This year’s report should dispel any lingering doubts that the world is moving backwards in its efforts to end hunger, food insecurity and malnutrition in all its forms. We are now only eight years away from 2030, the SDG target year. The distance to reach many of the SDG 2 targets is growing wider each year, while the time to 2030 is narrowing. There are efforts to make progress towards SDG 2, yet they are proving insufficient in the face of a more challenging and uncertain context.
As shown in Chapter 2, between 702 and 828 million people in the world faced hunger in 2021. This is about 180 million more people since the beginning of the 2030 Agenda, with much of the increase (150 million) since 2019, before the COVID-19 pandemic. Furthermore, nearly one in three people in the world, around 2.31 billion people, were moderately or severely food insecure in 2021. This is around 350 million more people than in 2019, the year before the COVID-19 pandemic unfolded. Healthy diets, crucial for enhancing food security and preventing all forms of malnutrition, are also now further out of reach for people in every region in the world. In 2020 – the most recent year for which data are available, almost 3.1 billion people could not afford a healthy diet, which is 112 million more people compared to 2019.
Of the seven 2030 global nutrition targets, only exclusive breastfeeding and stunting among children under five years of age have improved since 2012. No region has exhibited progress in lowering the prevalence of adult obesity, and overweight prevalence in children under five years of age is increasing in more than half of countries representing Southern Africa, Oceania, South-eastern Asia, South America, and the Caribbean. Furthermore, the latest available nutrition estimates are based primarily on data collected prior to 2020 and do not fully account for the anticipated global setbacks due to the effects of the COVID-19 pandemic.
Things did not improve much in the first half of 2022. The lingering effects of the COVID-19 pandemic continue to impede progress and create setbacks, contributing to a slow and mixed picture of economic recovery among countries that also weakens efforts to end hunger, food insecurity and malnutrition in all its forms. The war in Ukraine is also disrupting supply chains and affecting global grain, fertilizer and energy prices. Global food and energy prices are soaring and have reached levels not seen in decades. Global economic growth prospects for 2022 have been revised downward significantly. The growing frequency and intensity of extreme climate events continue to be major disrupters of agricultural production and supply chains, affecting food security, nutrition, health and livelihoods in many countries.
The intensification of the major drivers behind recent food insecurity and malnutrition trends (i.e. conflict, climate extremes and economic shocks) combined with the high cost of nutritious foods and growing inequalities will continue to challenge food security and nutrition. This will be the case until agrifood systems are transformed, become more resilient and are delivering lower cost nutritious foods and affordable healthy diets for all, sustainably and inclusively.
This year’s report is cognizant of the fact that the current recessionary context makes it even more challenging for many governments to increase their budgets to invest in agrifood systems transformation. At the same time, the report has argued that much can and needs to be done with existing resources. A key recommendation is that governments start rethinking how they can reallocate their existing public budgets to make them more cost-effective and efficient in reducing the cost of nutritious foods and increasing the availability and affordability of healthy diets, from sustainable agrifood systems and leaving no one behind.
Chapter 3 shows that worldwide governments allocated almost USD 630 billion a year on average over 2013–2018 to the food and agriculture sector. Support targeting agricultural producers averaged almost USD 446 billion a year in net terms, accounting for both price incentives and disincentives to farmers. About USD 111 billion were spent yearly by governments for the provision of general services to the sector, while food consumers received USD 72 billion on average every year through fiscal subsidies. Altogether, the USD 630 billion a year is not a small amount if one compares it with other important sources of finance. For example, as measured in the Global Landscape of Climate Finance 2021 report, total climate finance – which has been growing considerably – reached USD 632 billion in 2019–2020,394 which is close to this report’s estimate of support to food and agriculture. While governments are spending similar amounts of public resources to support food and agriculture, agrifood systems are not delivering on what is needed to achieve food security and nutrition objectives.
