India’s agrifood systems have run up hidden costs of $1.1 trillion: FAO

India’s agrifood systems have accumulated hidden costs amounting to about $1.1 trillion, ranking it as the third highest globally after China and the US, the Food and Agriculture Organization (FAO) said.

The UN body’s report identifies hidden costs in agrifood systems, including environmental impacts from emissions and water use, health costs from poor diets, and social costs related to poverty and undernourishment.

“Hidden costs appear to be a greater burden in low-income countries, where they are estimated to amount to 27% of gross domestic product, against 11% in middle-income countries and 8% in high-income countries,” FAO said.

While India’s share of these hidden costs was 8.8% of the global total of $12.7 trillion, China had a 20% share and the US 12.3%, FAO data showed.

An analysis of India’s hidden agrifood costs shows that 60% of these expenses are attributed to diseases, which stem from reduced productivity linked to unhealthy dietary habits.

The social cost of poverty among agrifood workers was 14%, and the environmental cost of nitrogen emissions was 13%.

“Clearly, addressing poverty and undernourishment remains a priority for low-income countries, as these account for about half of all hidden costs quantified in these countries,” Qu Dongyu, director-general of FAO, said.

The majority of hidden costs come from upper-middle-income countries (39%) and high-income countries (36%). Countries with a lower middle income are responsible for 22% of the costs, while the poorest countries contribute just 3%.

These hidden costs vary depending on how wealthy a country is. In all but the poorest countries, unhealthy diets lead to diseases, which reduce people’s ability to work. This is followed by costs related to environmental damage.

Worldwide, the biggest hidden cost is health-related, due to unhealthy eating habits affecting workers’ health and productivity. In the two most affected countries, bad diets caused up to 85% of total costs. The next biggest costs are nitrogen emissions and land use.

About 20% of global agrifood hidden costs are environmental, which are most likely underestimated. Nitrogen emissions are the largest part of this, followed by greenhouse gas emissions, changes in land use, and water use.

The report stresses the need to consider these hidden costs in policy-making to improve agrifood systems. These costs are closely linked to sustainable development goals like ending poverty, hunger, and ensuring good health.

It notes that changing agrifood systems to address these hidden costs can be challenging. Governments, businesses, and individuals might resist change due to the fear of high costs or altering habits and traditions.

“Decision-makers face conflicting objectives, and addressing the hidden costs of agrifood systems can require significant changes to current production and consumption practices. This may be met with resistance from governments, businesses, producers and consumers, who may prefer the status quo for fear of high transition costs or changes in habits, culture or traditions,” the FAO report said.