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The True Cost of US Food System is Three Times What Americans Pay

by Tippi Leung Americas Sep 7th 20215 mins
The True Cost of US Food System is Three Times What Americans Pay

A new report released by The Rockefeller Foundation in July 2021, shows that the true cost of the US food system is actually three times the amount of what Americans are currently paying when you take into account on issues such as deforestation and forced migration. This report provides the framework on the necessary first step towards reshaping the economic and regulatory incentives that drive the current food system. 

The Rockefeller Foundation report is the first to conduct a US-specific, national-level analysis, as well as a comprehensive set of 14 metrics across the categories of human health, environment, and society, and how they are impacted by food production and consumption.  

The analysis is a collaboration between academics, think tanks, and other international and US organisations using true cost accounting on food systems. The result is striking: while Americans spent an estimated USD$1.1 trillion on food in 2019, if you account for the aforementioned impact areas, another substantial $2.1 trillion would be added to the actual cost. 

Given that only the primary impacts of the food system are studied, this means that adding on any downstream impacts such as  risks of increased exposure to viruses due to deforestation for food cultivation, and migration due to climate change, would lead to a cost easily exceeding the ‘three-time’ threshold. The externalised costs are being incurred by all players, including the public sector, businesses and producers, consumers, and future generations.

Key Takeaways of the Report

cost of food system

Figure 1: Unaccounted food cost in each category.

The study finds that the biggest unaccounted cost of the food system is the impact on human health. People in the US pay close to USD $1.1 trillion a year in health-related costs, a significant amount of which is spent on health care for diet-related diseases such as hypertension, cancer, and diabetics. 

Unaccounted environmental costs encompasses direct environmental impacts such as greenhouse gas emissions, water use, and soil erosion, as well as the impact on biodiversity. The report unsurprisingly finds there are high costs incurred in land use and land transformation for food production.

Societal costs, including costs to livelihoods (such as underpayment of wages and lack of benefits), and economic costs are high. However, the use of total cost accounting can be restricting due to the ethical difficulties in assigning monetisation factors to several areas that would require inherent value judgement. At the moment, what we have is an underestimate of the actual cost. This is approximately USD $100 billion for the costs to livelihood, and the economic cost, as measured by the average value of federal agricultural subsidies over the past five years, is USD$21 billion.

The Disproportionate Impacts on Minority Communities

Numerous published findings demonstrated that most of these costs have been disproportionately impacted by minority communities and people of colour. This is most evident when it comes to health-related costs for Black and Indigenous communities. According to the American Diabetes Association, Latinx American adults are 1.7 times more likely to be diagnosed with diabetes than White American adults, while Black American adults are 1.5 times more likely to get diagnosed. In 2019, 2.4 times more black households are also suffering from food insecurity than White households, according to the US Department of Agriculture.

You might also like: 15 Countries That Waste the Most Food

trends in us food system

Figure 2: Trends in food insecurity by race and ethnicity. Source: USDA, Economic Research Service.

A similar picture is painted in regards to environmental costs. While White families living in areas with about $10 billion in natural disasters damages saw a wealth increase of nearly $126,000 due to generous reinvestment initiatives, Black families lost about $27,000. These highlight how communities of colour are not only disproportionately impacted by the direct costs of the food system, but also by their downstream impacts.

On a similar note, figures from the US Department of Agriculture show that historical agricultural subsidies have benefitted White farmers far more than farmers of colour, signifying the disproportionate livelihood and economic costs incurred. 

These contrasting figures demonstrated that any reshaping of the food system would require the consideration of the deeply-rooted, systemic inequalities and burdens already carried by the marginalised communities. In other words, a successful reform to the food system would require looking at ways to address the true cost without necessarily raising consumer prices or employing changes that will exacerbate the existing inequalities. 

What are the Solutions to Transform the US Food System?

“In the absence of stronger and more holistic data, direction, and informed decision-making, food in the US is not just a sunk cost but a sinking cost, sapping trillions of additional dollars a year from human health, environment and biodiversity, and societal issues,” the report states. 

This report is the first step towards a more equitable and sustainable food system. By leveraging on the potential of true cost accounting, it signifies a call to action across all players with a focus on product innovation, redesigning of public goods and safety nets, rethinking market and investor incentives, creating new markets, and influencing consumer demand. 

Existing practices aiming towards the direction are a good start but are usually small in scale and oftentimes controversial. For instance, Biden’s stimulus relief package would provide billions of dollars of debt relief, grants, training, and education for Black farmers who have suffered from mistreatment over the century. Another example is The Healthy Food Financing Initiative, which increases access to healthy food by bringing supermarkets into low-income areas, as well as the WIC (Women, Infants and Children) Farmers’ Market Nutrition Programs, providing seniors and participants with coupons that can be used at the farmers’ markets. 

Meanwhile, acceleration in the development of new tools to reduce greenhouse gases is closely observed. This includes subsidies or incentives for agriculture producers to encourage the adoption of regenerative practices to avert a climate catastrophe in Biden’s climate change strategy. New financial markets related to natural capital are also on the rise, and more financial investors are incentivising environmental and social stewardship of corporates through ESG funds where investment strategies are not only based on the potential financial returns, but also on the environmental and societal implications. 

Featured image by: Pxfuel

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