- ➔ Many consumers have untapped potential to drive agrifood systems transformation by incentivizing food supply chain actors to increase the value of food by changing the way it is produced, processed and delivered.
- ➔ Reducing inequalities and increasing agency, especially among those who cannot afford a healthy diet, is important, so that all consumers can leverage their influence on agrifood systems.
- ➔ Consumption patterns are driven by access, as well as economic and behavioural factors, so a mix of monetary and non-monetary interventions is needed to reshape consumer demand.
- ➔ Institutional procurement can be channelled for significant influence over agrifood systems transformation to advance environmental, social and health goals while raising consumer awareness.
- ➔ In agrifood systems where consumer purchasing power is limited, social safety nets and institutional procurement can be designed to advance agrifood systems transformation.
Consumers are the largest group of agrifood actors globally, even though they may lack political clout and visibility. When in a position of agency, consumers can drive the transformative change needed in agrifood systems through their buying power. Harnessing the purchasing power of consumers – and raising it for those who lack such agency – can be a strategic means of spurring change across food supply chains. In addition, from a health perspective, a widespread shift towards healthy diets will address not only the quantified health hidden costs associated with a higher risk of NCDs – amounting to 70 percent of the quantified hidden costs of global agrifood systems – but also those unquantified costs associated with other forms of malnutrition. Consequently, widespread changes in demand can serve as a catalyst for systemic transformation.
Marked changes in behaviour in even a small group of consumers can lead to significant changes in agrifood systems. This is evidenced by the large and varied offering of food products modified to have desirable health properties (such as low-fat, low-sugar and high-protein), especially in industrial agrifood systems. The power wielded by consumers through their purchasing behaviour also extends to transformative action to reduce environmental and social hidden costs. On the environmental side, for instance, harmful fishing practices damaging dolphins prompted some consumers in the United States of America to boycott tuna. Though the impact on sales was unclear, the boycott caused a substantial reaction among producers.1 Similarly, boycotts targeted at certain companies have prompted them to impose higher worker welfare standards on their supply chains, reducing social hidden costs.2, 3 The proliferation of organic, fair trade and similar sustainability standards, or environmental, social and governance reporting initiatives among agribusinesses, discussed in Chapter 3, attest to this power.
Nonetheless, the strength of consumers’ purchasing power in driving agrifood systems transformation depends on both their ability and their willingness to pay for a different basket of food products, which may come at a higher price (Box 18 in Chapter 3). Already, more than one-third of the world’s population – about 2.8 billion – was unable to afford a healthy diet in 2022.4 However, economic constraints do not explain all consumption behaviour. Food preferences, stemming from taste and required preparation time and skills, for instance, as well as food access and environments, are also pertinent. Consequently, it is important to understand consumers’ motivations and constraints in changing their food purchasing and consumption behaviours for more climate-sensitive, health-conscious and socially responsible products. Governments’ role in addressing these constraints and shaping food environments is a key factor in achieving this behavioural change.
This chapter explores key questions regarding the extent to which consumer and institutional purchasing power can drive transformation. It also examines the various levers that public and private decision-makers can use to leverage this purchasing power and motivate behavioural change by consumers. This includes a holistic approach to public-sector procurement that channels institutional purchasing power into reducing not only the health, but also the environmental and social, hidden costs of agrifood systems.
Factors shaping consumer food demand
Numerous factors determine food demand, including access, income, relative prices, preferences, marketing and information, culture, tradition, and food environment. At the individual level, the hidden costs of unhealthy diets fall on each consumer in the future (as years of life either lived with disability or lost) as well as on society (as environmental, social and health hidden costs). These costs may be hidden from consumers due to lack of awareness or a tendency to ignore potentially bad events in the future. Therefore, building awareness, motivation and capabilities among consumers can change food demand and address hidden costs.
While consumers have significant value to gain from more inclusive, sustainable and resilient agrifood systems, the extent to which individual purchasing power can be leveraged for transformation varies across agrifood systems, as well as within countries, due to inequality and poverty. Food security – a situation in which all people at all times have physical and economic access to sufficient, safe and nutritious foods that meet their dietary needs and food preferences for an active and healthy life – remains the primary objective of many countries in which affordability is a major constraint. Box 21 explores the inequalities in economic access to the most basic energy-sufficient diets compared with healthy diets that cost five times more, on average, across agrifood systems types.5 It documents the limits on consumers’ purchasing power among the most vulnerable segments of society and underlines the need to combine social safety nets to address capability for change with other interventions that focus on awareness and motivation to reshape food demand. The right to feed oneself in dignity and to be free from hunger is a legal obligation anchored in international law, guaranteed by the International Covenant on Economic, Social and Cultural Rights.6 Box 22 discusses how the true cost accounting approach incorporates the right to food as part of social hidden costs.
Box 21Economic access to energy-sufficient versus healthy diets
Having economic access to food is an issue related to price and income, and is therefore shaped by poverty, income inequality and the cost of food relative to disposable income. The poorer a person is, the larger the proportion of income spent on food. Therefore, even small increases in the cost of a diet or small reductions in the level of income can have a significant impact on accessibility to diets by the poorest. Not having a reliable and substantial income buffer limits consumers’ options in periods of shock, such as price spikes, crop failures or loss of assets. Therefore, a measure of economic access to estimate the extent to which populations have access to different diets provides some insights into the high incidence of either undernutrition or unhealthy dietary patterns across the different types of agrifood systems.
