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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.