Agricultural producers take the lion’s share of all this support globally – about 70 percent. Governments, particularly in HICs and UMICs, are providing price incentives to farmers through border measures (i.e. import tariffs and NTMs) and market price controls as well as fiscal subsidies (often tied to the production of a specific commodity or the use of a specific input). In contrast, LMICs and LICs have more limited fiscal space and tend to use trade policies to protect consumers, rather than producers.
Not only is the amount of public support significant but depending on how it is allocated, it can either support or hinder efforts towards sustainable development – as highlighted in Section 3.2. The distortions that border measures, market interventions and fiscal subsidies generate affect trade, production and consumption decisions, with repercussions for the environment, food security and nutrition.
Border measures affect the availability, diversity and prices of food in domestic markets. While some of these measures target important policy objectives including food safety, governments could do more to reduce trade barriers for nutritious foods, such as fruits, vegetables and pulses, in order to increase the availability and affordability of such foods to reduce the cost of healthy diets.
In LICs and MICs, market price controls such as minimum or fixed price policy to consumers overwhelmingly target commodities like wheat, maize, rice, as well as sugar, with the objective of stabilizing or raising farm incomes while ensuring supplies of staple foods for food security purposes. However, these policies could be contributing to the unhealthy diets that one observes all over the world.
Fiscal subsidies allocated to some specific commodities or factors of production have significantly contributed to increasing production and reducing the prices of cereals (especially maize, wheat and rice), but also of beef and milk. This has positively impacted food security and farm incomes. They have also indirectly supported the development and use of better technology and of new agricultural inputs, which enhance the productivity of the subsidized commodities. On the other hand, these types of subsidies have also resulted in important market distortions within and across borders that do not usually exist in a competitive market. In a way, they have de facto created (relative) disincentives towards producing nutritious foods. They have also encouraged monocultures in some countries, ceased the farming of certain nutritious products, and discouraged the production of some foods that do not receive the same level of support. The resulting changes in production have had direct implications for the price and availability of unsubsidized or less subsidized commodities and their derivatives, creating negative incentives for people to diversify their diets.
Public support through general services benefits actors of the food and agricultural sector more collectively, which is in principle good for small-scale farmers, women and youth. But as noted, this type of support is significantly lower than the support provided to individual producers through price incentives and fiscal subsidies, and it is more widely funded in HICs. In some cases, services such as R&D are biased towards producers of staple foods. Nonetheless, this alternative form of support, if allocated for example to research, development and knowledge transfer, infrastructure, inspection, food and agricultural marketing services, and so forth, can be strategic to bridge productivity gaps in countries at lower-income levels. More expenditure on general services and more support decoupled from production is essential for ensuring food safety and food availability and can significantly contribute to lower food prices – including for nutritious foods. Yet, important gaps exist in the provision, implementation, design and coherence of such types of support in many countries.
This report, while acknowledging data limitations, has also shown that subsidies to consumers represent the lowest share of all the support to food and agriculture. The evidence also shows that policies and programmes supporting consumers have the potential to contribute to increasing consumption of nutritious foods. This is especially the case of interventions that are well targeted (e.g. to the poorest households or the most nutritionally vulnerable people), explicitly designed to have nutritional impacts (i.e. nutrition-sensitive programmes) and are accompanied by nutritional education.
Having taken stock of support to food and agriculture worldwide and by regions, and on how the evidence suggests this support affects agrifood systems and diets, another significant contribution is Chapter 4. It provides evidence that repurposing existing food and agricultural support has the potential to play an important role in delivering healthy diets at lower costs and more generally contribute to people’s ability to afford them.
