In 2022, the poorest 20% of the U.S. population, on average, spent almost 30% of their income on food, while the second quintile of American earners spent just over 15%. Today, food expenditure likely does not have the same significance for a measure of poverty as in the 1960s. For example, the rate of food purchases away from home—at restaurants, fast food establishments, and more—is significantly higher, even for lower-income individuals and families. This is in part due to costs of food, especially major commodity crops, declining since the 1960s, a relative success story, and, in another part, to time constraints on lower-income people needing to work longer hours in more precarious circumstances.
And yet, food prices remain stubbornly high for the lowest-income earners in the U.S. On the global scale, food prices are an even greater concern. Around the world the high cost of food keeps children hungry, forces migrations, and reduces the life expectancy of impoverished communities.
And yet, a growing contingent of environmental economists, activists, and others likes to claim that food is actually “too cheap.” Headlined by a 2023 report of the UN Food and Agriculture Organization (FAO) entitled “Revealing the True Cost of Food to Transform Agrifood Systems”, the burgeoning field of “true cost accounting” aims to set the record straight on what food really costs.
Among others, the Global Alliance for the Future of Food, the Rockefeller Foundation, and the “scientific group” for the 2021 UN Food System Summit, have performed their own true-cost studies, finding high externalities and “hidden costs” of our food system beyond the price consumers pay at the grocery store, restaurant, or market. These groups contend that by understanding the hidden costs of the food system—externalities like environmental degradation, greenhouse gas emissions, and diet-related health care costs, to name a few—policymakers, companies, and investors can better prioritize how to change the food system.
But these studies peddle in false specificity and risk creating perverse priorities for food system transformations. At their core, they tell us very little. Of course the food system produces externalities—all aspects of our economy does—and no observer would deny that these costs are important. That assertion is nothing new.
What is new, rather, is the faux precision that these reports use to justify their modest proposal: that we all should be paying more for food.
Is food really too cheap?
“True cost accounting” (TCA) is an economic method that seeks to account for the full cost of goods and services—including costs external to the purchase price. It is not a new idea. Externalities, as a concept, date back to the late 19th century and the economist Alfred Marshall. The ideas were further elaborated by Arthur Pigou in the early 20th century. For the food system, TCA analyses take into account the environmental impacts wrought by food production and transportation, the healthcare costs associated with food consumption, un- or underpaid labor of workers in the food system, and more. According to most studies, the true cost of food is often at least double the price of any given product in the market.
FAO’s recent TCA study found that the global food system costs at least $12 trillion dollars annually above what food products are sold for. For comparison, the total actual value of the food system was about $14 trillion dollars in 2022. The majority of these “hidden costs,” according to FAO, stem from the healthcare costs of “unhealthy dietary patterns,” with additional hidden costs from nitrogen pollution, land and water use, and climate impacts.
The Rockefeller Foundation performed a similar analysis of the U.S. food system and found that whereas the commercial value of food in the United States sat at just over a trillion dollars, beneath that lay over $2 trillion in “hidden costs.” According to the Rockefeller report, every dollar spent on food in the United States, should actually be about $2.90.
More than half of the “hidden costs” of the U.S. food system uncovered by the Rockefeller Foundation, around $1.1 trillion, are related to the health impacts of food. They include impacts of obesity and being overweight, as well as those from cardiovascular disease, cancer, diabetes, and hypertension. In their study, the authors claim to have limited the “impacts” to only health conditions that “have clear attribution to diet or the food system.”
Similarly, FAO’s 2023 report found that 73% of their reported “hidden costs” of food came from dietary-related health impacts, roughly $10 trillion globally.
These findings align with what advocates have called “food as medicine,” the idea that food is a primary driver of long-term health outcomes for humanity. “Food as medicine” works from the principle that food consumption is central to our individual health outcomes. Non-communicable diseases and conditions like obesity, diabetes, and certain cancers, in this logic, directly stem from patterns in food production and consumption.
While food is, by nature, integral to health outcomes, placing the burden of human health—in the abstract—on food production and consumption patterns elides social contexts and takes a very limited idea of health. Quantifying the “costs” of the connection between food and health relies, instead, on a deterministic understanding of the field of nutrition—a field that has its fair share of confusion, reproducibility issues, and overstated findings.
