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The true cost of food is far higher than what you spend at the checkout counter

Kathleen Merrigan, Arizona State University, The Conversation on

Published in News & Features

After several years of pandemic-driven price spikes at the grocery store, retail food price inflation is slowing down. That’s good news for consumers, especially those in low-income households, who spend a proportionally larger share of their income on food.

But there’s more to the cost of food than what we pay at the store. Producing, processing, transporting and marketing food creates costs all along the value chain. Many are borne by society as a whole or by communities and regions.

For example, farm runoff is a top cause of algae blooms and dead zones in rivers, lakes and bays. And food waste takes up one-fourth of the space in U.S. landfills, where it rots, generating methane that warms Earth’s climate.

Exploring these lesser-known costs is the first step toward reducing them. The key is a method called true cost accounting, which examines the economic, environmental, social and health impacts of food production and consumption to produce a broader picture of its costs and benefits.

Every year since 1947, the United Nations Food and Agriculture Organization has released an important and widely read report called The State of Food and Agriculture, known in the food sector as SOFA. SOFA 2023 examines how much more our food costs beyond what consumers pay at the grocery store.

Using true cost accounting, the report calculates that the global cost of the agrifood system in 2020 was up to US$12.7 trillion more than consumers paid at retail. That’s equivalent to about 10% of global gross domestic product, or $5 per person per day worldwide.


In traditional economics-speak, hidden costs are known as externalities – spillover effects from production that are caused by one party but paid for by another. Some externalities are positive. For example, birds, butterflies and insects pollinate crops at no charge, and everyone who eats those crops benefits. Others, such as pollution, are negative. Delivery trucks emit pollution, and everyone nearby breathes dirtier air.

True cost accounting seeks to make those externalities visible. To do this, scholars analyze data related to environmental, health, social and other costs and benefits, add them together and calculate a price tag that represents what food really costs.

The Swette Center for Sustainable Food Systems at Arizona State University, which I direct, recently conducted a true cost accounting study of cow-calf operations in the Western U.S., in partnership with Colorado State University. It found that the climate costs of these operations are very high – but that solving for climate change alone could threaten the livelihoods of 70,000 ranchers and the rural communities in which they live. A true cost accounting approach can illuminate the need for multidimensional solutions.

I study sustainable food systems and am one of 150 scholars across 33 countries who worked together over several years to design and test this new methodology. Our work was led by the U.N. Environment Program and partially funded by the Global Alliance for the Future of Food, a coalition of philanthropic foundations.


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