The World’s Broken Food System Costs $12.7 Trillion a Year

The United Nations has published an important new overview of the impact the global food system is having on our health and the planet. According to a report by the Food and Agriculture Organization of the United Nations (FAO), the total hidden costs of the global food system amount to $12.7 trillion – roughly 10 percent of global GDP.

The report analyzed the health, social and environmental costs embedded in the current food system. The biggest impact in monetary terms is on health: Globally, 73 percent of all hidden costs covered by the FAO were associated with diets that led to obesity or non-communicable diseases such as diabetes and heart disease. The next largest impact in monetary terms was on the environment, accounting for more than 20 percent of the quantified hidden costs.

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

The hidden costs of food systems change dramatically from country to country. In low-income countries, almost half of hidden costs are related to poverty and may be partly caused by farmers not being able to grow enough food or getting a fair price for their products. In these countries, hidden food costs average 27 percent of GDP, compared to just 8 percent in high-income countries. The FAO figures use 2020 purchasing power parity dollars – a way to compare the living standards of countries with very different incomes and prices.

These hidden costs may be connected. Laborde gave the example of cocoa, the main ingredient in chocolate. Cocoa is mainly grown in Ghana and Ivory Coast, where farmers often receive a pittance for their crops. That cocoa is mainly eaten by people in high-income countries, especially in Europe, and usually in the form of sugar-laden chocolate bars. If people in Europe ate a little less chocolate, but paid more for a fairer and better quality product, it could help reduce the health impact in Europe while sending more money to farmers in West Africa, says Laborde.

These cross-border value calculations can become enormously complex, says Jack Bobo, director of the University of Nottingham’s Food Systems Institute. Take the EU’s Farm-to-Fork Strategy, which aims, among other things, to ensure that a quarter of European agricultural land is organic and to reduce the use of fertilizers by at least 20 percent by 2030. Achieving these targets is likely to reduce hidden environmental costs in Europe. , but it is likely that this will also ultimately reduce the overall productivity of European farms. This could mean European countries would have to import more food from countries like Brazil, which would drive deforestation and lead to more hidden environmental costs there.