While governments will need to develop tailored repurposing strategies based on their country context and evidence, the need for such reforms will be found in most countries, given the internationally agreed SDG 2, and in some cases, well-coordinated multilateral actions will be needed to enable reforms. Thus, analysing the effects of potential options for repurposing support to food and agriculture is also of strategic importance at the global level. In this regard, an analysis of model-based scenarios developed in Section 4.1 provides some important insights to keep in mind:
- A general empirically grounded observation is that repurposing existing public support to agriculture in all regions of the world, with the objective of promoting the production of nutritious foods (whose production and consumption is low relative to the dietary requirements) would contribute to make a healthy diet less costly and more affordable, globally and particularly in LMICs and UMICs.
- Most improvement towards this specific objective would be seen through repurposing fiscal subsidies, particularly if these were to be shifted from producers to consumers. Fiscal subsidies to products whose consumption must increase to bridge dietary gaps can result in the most diversified healthy diet consumption pattern with GHG emission reductions, especially when targeted at consumption rather than production level. However, the benefits could be at the cost of poverty reduction, farm incomes, total agricultural output and economic recovery, particularly if the reallocation of these subsidies were to be targeted at production level.
- Repurposing support through border measures and market price controls would also help to move towards the objective of making a healthy diet less costly and more affordable, although relatively less so than in the case of fiscal subsidies. This alternative policy shift would however contribute to cutting GHG emissions in agriculture without the trade-offs seen with the repurposing of fiscal subsidies.
- Globally, the trade-off between increasing the affordability of a healthy diet and reducing GHG emissions in agriculture would be more apparent should fiscal subsidies to producers be repurposed to target nutritious foods. This is because, in this case, dairy production in particular would have to increase to enable meeting certain dietary requirements, particularly in LICs and MICs. More generally, such type of trade-off may be offset if countries shift towards technologies that are relatively lower in emission intensity and, more generally, production and consumption become more sustainable.
- Whether through border measures and market controls or fiscal subsidies, policymakers will have to repurpose their support considering the potential inequality trade-offs that may emerge if small-scale farmers (including women and youth) are not in a position to specialize in the production of nutritious foods due to resource constraints.
- Moreover, to avoid other trade-offs, policymakers may choose not to shift fiscal subsidies from producers to consumers. Instead, they may phase out fiscal subsidies to producers that are tied to the production of a specific commodity or the use of specific inputs and are proven distorting, environmentally harmful and not promoting of nutritious foods. The resources should be redirected to fiscal subsidies to producers that are decoupled from production but whose design is nutrition-sensitive, promotes the adoption of low-emission intensity technologies, and includes other environmental conditionalities.
- Policymakers may also want to take advantage of the evidence emerging from this report, which indicates that a fiscal subsidy to commodities whose consumption needs to increase in adherence to the country dietary guidelines is a very efficient policy. Subsidies to consumers generally form the tiniest share of all the support being provided to food and agriculture in the world; hence, governments will have to allocate significant additional resources to them.
- Where agriculture is still key to the economy and job generation, particularly in LICs and also some LMICs, support through government services will have to be scaled up. This needs to be done, though, with careful prioritization to ensure that both productivity gaps are bridged where most needed and that agricultural transformation effectively helps increase incomes, resilience and the availability of nutritious foods, all of which will contribute to reducing the cost of such nutritious foods for the consumer.
To take advantage of the opportunities that repurposing support offers, countries will have to get together at the multilateral table. The repurposing of border measures, market price controls and fiscal subsidies will have to consider countries’ commitments and flexibilities under current WTO rules, as well as issues in the ongoing negotiations. Importantly, repurposing agricultural subsidies, if undertaken by many countries, could even open a new chapter for agricultural trade negotiations at the WTO. Countries could find new ground for discussion on how to discipline trade-distorting domestic support. Options could include increasing the flexibility for providing product-specific subsidies to producers of nutritious foods, and in the context of the negotiations on market access that includes tariffs, countries could consider reducing the bound level of tariffs on fruits, vegetables, legumes and other products important to healthy diets, to foster trade in these products.
