percent of hidden food costs are intertwined with unhealthy dietary choices in these countries.

Anomalies, such as Japan’s relatively lower share of hidden food costs relative to GDP compared to countries like the US or Canada, offer insights into potential improvements. Japanese dietary habits, which often revolve around fish and relatively expensive yet healthier food options, play a pivotal role in steering individuals toward healthier diets. The cultural stress on wholesome foods has laid the groundwork for sound dietary decisions. In Western countries, it’s crucial to consider tactics to motivate individuals accustomed to regular meat consumption to scale back their intake by a meal or two weekly.

In conclusion, the reduction of these hidden costs necessitates a multifaceted approach. It calls for the concerted efforts of governments, individual choices, and responsible practices within the food industry. The FAO is currently engaged in producing the forthcoming report, which will feature a range of case studies to assist nations in adopting true-cost accounting and handling the authentic costs associated with the food system.