The figure shows the spectrum of diet affordability and vulnerability to shocks in populations across the agrifood systems categories in 2019. It compares the affordability of an energy-sufficient diet, which only meets caloric needs, with that of a healthy diet, which protects against malnutrition in all its forms through balanced and diverse nutritious foods. The affordability spectrum ranges from unable to afford the given diet (red) to able to afford (green), with orange showing the populations that would lose economic access to the diet in the event of a shock that reduces real incomes by one-quarter (through either a price increase or an income shortfall).
The spectrum of diet affordability provides a sense of whether a healthy diet is within everyone's reach. Not being able to afford the lowest cost possible energy-sufficient diet indicates that a more expensive healthy diet is clearly not within reach without targeted support. This gap is felt most strongly by populations in protracted crisis and traditional agrifood systems, where 5–10 percent of the population cannot afford an energy-sufficient diet. Furthermore, in these two categories, over 75 percent of the population cannot afford a healthy diet, and within this group situations span from those for whom this diet is within reach to those for whom it is not. In expanding agrifood systems, the affordability of an energy-sufficient diet mirrors that in traditional agrifood systems with 50 percent of the population unable to access a healthy diet. Access to a healthy diet increases across the diversifying, formalizing and industrial agrifood systems. Vulnerability to shocks remains persistent in all agrifood systems except industrial, with 5–10 percent of the population facing the risk of losing access to a healthy diet after an income shock. The findings highlight that low incomes and high food prices constrain consumers’ ability to change their consumption patterns in ways that significantly differ across agrifood systems categories.
FIGURE Affordability of diets by agrifood systems category, 2019
Box 22Addressing the social hidden costs of agrifood systems through THE right to food
The right to food is a fundamental human right and legal obligation for countries anchored in international law. FAO is the lead intergovernmental actor advocating for and supporting the realization of the right to food. Actions to advance the right to food include efforts in boosting social protection, promoting gender equality and decent work, and ensuring inclusive climate action and tenure policies. These make up integral components of the broader commitment to inclusive rural transformation, which would address the market, institutional and policy failures that lead to the hidden costs of agrifood systems.
Addressing the social hidden costs discussed in this report (including poverty, undernourishment, gender pay gaps, living income gaps and child labour) would significantly contribute to the realization of the right to food. This would complement FAO’s ongoing efforts in promoting the right to food through technical assistance on policy and legislation, strengthening governance and monitoring mechanisms, capacity development and policy dialogue using inclusive stakeholder participation.
Healthy and sustainable diets need not be more expensive than current diets, especially if measured on a per day or per serving basis (as opposed to a per calorie basis).7–9 For example, one recent study compared the current Italian diet to a healthy and sustainable diet and found the latter to be 5 percent cheaper.10 The results also showed that a sustainable and healthy diet had a carbon footprint that was 47 percent lower and a water footprint that was 25 percent lower.
Whether consumers choose to channel their purchasing power into healthy and/or sustainable diets depends on their awareness and motivation, and these are strongly shaped by food environments. As discussed in Chapter 3, customers are increasingly demonstrating their preference for products making environmental and social responsibility claims.11–14 A meta-analysis on consumers’ willingness to pay for products claiming corporate social responsibility (CSR) based on seven decades of publications finds that CSR acts as a product feature that helps consumers gain self-esteem and increases the overall value of the product.15 The findings vary by income and age, with youth demonstrating a keener interest and greater willingness to pay for CSR. While this study covers countries in all agrifood systems categories, except for protracted crisis, more than half of the country coverage is in countries with industrial agrifood systems, highlighting the need to better understand the scope for demand-side change across different agrifood systems contexts.
While agrifood businesses, particularly those connected to global value chains, are increasingly responding to these signals from consumers, greater consumer awareness and motivation to demand diets that internalize hidden costs are needed to serve as the tipping point for change beyond niche products. Box 18 in Chapter 3 explores how consumers reacted to the True Cost campaign by PENNY supermarkets in Germany, underlining that even in high-income settings, affordability can be a constraint on subpopulations, and behavioural change is difficult to achieve, requiring longer-term interventions.
Policymakers have long experimented with price incentives (taxes and subsidies) to change consumption patterns.16 The effectiveness of these measures depends on the price responsiveness of consumers, which varies by food group, income, socioeconomic variable and region.17 Price responsiveness may be higher for some food groups (such as meat) than for others (such as staples, oils and fats) and it tends to decrease with higher incomes.17, 18 While taxes on food can be financially regressive, disproportionately burdening vulnerable populations, the revenue generated can be strategically allocated to programmes and services that ultimately benefit and uplift these communities in the long term. Therefore, while demand-side change can be catalytic, systems-wide actions for dietary improvements and nutritional outcomes need to follow a structured framework influencing demand, supply and enabling factors.19 Policy and programmatic actions within this framework can be geared towards improving the capability, motivation and opportunity of consumers to make food purchase and consumption decisions, as well as increasing the availability and affordability of nutritious foods.
