Transformational food systems

Our key takeaway: Transformational food systems can deliver benefits to both people and planet. While current food systems have been instrumental in keeping pace with population growth and development demands, they have imposed significant costs on human health and the environment such that the costs now outweigh the benefits of food systems. Unaccounted costs to health and the environment are estimated at 15 trillion USD per year, which is equivalent to 12% of GDP in 2020. Transforming food systems in a way that respects people and planet can bring enormous benefits. For instance, farmers in the global food system — around 400 million people — may see improved incomes due to increased productivity and targeted support policies. Deaths from diet-related illnesses, biodiversity loss, water use, and nitrogen surplus from agricultural land will decrease from the shift to more environmentally sustainable food production. The Food System Economics Commission (FSEC) recognises the challenge of transforming food systems while remaining hopeful that this can happen provided we work together to push this transformation forward: “New technologies and business models are expanding the scope of what is possible.”

The Food System Economics Commission (FSEC) published The Economics of the Food Systems Transformation (February 2024):

• “A transformation of food systems is urgently needed”: The report highlights the costs of current food systems to human health, environmental damage and climate change, which is estimated at 15 trillion USD a year or equivalent to 12% of GDP in 2020. More specifically, health costs are estimated to be around 11 trillion USD, which is measured by looking at the negative impacts of disease (caused by food and diets) on labour productivity. Environmental costs are estimated to be around 3 trillion USD a year and has been quantified by considering the adverse impacts of food systems on land, its contribution to a third of greenhouse gas emissions and to the loss of over 6 million hectares of natural forest each year. Moreover, food systems significantly contribute to socioeconomic inequality: “[F]ood systems are a source of structural poverty through the costs of food, but also through the low incomes of many who work in food production. The incidence of poverty tends to be higher in agriculture than in the other segments of food systems.”

• Transformational food systems respects and protects human rights and the environment: Drawing on the Food System Transformation (FST) pathway, FSEC outlines the potential for food systems to meet people’s needs in a way that protects the environment. The FST pathway can bring several human rights and environmental benefits: 1) “Farmers in the global food system — around 400 million people — enjoy a sufficient income from their work thanks to productivity growth and targeted support policies”; 2) “Undernutrition is eliminated by 2050, and cumulatively 174 million lives are saved from premature death due to diet-related chronic disease”; 3) “An additional 1.4 billion hectares of land is protected, while a further 200 million hectares are afforested”; 4) “A shift to environmentally sustainable production in agriculture reverses biodiversity loss, reduces demand for irrigation water and almost halves nitrogen surplus from agriculture and natural land”; 5) “The food system becomes a net carbon sink by 2040”; and 6) “Processes of structural transformation are accelerated… About 75 million more on-farm jobs are reallocated to other segments of food systems.”

• Transformational food systems must manage tensions that will arise: The report states that there will be winners and losers of transforming food systems unless measures are taken to address tensions that may arise. A few of the tensions, opportunities and measures that may be relevant to companies include: 1) “Concerns about the future affordability of food can paralyse food system reforms, as well as resulting in disruptive policy responses such as export bans.” Effective safety nets should be put in place to cushion the effects of food price rises; and 2) “Developing downstream segments of the food system can help create jobs for farm workers displaced by food system change, particularly in low-income countries.” This requires “well-targeted investment in productive infrastructure, skills and more equitable access to finance – notably for women farmers.”