1. A brief history of the food system

The globalized food system arose from the period of economic reconstruction following the Second World War, premised on investment-driven productivity growth and increased trade. As President Truman said in his inaugural speech in 1949: “Economic recovery and peace itself depend on increased world trade… Our aim should be to help the free peoples of the world, through their own efforts, to produce more food, more clothing, more materials for housing, and more mechanical power to lighten their burdens.”Footnote ^iv

Multilateral trade liberalization progressed through the General Agreement on Tariffs and Trade, which evolved into the World Trade Organization in 1995. To promote yield growth, and to protect their farm sectors from the full effects of increasing global competition brought about by trade, developed country governments invested heavily in agricultural subsidies which persist today. Data available in 2012–2014, for 52 countries responsible for approximately two thirds of global agricultural value, suggest $519 billion of support was given per annum to agriculture (OECD, 2017).

The Green Revolution – an international donor-led research and development programme to create and adopt high-yielding varieties of maize, wheat and rice and intensive agricultural practices – led to remarkable yield growth throughout Asia and Latin America, underpinning the ability of developing country agriculture to link to international commodity markets. Across the developing world, trade liberalization was prescribed through the technical assistance and structural adjustment programmes of the World Bank and International Monetary Fund as part of the ‘Washington Consensus’ (Williamson, Reference Williamson and Williamson1990): opening up markets to international competition was a common funding condition.

Underpinned by both trade liberalization and investment in productivity growth, trade in agricultural products, food and its ingredients grew exponentially from the 1960s, such that by 2008, 60% of the total value of food was traded internationally ($1060/$1780 billion) (Ercsey-Ravasz et al., Reference Ercsey-Ravasz, Toroczkai, Lakner and Baranyi2012).

Thus, the joint investments in productivity growth and international trade (creating globally competitive markets), led to the long run decline in international food prices described earlier (Figure 1), and provided a powerful justification for these policies on the basis that cheaper food provides social benefits.

2. Cheaper food as a public good

For governments, concerned with the security and welfare of their populations, cheaper food enhances food accessibility (one of the four dimensions of food security in a widely used definition). And given the relationship between food price inflation and social unrest, politicians often view low (or lowering) food prices as important not only for food security, but also political security. More broadly, falling food prices relative to incomes is seen as an essential component of economic development, as it can provide more disposable income for purchasing other goods, and thus drive more economic activity.

For economists, argued by Dorward (Reference Dorward2013), in the long run low and stable food prices meet the definition of ‘public goods’ because they are non-excludable and non-rival benefits arising from government investment in agricultural research. In other words, low food prices facilitated by public investment in agricultural productivity provide benefits to everyone through higher disposable incomes (via lower food bills), avoided negative impacts on the welfare of poor consumers, and wider associated development gains that occur as a result. Cheaper and more available food also arises as an externality from commercial research investments in excludable technologies, as well as from producers’ and traders’ decisions to produce and sell food.

The notion of cheaper food being important because it provides food security by allowing access to food at all times by all people is thus further supported by the notion that by reducing food prices allows more money for people to spend on other goods, driving the economy further. Promoting consumption growth for the benefit of the economy has been an underpinning notion for decades. In the 1950s the US marketer, Victor Lebow, famously said:

The support for consumption growth to drive the economy must, in the long run, be balanced against any costs that growing consumption might impose on public health and environmental systems.

3. Increasingly productive and efficient production has downsides

As economic theory predicts, policies supporting agricultural efficiency and productivity, coupled with trade liberalization to increase market competitiveness, have increased food availability and driven down prices (Figure 1A & B). This has in part come about through specialization of production: global agriculture has become increasingly focused on a few highly productive commodity crops suited to industrial farming systems and grown at scale in the ‘breadbasket’ areas of the world. These staples have crowded out alternative, traditionally grown varieties and attracted the lion's share of crop-related R&D. Over 50% of the world's crop calories now come from wheat, rice and maize; adding sugar, barley, soy, palm and potato gets to 76% (West et al., Reference West, Gerber, Engstrom, Mueller, Brauman, Carlson, Cassidy, Johnston, MacDonald and Ray2014). This has a number of implications.

First, calorie production is concentrated genetically and geographically, creating a potentially fragile global food system vulnerable to disruptions in breadbaskets or to pests and diseases affecting key staples (Puma et al., Reference Puma, Bose, Chon and Cook2015). Second, the increasing dominance of these energy-dense staples in global food supply has contributed to the growth in obesogenic processed foods, as food manufacturers have formulated products derived from these abundant, low-cost, high-calorie commodities. Third, the growth in food trade and manufacturing has led to long and complex supply chains that create challenges of transparency, traceability and food safety (Ercsey-Ravasz et al., Reference Ercsey-Ravasz, Toroczkai, Lakner and Baranyi2012; Puma et al., Reference Puma, Bose, Chon and Cook2015). Fourth, the growth in availability of animal feeds derived from commodity staples – notably soybean and coarse grains – has underpinned the exponential growth of the livestock sector and the associated growth in meat and dairy consumption.

