The capacity of countries to take transformative action correlates to their institutional and fiscal spaces, as well as their supply chain structures and food environments. Figure 9 shows selected indicators to assess these dimensions by agrifood systems category.15 The radar graph in Panel A captures the capacity of governments to enact policies that can address different components of agrifood systems. The government effectiveness index captures overall implementation capacity. The proportion of recurrent central government agricultural support in agricultural value added captures both the capacity to reform the primary production sector and the fiscal space available for repurposing government support. Social protection coverage and the existence of a tax on SSBs capture the capacity to address social and health hidden costs, respectively. Panel B shows selected indicators of the production, infrastructure and consumption dimensions of agrifood systems, which can act as potential policy entry points to address hidden costs.
FIGURE 9 Selected agrifood systems indicators by agrifood systems category
SOURCES: Authors' elaboration based on Food Systems Dashboard. 2024. Food Systems Dashboard. [Accessed on 1 March 2024]. https://foodsystemsdashboard.org; data for Panel A are from FAO. 2024. FAOSTAT: Country Investment Statistics Profile. [Accessed on 20 February 2024]. https://www.fao.org/faostat/en/#data/CISP. Licence: CC-BY-4.0; FAO. 2024. FAOSTAT: Government Expenditure. [Accessed on 20 February 2024]. https://www.fao.org/faostat/en/#data/IG. Licence: CC-BY-4.0; Kaufmann, D. & Kraay, A. 2023. Worldwide Governance Indicators: 2023 Update. [Accessed on 19 October 2023]. www.govindicators.org; World Bank. 2022. World Bank: Global SSB Tax Database. [Accessed on 5 May 2024]. https://datacatalog.worldbank.org/search/dataset/0063310; World Bank. 2024. Data catalog: Coverage (%) - Active Labor Market. [Accessed on 20 February 2024]. https://datacatalog.worldbank.org/indicator/4bca7d49-fdce-eb11-bacc-000d3a596ff0/Coverage-------Active-Labor-Market; data for Panel B are from FAO. 2021. FAOSTAT: Fertilizers by nutrient. [Accessed on 20 February 2024]. https://www.fao.org/faostat/en/#data/RFN. Licence: CC-BY-4.0; FAO. 2024. FAOSTAT: Cost and Affordability of a Healthy Diet (CoAHD). [Accessed on 29 July 2024]. https://www.fao.org/faostat/en/#data/CAHD; FAO. 2024. FAOSTAT: Supply Utilization Accounts (2010-). [Accessed on 2 October 2024]. https://www.fao.org/faostat/en/#data/SCL; FAO. 2024. FAOSTAT: Value of Agricultural Production. [Accessed on 2 October 2024]. https://www.fao.org/faostat/en/#data/QV; World Bank. 2023. Access to electricity, rural (% of rural population). [Accessed on 20 February 2024]. https://data.worldbank.org/indicator/EG.ELC.ACCS.RU.ZS. Licence: CC-BY-4.0.
The fiscal space available to governments for agrifood systems transformation is critical in assessing the feasibility of levers and varies widely across agrifood systems categories. Countries in industrial and formalizing agrifood systems categories have the most resources available for repurposing government support towards safe, nutritious diets with sustainable and inclusive food production and consumption patterns. They dedicate an amount equivalent to around 33 percent of their agricultural value added to recurring agricultural support, on average, while no other category exceeds 10 percent. Traditional and protracted crisis groups allocate an amount equivalent to less than 3 percent of their agricultural value added to recurrent agricultural support, while at the same time having the greatest need for funding to finance agrifood systems transformation.16 Agrifood systems categories with the most fiscal space are also those with the highest government effectiveness indices and social protection coverage, further indicating the capacity to implement transformative policies.
Countries and territories in the diversifying category with the highest burden of health hidden costs as a share of GDP face significant challenges in the form of low government effectiveness and fiscal space (Figure 9, Panel A). Yet only 30 percent of countries in this category have an SSB tax. Panel B in Figure 9 shows that these same countries also have a high average rural electrification rate (95 percent), signalling high capacity to produce, process and preserve food, and the second-lowest food loss rate; yet 27 percent of their population cannot afford a healthy diet. This finding suggests that levers aimed at addressing health hidden costs in the diversifying category need to consider the detailed dietary risks and affordability of nutritious foods.
