State of Food and Agriculture

The State of Food and Agriculture is the Food and Agriculture Organisation's major annual flagship publication. It aims at bringing to wider audience balanced science-based assessments of important issues in the field of food and agriculture. Each edition of the report contains a comprehensive, yet easily accessible, overview of selected topic of major relevance for rural and agriculture development and for global food security.

The State of Food and Agriculture 2023

The State of Food and Agriculture 2023 looks into Revealing the true cost of food to transform agrifood systems.

Agrifood systems generate significant benefits to society, including the food that nourishes us and jobs and livelihoods for over a billion people. However, their negative impacts due to unsustainable business-as-usual activities and practices are contributing to climate change, natural resource degradation and the unaffordability of healthy diets. Addressing these negative impacts is challenging, because people, businesses, governments and other stakeholders lack a complete picture of how their activities affect economic, social and environmental sustainability when they make decisions on a day-to-day basis.

The report introduces the concept of hidden environmental, health and social costs and benefits of agrifood systems and proposes an approach – true cost accounting (TCA) – to assess them. To operationalize the TCA approach, the report proposes a two-phase assessment process, first relying on national-level TCA assessments to raise awareness and then moving towards in-depth and targeted evaluations to prioritize solutions and guide transformative actions. It provides a first attempt at national-level assessments for 154 countries, suggesting that global hidden costs from agrifood systems amount to at least to 10 trillion 2020 PPP dollars.

The estimates indicate that low-income countries bear the highest burden of the hidden costs of agrifood systems relative to national income. Despite the preliminary nature of these estimates, the analysis reveals the urgent need to factor hidden costs into decision-making for the transformation of agrifood systems. Innovations in research and data, alongside investments in data collection and capacity building, are needed to scale the application of TCA, especially in low- and middle-income countries, so that it can become a viable tool to inform decision- and policymaking in a transparent and consistent way.

Key Messages

• The value of agrifood systems is not in doubt. They provide nourishment, sustain economies and shape cultural identities. However, one must also consider the environmental, social and health hidden costs associated with these systems. 
• True cost accounting allows the estimation of the hidden costs generated by market, institutional and policy failures. It provides decision-makers with the evidence needed to correct these failures and transform agrifood systems for the better.
• True cost accounting for decision-making builds on a long tradition of economic valuation; however, a lack of availability of high-quality data, on both hidden costs and the costs of taking action, often limits its application.
• This report proposes a two-phase assessment process, relying first on national-level true cost accounting assessments to raise awareness (presented in this report) and then moving towards in-depth and targeted evaluations to prioritize solutions and guide transformative actions (which will be the focus of the 2024 edition of the report).
• This year’s report presents a first attempt at a national-level assessment for 154 countries. Even with large uncertainty and excluding some impacts, there is a very high degree of confidence that the global quantified hidden costs of agrifood systems amount to 10 trillion dollars or more at 2020 purchasing power parity (PPP), revealing the urgent need to factor these costs into decision-making to transform agrifood systems.
• Globally, the dominant quantified hidden costs are those arising from dietary patterns which lead to diseases and lower labour productivity. These health-related costs exhibit considerable variation across countries, but are most prominent in high- and middle-income countries.
• The environmental hidden costs, while not exhaustive, constitute over 20 percent of the quantified hidden costs and are equivalent to almost one-third of agricultural value added. They are mostly associated with greenhouse gas (GHG) and nitrogen emissions and are relevant across all country income groups.
• Hidden costs appear to be a greater burden in low-income countries, where they are estimated to amount, on average, to 27 percent of gross domestic product (GDP), compared with 11 percent in middle-income countries and 8 percent in high-income countries.
• Addressing poverty and undernourishment remains a priority in low-income countries, as they account for about half of the total hidden costs quantified in these countries.
• The new national-level estimates are a first step in raising awareness, even if they are incomplete and involve a high degree of uncertainty. Targeted true cost accounting assessments that also look at the cost of different abatement actions – the focus of next year’s report – are needed to inform decision-makers on how to leverage policy, regulation, standards and private capital for a transition towards sustainable agrifood systems.
• For true cost accounting assessments at scale, innovations in research and data, as well as investments in data collection and capacity building, are needed to scale the application of true cost accounting, especially in low- and middle-income countries, so that it can become a viable tool for informing decision- and policymaking in a transparent and consistent way.

Source : FAO

Related resources

1. The State of Food and Agriculture 2023 - Full report