In the face of escalating global challenges – lack of food availability, food accessibility and food affordability due to the climate crisis, biodiversity loss, economic slowdowns and downturns, worsening poverty, and other overlapping crises – we find ourselves standing at a critical juncture. The choices we make now, the priorities we set and the solutions we implement will determine the trajectory of our shared future. Consequently, the decisions we make about global agrifood systems must acknowledge these interrelated challenges.

There is increased international consensus that transforming agrifood systems to increase their efficiency, inclusiveness, resilience, and sustainability is an essential comprehensive design for realizing the 2030 Agenda for Sustainable Development. Momentum for change led to the first ever United Nations Food Systems Summit (UNFSS), convened by the UN Secretary-General (UNSG) in September 2021, followed by the UN Food Systems Summit + 2 Stocktaking Moment (UNFSS+2), hosted by the Italian Government in the Food and Agriculture Organization of the United Nations (FAO) in late July 2023. These meetings highlighted strong political will and stakeholder support for innovative solutions and strategies to transform agrifood systems and leverage those changes to deliver progress on all the Sustainable Development Goals.

To achieve these goals, including FAO's vision to transform agrifood systems for better production, better nutrition, a better environment, and a better life for all, leaving no one behind, it is vital that the impacts of our actions within these systems be transparent. FAO is responding to this essential need by dedicating two consecutive issues of The State of Food and Agriculture ‒ for the first time since this flagship publication was launched in 1947 ‒ to uncovering the true impacts, both positive and negative, of global agrifood systems for informed decision-making.

This year’s report introduces true cost accounting (TCA) as an approach to uncovering the hidden impacts of our agrifood systems on the environment, health, and livelihoods, so that agrifood systems actors are better informed and prepared before making decisions. There is always concern that if we consider all the hidden costs of producing food, prices will go up, but integrating these costs in the decision-making process, as well as in the incentives faced by producers and consumers, is part of a much larger process of agrifood systems transformation. TCA is about supporting the right investment decisions by countries and the private sector, to reduce existing costs instead of perpetuating them.

The 2023 report further highlights the methodological and data challenges that need to be addressed for greater adoption of TCA, especially in low- and lower-middle-income countries. It quantifies, to the extent possible, the hidden costs of national agrifood systems in a consistent and comparable way for 154 countries. These preliminary results cover hidden costs from greenhouse gas emissions, nitrogen emissions, blue water use, land-use transitions, and poverty, as well as losses in productivity caused by unhealthy dietary patterns and undernourishment.

The results we present in this report should not be viewed as a definitive assessment, but rather as a starting point for stimulating debate and dialogue. Indeed, while these results help us see the big picture of the hidden costs of agrifood systems, action to address these costs will have to be taken at country level. In this context, the next edition of The State of Food and Agriculture will aim to improve upon this initial preliminary quantification and analysis using country-specific information and input from in-country stakeholders and experts. This can then inform the planning for more in-depth, tailored analyses to guide transformational policy actions and investments in specific countries.

The pressing need to incorporate hidden costs into our decision-making processes, as part of the broader effort to transform the way our agrifood systems function, is underscored by the striking figures that already emerge from this year’s findings, despite their tentative nature and the aim of refinement in 2024. Preliminary results strongly suggest that the global hidden costs of our agrifood systems ‒ despite the exclusion of certain impacts and a considerable degree of uncertainty ‒ exceed USD 10 trillion.

One of the most glaring findings is the disproportionate burden of these hidden costs on low-income countries. Here, hidden costs account for, on average, 27 percent of gross domestic product, primarily due to the impacts of poverty and undernourishment. Compared with, on average, 11 percent in middle-income countries and 8 percent in high-income countries, this reveals a stark economic disparity. Clearly, addressing poverty and undernourishment remains a priority for low-income countries, as these account for about half of all hidden costs quantified in these countries.

Productivity losses from dietary patterns that lead to non-communicable diseases are the most significant contributor to the total hidden costs of agrifood systems and are particularly relevant for high- and upper-middle-income countries. Environmental hidden costs, which constitute more than 20 percent of total quantified hidden costs, correspond to nearly one-third of the value added by agriculture.

Next year’s edition of this report aims to provide case studies with more targeted assessments, linking hidden costs to actions that can be taken to reduce them. These consecutive editions are part of a broader strategy by FAO to integrate TCA into agrifood systems assessments and policy advice. The findings presented in the 2023 report underscore the urgent need for systemic transformation. They also reveal the potential of TCA as a catalyst for transformation – a tool for unveiling these hidden costs, informing policy, and improving the value proposition of agrifood systems.

As we turn the pages of this report and look forward to The State of Food and Agriculture 2024 advancing this work programme, let us remember that the future of our agrifood systems and, indeed, of our planet hinges on our willingness to appreciate all food producers big or small, to acknowledge these true costs and to understand how we all contribute to them. We all have a stake in acting upon them.

It is my sincere hope that this report will serve as a call to action for all stakeholders – from policymakers and private-sector actors to researchers and consumers – and inspire a collective endeavour to transform our agrifood systems for the betterment of all.

The F A O Director-General, Qu Dongyu's signature.

Qu Dongyu
FAO Director-General

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