Obesity, for example, would seem to have the most immediately “logical” relationship between food consumption and human health, but it’s not so simple. The fundamental relationship between food consumption and human weight is perhaps one of the more contentious scientific concepts of our time, at least as it relates to society. The diet industry sells promises of slim waists and “beach bodies.” Individual diets tell consumers they will achieve their fitness and health goals if they simply follow what the diet prescribes as “healthy” eating. But, food is not the sole driver of obesity or weight gain. Things like environment, physical activity, income level, and education all play a role in obesity rates around the world. Simply, obesity is not a challenge of the food system, and the food system alone.
The health consequences of obesity are also not entirely clear. Doctors constantly tell patients who sit above the “normal” BMI range they must lose weight, and that whatever physical ailment they are facing are a direct result of their weight. But there is less actual scientific consensus about the health impacts of obesity. Some studies, for example, have claimed that “healthy obesity” is a myth, while competing studies have found that “healthiness” and “weight” are not inextricably tied. There are significant health impacts and costs related to Class III obesity, formerly known as “morbid obesity,” which makes up a much smaller portion of the population classified as obese.
Food and human weight are obviously tied, but to put a specific price tag, as these TCA analyses have, on the “health costs” of that relationship is laughable. And even if we can assume direct relationships between food consumption and the non-communicable conditions that FAO and Rockefeller price out, the idea that higher food costs can somehow improve those health outcomes is laughable. After all, while poor diets and unhealthy food is bad for people’s hearts, colons, and blood sugar, to name a few, undernourishment from overpriced food is arguably worse.
“True cost accounting” (TCA) is an economic method that seeks to account for the full cost of goods and services—including costs external to the purchase price. It is not a new idea. Externalities, as a concept, date back to the late 19th century and the economist Alfred Marshall. The ideas were further elaborated by Arthur Pigou in the early 20th century. For the food system, TCA analyses take into account the environmental impacts wrought by food production and transportation, the healthcare costs associated with food consumption, un- or underpaid labor of workers in the food system, and more. According to most studies, the true cost of food is often at least double the price of any given product in the market.
FAO’s recent TCA study found that the global food system costs at least $12 trillion dollars annually above what food products are sold for. For comparison, the total actual value of the food system was about $14 trillion dollars in 2022. The majority of these “hidden costs,” according to FAO, stem from the healthcare costs of “unhealthy dietary patterns,” with additional hidden costs from nitrogen pollution, land and water use, and climate impacts.
The Rockefeller Foundation performed a similar analysis of the U.S. food system and found that whereas the commercial value of food in the United States sat at just over a trillion dollars, beneath that lay over $2 trillion in “hidden costs.” According to the Rockefeller report, every dollar spent on food in the United States, should actually be about $2.90.
More than half of the “hidden costs” of the U.S. food system uncovered by the Rockefeller Foundation, around $1.1 trillion, are related to the health impacts of food. They include impacts of obesity and being overweight, as well as those from cardiovascular disease, cancer, diabetes, and hypertension. In their study, the authors claim to have limited the “impacts” to only health conditions that “have clear attribution to diet or the food system.”
Similarly, FAO’s 2023 report found that 73% of their reported “hidden costs” of food came from dietary-related health impacts, roughly $10 trillion globally.
These findings align with what advocates have called “food as medicine,” the idea that food is a primary driver of long-term health outcomes for humanity. “Food as medicine” works from the principle that food consumption is central to our individual health outcomes. Non-communicable diseases and conditions like obesity, diabetes, and certain cancers, in this logic, directly stem from patterns in food production and consumption.
While food is, by nature, integral to health outcomes, placing the burden of human health—in the abstract—on food production and consumption patterns elides social contexts and takes a very limited idea of health. Quantifying the “costs” of the connection between food and health relies, instead, on a deterministic understanding of the field of nutrition—a field that has its fair share of confusion, reproducibility issues, and overstated findings.
