A study by the Food and Agriculture Organization of the United Nations (FAO) involving 156 countries reveals that hidden costs within global agrifood systems total approximately $12 trillion annually.

Of this figure, around 70% ($8.1 trillion) arises from unhealthy dietary patterns linked to alarming non-communicable diseases (NCDs) such as heart disease, stroke, and diabetes—significantly outpacing costs related to environmental degradation and social inequalities.

The State of Food and Agriculture 2024 (SOFA) builds on the 2023 edition, providing an in-depth analysis of the true costs and benefits associated with food production, distribution, and consumption, including “hidden costs and benefits” not reflected in market prices. The report categorizes these costs by agrifood system types and offers a roadmap for transformative change in agrifood systems worldwide.

Health and Environmental Costs Drive Hidden Expenses

The study highlights that global hidden costs are primarily driven by health-related issues, followed by environmental impacts, especially in highly industrialized agrifood systems in upper-middle- and high-income countries.

The report identifies 13 dietary risk factors, including low intake of whole grains, fruits, and vegetables, along with high sodium consumption and elevated intake of red and processed meats, with notable variations across agrifood systems.

Hidden Costs by Agrifood System Type

Agrifood systems have evolved from traditional to industrial, each with distinct outcomes and hidden costs. To analyze this, the report classifies systems into six categories: protracted crisis, traditional, expanding, diversifying, formalizing, and industrial. This framework enables a targeted understanding of each system's unique challenges and opportunities, facilitating the development of tailored policies and interventions.

For example, while low intake of whole grains is a common dietary risk across systems, protracted crisis and traditional systems struggle more with limited fruit and vegetable intake. Conversely, high sodium intake peaks in formalizing systems, while red and processed meat consumption steadily increases from traditional to industrial systems.

Beyond dietary risks, unsustainable agricultural practices contribute substantially to hidden costs. Environmental costs—such as those from greenhouse gas emissions, nitrogen runoff, land-use changes, and water pollution—are particularly high in countries with diversifying agrifood systems, reaching an estimated $720 billion. Formalizing and industrial systems also bear significant environmental costs, though protracted crisis countries bear the highest relative costs, equivalent to 20% of their GDP.

Social costs, including poverty and undernourishment, are most severe in traditional systems and those in protracted crises, representing 8% and 18% of GDP, respectively, underscoring the need for improved livelihoods and integrated humanitarian, development, and peacebuilding efforts.

A Call for Collective Action

Overall, the report advocates for a value-driven transformation of agrifood systems to make them more sustainable, resilient, inclusive, and efficient. This approach requires moving beyond traditional economic indicators like GDP to account for hidden costs through true cost accounting.

With this approach, policymakers can make more informed choices that enhance the societal value of agrifood systems, acknowledging their roles in food security, nutrition, biodiversity conservation, and cultural identity. Achieving this transformation requires bridging sectoral divides, aligning policies across health, agriculture, and environment, and ensuring equitable cost and benefit distribution among stakeholders.

“The choices we make now, our priorities, and the solutions we implement will determine our shared future,” said FAO Director-General QU Dongyu. “Real change begins with individual actions and initiatives, supported by enabling policies and targeted investments. The transformation of global agrifood systems is fundamental to achieving the SDGs and securing a prosperous future for all.”

The report underscores the need for collective action among primary producers, agribusinesses, governments, financial institutions, international organizations, and consumers. Addressing hidden costs will impact stakeholders unevenly, but supportive policies can help ease transitions, especially for small-scale producers, by encouraging early adoption of sustainable practices and safeguarding vulnerable groups.

Key Recommendations:

• Financial and Regulatory Incentives: Support sustainable practices along the food supply chain and reduce power imbalances among stakeholders.
• Promote Healthier Diets: Enact policies to make nutritious food more affordable and accessible, reducing health-related hidden costs.
• Reduce Environmental Impact: Use labeling, certification, voluntary standards, and industry-wide due diligence to lower greenhouse gas emissions, nitrogen runoff, and biodiversity loss.
• Empower Consumers: Provide clear information on the environmental, social, and health impacts of food choices, ensuring all households benefit.
• Harness Institutional Buying Power: Use food procurement through institutions to reshape supply chains and improve food environments, complemented by food and nutrition education.
• Inclusive Rural Transformation: Avoid worsening environmental, social, and health costs by promoting equitable agrifood transitions.
• Strengthen Governance: Foster an environment that accelerates innovations for sustainable and equitable agrifood systems.

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