Unsurprisingly, countries and territories in protracted crisis fare worst on most agrifood systems indicators, as depicted in Figure 9, with particularly low levels of government effectiveness, agricultural support, social protection coverage, fertilizer use intensity, and rural electrification. They also have the highest DALY rates due to diets low in fruits and vegetables, as shown in Figure 8. The 21 countries in this group account for 23 percent of global social hidden costs, despite being home to just 6 percent of the total population. The high burden placed on their GDP by social and environmental hidden costs stands out (18 percent and 20 percent on average, respectively), specifically for the latter, which is the highest GDP burden of any agrifood systems category in any hidden cost domain. This is probably due to the vicious cycle of social and environmental stressors and conflict. Agrifood systems interventions in such situations should not only focus on food aid, but also provide medium- to long-term perspectives to address environmental stressors, poverty and social inclusion, and break this cycle (Box 6). Recognizing that humanitarian assistance remains the most significant source of funding for countries and territories in protracted crisis, effective application of the humanitarian–development–peace nexus approach – integrating the agendas on relief and development, resilience, disaster risk reduction, and sustaining peace – is essential in this regard.17–19
Box 6Challenges of agrifood systems in protracted crisis countries and territories
Agrifood systems in countries and territories in protracted crisis present unique challenges and complexities compared with other countries, stemming from their geopolitical context, environmental vulnerabilities and socioeconomic factors.20 Prolonged political instability, ongoing conflict and regional tensions significantly impact these agrifood systems.21 The fragmentation of governance structures, disruptions to trade routes and insecurity in rural areas lead to diminished productivity and increased vulnerability to food insecurity.22 Most countries in this category have populations consistently in Phase 3 or above (crisis or worse) in the IPC* Acute Food Insecurity classification system for several consecutive years. These populations struggle to meet their essential food requirements, resort to unsustainable coping measures, and require urgent action to protect their livelihoods and reduce food consumption gaps.21
Environmental challenges, including water scarcity, land degradation and susceptibility to climate change, further strain agrifood systems in these countries and territories. Moreover, recurrent droughts and erratic rainfall patterns disrupt agricultural cycles, exacerbating food insecurity and rural poverty.23 Their agrifood systems are, therefore, intricately linked to socioeconomic factors such as poverty, unemployment and rural–urban disparities. Subsistence farming predominates, and limited access to credit and agricultural inputs, and inadequate infrastructure impede agricultural development and perpetuate poverty.24 Gender inequalities in landownership and resource access further exacerbate vulnerabilities within rural communities, affecting household food security and nutritional outcomes.25
The hidden costs of agrifood systems in the protracted crisis category reflect these challenges. Social hidden costs, such as the poverty and food insecurity of agrifood systems workers, perpetuate cycles of vulnerability and instability. Environmental hidden costs, such as land degradation and water pollution, undermine the long-term resilience of agricultural ecosystems, causing biodiversity loss and exacerbating resource scarcities, and negatively impact human health.26 Health hidden costs from malnutrition impose a significant burden on public health systems and human well-being.
In these contexts, hidden costs are often overlooked, but have profound implications for sustainable and inclusive development. Addressing the complex problems affecting protracted crisis countries requires a multidimensional and immediate policy response.27 Most countries in this category have a food systems transformation pathway as part of the 2021 United Nations Food Systems Summit. These national pathways offer a significant opportunity to address the challenges of agrifood systems comprehensively. Effective implementation of the humanitarian–development–peace (HDP) nexus approach through multistakeholder mechanisms such as the HDP Nexus Coalition can facilitate this transformation.17
The successful abatement of hidden costs requires a careful analysis of the specific vulnerabilities of these countries to various shocks – economic, environmental and social – and agile implementation strategies. Effective policies should consider exit strategies from aid dependency, creating the conditions for rural transformation that can improve income-generating opportunities, purchasing power and access to healthy and nutritious foods.
SOURCE: Zurayk, R., Harik, G. & Al Kareem Yehya, A. 2024. True cost accounting and national food systems transformation pathways – Background paper for The State of Food and Agriculture 2024. Rome, FAO. Internal document.