Obesity, for example, would seem to have the most immediately “logical” relationship between food consumption and human health, but it’s not so simple. The fundamental relationship between food consumption and human weight is perhaps one of the more contentious scientific concepts of our time, at least as it relates to society. The diet industry sells promises of slim waists and “beach bodies.” Individual diets tell consumers they will achieve their fitness and health goals if they simply follow what the diet prescribes as “healthy” eating. But, food is not the sole driver of obesity or weight gain. Things like environment, physical activity, income level, and education all play a role in obesity rates around the world. Simply, obesity is not a challenge of the food system, and the food system alone.
The health consequences of obesity are also not entirely clear. Doctors constantly tell patients who sit above the “normal” BMI range they must lose weight, and that whatever physical ailment they are facing are a direct result of their weight. But there is less actual scientific consensus about the health impacts of obesity. Some studies, for example, have claimed that “healthy obesity” is a myth, while competing studies have found that “healthiness” and “weight” are not inextricably tied. There are significant health impacts and costs related to Class III obesity, formerly known as “morbid obesity,” which makes up a much smaller portion of the population classified as obese.
Food and human weight are obviously tied, but to put a specific price tag, as these TCA analyses have, on the “health costs” of that relationship is laughable. And even if we can assume direct relationships between food consumption and the non-communicable conditions that FAO and Rockefeller price out, the idea that higher food costs can somehow improve those health outcomes is laughable. After all, while poor diets and unhealthy food is bad for people’s hearts, colons, and blood sugar, to name a few, undernourishment from overpriced food is arguably worse.
Will knowing the true cost of food change much?
These reports, according to their authors, share a goal: to influence policymakers and “reset” the conversation about food systems and agricultural production. Ultimately, these reports aim, in the words of Rajiv Shah, president of the Rockefeller Foundation, to “shift the incentive structure that perpetuates our unsustainable food system today.”
For many TCA report writers and advocates, the goal of assessing “hidden” and “true” costs is not to increase the price of food, but to simply highlight new ways to prioritize policy making. They recommend small-scale solutions to their supposedly multi-trillion dollar problems. But in doing so, they inevitably feed a wide-ranging chorus of environmentalists and food system critics who are happy to broadcast their headline assessment result: “food is too expensive.”
Such a position can only be taken by those in places of privilege. For the many Americans who spend a disproportionately large portion of their income on feeding themselves and their families as best they can, making real the “hidden” costs of food would be devastating. It would be even more devastating for the more than 300 million people who already face chronic hunger around the world.
Today, food prices are down from the price spikes following the Russian invasion of Ukraine, but remain high, according to the FAO. Increasing those food prices, even if they were to help internalize the food system’s external costs, threatens to increase the population of people facing severe food insecurity. The costs of inaction may be high, as these reports suggest, but the cost of bad action, such as raising prices, could be even higher.
It is also a recipe for political disaster. Broad economic inflation over the past years resulted in significant political stress for parties in power. The Biden administration’s attempts to push past the inflation discourse through large-scale investment bills like the Inflation Reduction Act created long-term economic benefits, but have not outright reduced the burden of inflation on the average American. Elsewhere in the world, inflationary pressures were even greater. Creating policy priorities around the idea that food is too cheap ignores the political opposition to rising prices and assumes that the priorities of the technocratic report writers supersede those of the average consumer.
Only six years ago, the Gilet Jaunes protests erupted in France in response to rising cost of living associated with increasing prices for fuel. Since then, protests in the Netherlands, Italy, France, and more, have pushed back on climate policies that place the onus on consumers. Increasing food prices in the name of environmental, climate, and even public health concerns, opens the door for the same kinds of political pushback.
Like for energy, it’s much more difficult to try to affect change by making the perceived bad thing more expensive. Instead of worrying about the “true cost” of food, advocates should find ways to make good, healthy food cheaper and more appealing, not price out the average consumer from “bad” food.
Alex Smith is a Senior Food and Agriculture Analyst at Breakthrough. Find Alex on X @alexjmssmith
A version of this article was originally posted at the Breakthrough Institute and is reposted here with permission. Any reposting should credit both the GLP and original article. The Breakthrough Institute can be found on X @TheBTI
