Our current agri-food systems impose massive hidden costs on health, the environment, and society, amounting to at least $10 trillion per year, according to a groundbreaking analysis by the United Nations Food and Agriculture Organization (FAO) covering 154 countries. This represents almost 10% of global GDP.

According to the 2023 edition of The State of Food and Agriculture (SOFA), the largest hidden costs (over 70%) are driven by unhealthy diets rich in ultra-processed foods, fats, and sugars, leading to obesity and non-communicable diseases, causing losses in labor productivity. Such losses are particularly high in high-income and upper-middle-income countries.

One-fifth of the total costs are related to the environment, stemming from greenhouse gas and nitrogen emissions, land use change, and water use. This is an issue affecting all countries, and the magnitude is likely underestimated due to data limitations.

Low-income countries are proportionally the most strongly affected by the hidden costs of agri-food systems, representing over a quarter of their GDP, compared to less than 12% in middle-income countries and less than 8% in high-income countries. In low-income countries, the hidden costs associated with poverty and malnutrition are the most significant.

The report advocates for more regular and detailed analysis by governments and the private sector of the hidden or "true" costs of agri-food systems through the implementation of cost accounting, followed by actions to mitigate these damages.

There have been other attempts to measure the hidden costs of agri-food systems, producing estimates similar to those of the FAO.

However, the new FAO report is the first to disaggregate these costs at the national level and ensures they are comparable across cost categories and countries.

For the first time, FAO will dedicate two consecutive editions of "The State of Food and Agriculture" to the same themes. This year's report presents initial estimates, while next year will focus on targeted in-depth assessments to identify the best ways to mitigate them. Governments can pull various levers to adjust agri-food systems and achieve better overall outcomes. These include taxes, subsidies, legislation, and regulations.

"Faced with growing global challenges: food availability, food accessibility, and food affordability; the climate crisis; biodiversity loss; economic slowdowns and recessions; worsening poverty; and other overlapping crises, the future of our agri-food systems depends on our willingness to value all food producers, large or small, to recognize these true costs, and to understand how we all contribute to them and what actions we need to take. I hope this report will serve as a call to action for all partners – from policymakers and private sector actors to researchers and consumers – and will inspire a collective commitment to transform our agri-food systems for the betterment of all," said FAO Director-General QU Dongyu.

The report urges governments to use real cost accounting to transform agri-food systems to address the climate crisis, poverty, inequality, and food security.

It notes that innovations in research and data, as well as investments in data collection and capacity building, will be necessary to expand the application of true cost accounting so that it can inform decision-making in a transparent and consistent manner.