Policymakers in LICs and perhaps also some LMICs will need to overcome two challenges. First, they will need to reach compromises in repurposing food and agricultural support to achieve several inclusive agricultural transformation objectives in alignment with the objective of reducing the cost and increasing the affordability of healthy diets. Second, considering their low budgets, they may also have to mobilize significant financing to step up the provision of general support services to effectively bridge productivity gaps in the production of nutritious foods. In this regard, international public investment support (e.g. from International Financial Organizations [IFIs], regional development banks, the Global Agriculture and Food Security Programme [GAFSP], and so forth) will be key to ease the transition towards higher general support services, especially in LICs.
This report also acknowledges that making nutritious foods more widely accessible and affordable is a necessary albeit insufficient condition for consumers to be able to choose, prefer and consume healthy diets. Thus the link to complementary policies that promote healthy diets is critical for success. Within agrifood systems, Section 4.2 pointed out the importance of policies that promote shifts in food environments and consumer behaviour towards healthy eating patterns. These could include implementing mandatory limits or voluntary targets to improve the nutritional quality of processed foods and drink products, enacting legislation on food marketing, and implementing nutrition labelling policies and healthy procurement policies to ensure that food served or sold in public institutions contributes to healthy diets. Combining land-use policies with other complementing policies to address food deserts and swamps can also be very important.
As shown in Section 4.1, repurposing can lead to trade-offs that may negatively affect some stakeholders. In these cases, social protection policies may be necessary to mitigate possible trade-offs, particularly short-term income losses or negative effects on livelihoods, especially among the most vulnerable populations. Environmental policies, health system policies, and transportation and energy policies are necessary to enhance the positive outcomes of repurposing support in the realms of efficiency, equality, nutrition, health, climate mitigation and the environment. Health services that protect poor and vulnerable groups whose diets do not provide all the nutrients to meet dietary requirements are particularly relevant in the context of repurposing support efforts. Not adequately addressing inefficiencies and problems in transportation would also undermine and render ineffective such efforts.
The success of repurposing food and agricultural policy support will also be influenced by the political context, the interests of stakeholders, market power concentration, and the governance mechanisms and regulatory frameworks in place to facilitate the reform process, an important discussion at the centre of Section 4.3. Given the diversity of each country’s political context, strong institutions on a local, national and global level will be crucial, as well as engaging and incentivizing stakeholders from the public sector, the private sector and international organizations to support the repurposing support efforts. For many countries, agrifood systems transformation pathways provide a framework through which to channel the repurposing efforts. The engagement of SMEs and civil society groups – as well as transparent governance and safeguards to prevent and manage conflicts of interest – will be key to balancing out unequal powers within agrifood systems.
To conclude, the need to realign food and agricultural policy support is not a new issue; however, it has gained impressive momentum as a specific issue in the run-up to, during and now after the 2021 UN Food Systems Summit, which triggered country pathways towards agrifood systems transformation and further called for a coalition for action in this area. As a result, the Coalition to Repurpose Public Support to Food and Agriculture is also being formed with the participation of international organizations, non-profit organizations, governments, farmers and other organizations.395 The objective of the coalition is to support countries who have indicated a desire to repurpose their public food and agricultural support. An important aspect is that priorities of this coalition are being defined according to science-based evidence.
There have been vast recent research and reports on the benefits of realigning and repurposing agricultural policy support to transform agrifood systems to improve their efficiency and environmental sustainability, as discussed in this report. However, the association, synergies and links between food and agricultural policy support and the cost of nutritious foods that constitute a healthy diet were under-researched before this edition of the report. The need to bridge this knowledge gap was the motivation for this year’s theme analysis, hoping that the new evidence that has been presented and the policy recommendations made will contribute to featuring healthy diets more prominently in the global agenda of repurposing food and agricultural support to achieve SDG 2 and generate impacts in favour of SDG 3 (Good Health and Well-Being), SDG 10 (Reduced Inequalities), SDG 12 (Responsible Consumption and Production) and SDG 13 (Climate Action), among other SDGs.
