Islamabad, The Food and Agriculture Organization of the United Nations (FAO) has released a report revealing that the hidden costs of current agri-food systems amount to a staggering $10 trillion annually, equating to about 10% of the global GDP. This comprehensive analysis, part of the 2023 edition of The State of Food and Agriculture (SOFA), covers 154 countries and highlights the extensive impact of these costs on health, the environment, and society.

According to Food and Agriculture Organization of the United Nations (FAO), 70% of these hidden costs arise from unhealthy diets prevalent in high- and upper-middle-income countries, leading to issues like obesity, non-communicable diseases, and significant productivity losses. Additionally, about one-fifth of the total cost is environmental, attributable to factors such as greenhouse gas emissions, nitrogen emissions, land-use change, and water use. The report notes that these environmental costs are often underestimated due to data collection challenges.

The report also points out the disproportionate burden faced by low-income countries, where hidden costs account for more than a quarter of their GDP, significantly impacting poverty and malnutrition. The FAO advocates for the adoption of True Cost Accounting (TCA), urging countries to perform regular, detailed analyses and develop strategies to reduce these hidden harms. This approach is expected to foster a deeper understanding of these costs at national and international levels.

In Pakistan, the hidden costs of the agri-food system are estimated at approximately $161.8 billion (2020 PPP), constituting around 15% of the country’s GDP. These costs are categorized into environmental ($28.9 billion), social ($20.9 billion), and health ($112 billion) dimensions. Notably, Pakistan’s environmental hidden costs are 10% lower than those in similar lower-middle-income countries, while its health-related hidden costs are 9% higher, highlighting unique national challenges.

The report emphasizes the need for governments to implement true cost accounting to effectively address challenges such as the climate crisis, poverty, inequality, and food security. It calls for innovative research, data investment, and capacity building to scale the application of TCA transparently and consistently.

The FAO report underscores the urgency for global awareness and action, encouraging stakeholders at all levels to contribute towards steering the agri-food system towards sustainability.