- ➔ Policies and investments to transform agrifood systems in an increasingly globalized world need to carefully navigate the distributional issues that arise when trying to address the hidden costs of agrifood systems.
- ➔ Giving voice to all actors through stakeholder consultation is a fundamental precondition to successful agrifood systems transformation on any scale.
- ➔ It is no longer a question of what needs to be done to advance transformation, but how to do it, due to the difficulty of bridging the spatial and temporal divide between actors at opposite ends of the distribution spectrum.
- ➔ By unveiling spatial and temporal trade-offs and synergies between different policy measures, meaningful stakeholder engagement, coupled with a pragmatic approach to true cost accounting assessment, can inform decisions on the most suitable actions.
- ➔ Political will to transform the governance of global agrifood systems is paramount in addressing the “hidden constraints” of distributional challenges.
There is no doubt that global agrifood systems must be transformed to achieve the SDGs and the goals of the Paris Agreement. Equally, there is no shortage of proposed pathways and actions for reaching the goals.1–4 Some actions are easier to implement than others, especially if the actors that need to change behaviour are also the beneficiaries. While intrinsic motivation can sometimes move the needle in the required direction, it is not enough to tip the balance and address all distributional challenges.
For example, increasing crop productivity in a sustainable way is one of the main actions needed globally. Farmers will adopt an improved, high-yielding seed if they are not bound by multiple constraints and can afford the upfront costs, as they can see it will benefit them come harvest time. If the same group of farmers needs to use more water and fertilizer to achieve those high yields, creating negative externalities for downstream farmers in other locations and a higher global carbon footprint (affecting current and future generations), the practice becomes unsustainable and they will not have the incentive to address those costs in the absence of regulation. Similarly, agrifood businesses will have no economic incentive to invest in reducing their environmental footprint if it does not yield higher incomes or customer loyalty (in other words, if there is no business case). Consumers, meanwhile, will not change their diets to include more sustainably and fairly produced items to the extent needed unless they benefit directly from a better environment and fairer wages themselves.
These are stylized depictions of the concept of externalities, introduced into economic thinking to guide welfare policy about 100 years ago.5 With the industrialization of production, combined with the globalization of agrifood systems, the potential for actors to generate externalities for others has grown exponentially due to the complexity of interdependencies over space and time. It is, therefore, not surprising that TCA assessments that aim to address these interdependencies are more mature in the agrifood systems sector, which has more direct and larger impacts and dependencies on nature and people.6 They provide a more complete understanding of our existing agrifood systems, in a precursor to identifying levers for agrifood systems transformation to ensure our health and the health of the planet.7
Distributional challenges, barriers to change, and how these can be addressed
The longer the agrifood value chain, the larger the scope of TCA assessments becomes, making it harder to identify all of the actors who produce hidden costs and those who would benefit from transformative action to address them. As discussed in Chapter 2, for some countries a system to finance the transformation pathway will be needed, as the costs are beyond their means. The large disparities in the global food sector tend to create hidden costs that affect marginalized groups disproportionately and are exacerbated by climate change and continuing inaction.8, 9
Partly in response to consumer demand for sustainability, but mostly driven by the business case for sustainability, there is an increasing trend among global food companies to report their impacts on natural, social and human capital based on global sustainability standards.10 Although this multicapital accounting is a welcome step towards sustainable agrifood systems transformation, the omission of the distributional implications jeopardizes a just transition on a larger scale.9
In the absence of a change in global food value chains to fully internalize the inequitable consequences of their actions, governments and intergovernmental organizations need to take action to incentivize a just transition. Though some progress was made at the COP28 United Nations Climate Change Conference in November 2023, where governments agreed on the operationalization and funding arrangements of the Loss and Damage Fund to support vulnerable nations dealing with the impacts of climate change,11 progress on fully operationalizing such initiatives is usually slow. On the bright side, the decision to establish such a fund is a critical step closer to achieving climate justice and may serve as a stepping stone in raising the bar and acknowledging the need for a just transition in global agrifood systems – be it due to climate change or not.
A starting point could be the use of TCA approaches to document the connections between the beneficiaries of today’s actions (carried out by primary producers, agribusinesses and consumers) and the bearers of the hidden costs of these actions, be they local or global actors of today, tomorrow or generations to come. By spatially and temporally unveiling trade-offs and synergies between different policy measures, open stakeholder discussions can inform decisions on the most suitable development paths.7
Table 3 synthesizes the distributional challenges and barriers to change due to these spatial and temporal divides between agrifood systems actors that produce hidden costs today and those that bear those costs now or in the future. For primary producers, the main challenge is that the beneficiaries of hidden costs are spread throughout the value chain, but the burden of addressing these costs falls on the producers. This issue is exacerbated by asymmetric power relations and difficulties in determining who bears the risk and cost of change. Mechanisms to address these challenges include collective action by producers, as well as regulatory and financial frameworks to support and scale up producer and agribusiness initiatives and broader investment in inclusive rural transformation (see Chapter 3).
TABLE 3 DISTRIBUTIONAL CHALLENGES AND MECHANISMS TO ADDRESS SPATIAL AND TEMPORAL DIVIDES BETWEEN AGRIFOOD SYSTEMS ACTORS FOR TRANSFORMATION
SOURCE: Authors' own elaboration.
Food supply chain actors may face situations that deviate from good commercial conduct (for example, unfair arbitrage) or situations of power concentration, and may seek to impose downward price pressure on suppliers. These challenges are compounded by difficulties in determining fair contributions along the value chain and the potential to externalize costs through imports or other means. As noted in Table 3, mechanisms to address these issues include voluntary standards, ESG reporting, compliance with laws and regulations for agrifood systems actors, labelling and certification, and industry-wide coalitions aimed at addressing hidden costs.
Consumers and institutions with purchasing power are the final link in determining the hidden costs that arise through dietary patterns. Changing these behaviours takes time and is influenced by culture and traditions. Mechanisms to shift consumer behaviour are quite diverse, including consumer labels, health-positive marketing, subsidizing healthy products, nutrition-sensitive social protection, and improved education on the hidden costs of consumption decisions (see Chapter 4).
The last column in Table 3 lists selected levers (discussed throughout this report) with the potential to address the hidden costs and distributional challenges inherent in transforming global agrifood systems. Given the interconnectedness between stakeholders and the systems approach taken in this report, the measures listed in each row are not limited to those that the stakeholders listed in the first column have the agency or power to implement. They are selected levers requiring stakeholder consultations for effective implementation, as highlighted throughout this report.
