Hidden Costs of India’s Agri-Food Systems: Key Insights from FAO Report

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Hidden Costs of India’s Agri-Food Systems: Key Insights from FAO Report

Context:

The State of Food and Agriculture 2024 report by the Food and Agriculture Organisation (FAO) highlights India’s $1.3 trillion annual hidden costs in agri-food systems. Driven primarily by unhealthy dietary patterns, these costs impact health, the environment, and social equity.

Key Drivers of Hidden Costs

  • Dietary Risks and Health Impacts
    • Non-communicable diseases (NCDs) linked to diets high in processed foods, sugars, and additives account for over 73% of hidden costs in India.
    • The hidden health costs include diseases like heart disease, stroke, and diabetes from low intake of plant-based whole foods and beneficial fatty acids.
    • $846 billion in costs stems from low consumption of fruits, whole grains, and healthy fats, while $128 billion comes from high processed food consumption.
  • Environmental Costs
    • Environmental impacts of agrifood systems include GHG emissions across the food supply chain, nitrogen emissions from fertilisers, and land-use changes.
    • Costs are attributed to both carbon emissions and nitrogen waste through runoff and leaching, affecting soil and water quality.
  • Social Costs
    • Poverty among agri-food workers due to low wages and productivity is a significant cost driver.
    • Distributional failures within the agri-food system lead to low earnings, affecting workers’ welfare and productivity.

Global and Regional Insights

  • India’s Position Globally
    • India ranks third highest in hidden costs, following China ($1.8 trillion) and the United States ($1.4 trillion).
    • On a global scale, $12 trillion is the estimated hidden cost of agrifood systems, with 70% ($8.1 trillion) arising from unhealthy diets.
  • True Cost Accounting
    • The FAO report uses true cost accounting to assess the full scope of costs—health, environmental, and social—beyond market prices, providing a more accurate valuation of agri-food systems.

Recommendations for Sustainable Agri-Food Systems

  • Promote Healthier Diets
    • Implement policies to make nutritious food more affordable and accessible, reducing the health-related hidden costs of unhealthy diets.
  • Sustainable Food Supply Chains
    • Introduce financial and regulatory incentives to encourage sustainable practices across the food supply chain.
    • Minimise power imbalances among stakeholders to create a fairer agri-food ecosystem.
  • Environmental Responsibility
    • Incentivise reductions in GHG emissions, nitrogen emissions, and harmful land-use changes.
    • Utilise labelling and certification to empower consumers with knowledge about the environmental impacts of their food choices.
  • Empower Consumers
    • Provide clear information on environmental, social, and health impacts associated with food products.
    • Ensure that even vulnerable households can benefit from improved food choices and sustainable practices.
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