Together, the system that specializes in producing cheaper, more available, calories, has led to significant costs levied on health systems from inadequate diets, and on the environment via production, manufacturing, processing and waste management. There is now growing evidence, as suggested below, that the costs from dietary-related ill health and environmental degradation exceed the economic value of agriculture, raising the alarming prospect that the full costs to society of food production may outweigh the benefits.

4. The paradox of productivity

If the efficiency of the food system is related to the amount of food grown that is eaten by humans, then, in total, global food system efficiency is 41% on an energy basis or 36% on a protein basis, primarily due to food loss and waste. If one includes human over-consumption as an inefficiency, these decline to 38 and 28%, respectively (Alexander et al., Reference Alexander, Brown, Arneth, Finnigan, Moran and Rounsevell2017). If one considers the trophic losses of eating meat protein versus vegetable protein as a form of inefficiency, the ‘opportunity food losses’ relative to plant-based food of beef, pork, dairy, poultry, and eggs are a further 96, 90, 75, 50, and 40%, respectively (Shepon et al., Reference Shepon, Eshel, Noor and Milo2018). In simple terms, if there was less waste and people ate more in line with dietary recommendations, it would be possible to free up very significant natural resources and reduce agriculture's impact on both environment (land, water, climate) and health (Harwatt et al., Reference Harwatt, Sabaté, Eshel, Soret and Ripple2017; Bahadur et al., Reference Bahadur, Dias, Veeramani, Swanton, Fraser, Steinke, Lee, Wittmen, Farber, Dunfield, McCann, Anand, Campbell, Rooney, Raine, Van Acker, Hanner, Pascoel, Sherif, Benton and Fraser2018; Poore, & Nemecek, Reference Poore and Nemecek2018; Shepon et al., Reference Shepon, Eshel, Noor and Milo2018).

Paradoxically, the current systemic inefficiency is a consequence of the drive for efficiency at the farm level: agricultural productivity and competition through trade keeps prices low, making waste economically rational for many consumers, and it creates a market-led focus on high-energy staples, encouraging the inefficient use of crops for animal feed, and the over-consumption of calories by humans. Incentives for agricultural efficiency and productivity – whether through market competition or public support – encourage the externalization of costs onto environment and health systems, costs which exceed by some margin the value of the agricultural economy.

The global food system evolved out of a need to drive consumption on a global basis, at a time when lack of access to food was a real issue and environmental degradation was not. The situation now has changed. Malnutrition from overconsumption of calories affects more people than undernutrition, whilst agriculture has come to threaten the ecosystems on which it depends. On current trends, fulfilling ‘business as usual’ projections for food demand would create sufficient warming to exceed the goals of the Paris Climate Agreement (Bajzelj et al., Reference Bajzelj, Richards, Allwood, Smith, Dennis, Curmi and Gilligan2014), and it is clear that the Sustainable Development Goals (SDGs) cannot be achieved if the strategy for meeting the zero hunger goal (SDG 2) is premised on agricultural intensification, as this is likely to undermine the goals associated with land (SDG 15), water (SDG 6), climate (SDG 13), sea (SDG 14) and health (SDG 3). Rather, meeting global goals, whether the SDGs or those of the Paris Agreement, will require a shift in emphasis away from agricultural efficiency to system efficiency.

Despite this, policy remains preoccupied with agricultural productivity and efficiency, through maximizing the growth rate of TFP. This is often interpreted as a framing of ‘sustainable intensification’ (Baulcombe et al., Reference Baulcombe, Crute, Davies, Dunwell, Gale, Jones, Pretty, Sutherland, Toulmin and Green2009; Garnett et al., Reference Garnett, Appleby, Balmford, Bateman, Benton, Bloomer, Burlingame, Dawkins, Dolan and Fraser2013) also described as ‘growing more with less.’ This is a prominent feature of agricultural policies in the major international institutions.Footnote ^vii But TFP measures the efficiency of food production with respect to the familiar economic inputs of labour, capital, land and chemicals, and fails to capture inputs of natural capital or further costs such as those externalized onto healthcare systems. So whilst increasing TFP remains the prevailing objective of agricultural policymaking, the efficiency paradox is likely to persist.

A better metric would be total resource productivity, or TRP, which extends TFP to include inputs of natural capital (Fuglie et al., Reference Fuglie, Benton, Sheng, Hardelin, Mondelaers and Lanborde2016) and so provides a measure of sustainable productivity. Conceptually, such a measure could be further extended to include as inputs other externalized costs such as the healthcare costs associated with agricultural production (e.g. via air quality) or from dietary-related ill health, or the costs associated with disposal of food waste and packaging; the outputs, rather than being yield, could be the number of people nourished. This would measure total system productivity (TSP).

A food system with high TSP would be sufficiently productive (to meet human nutritional needs) whilst imposing few costs on the environment and society (so being sustainable), and highly efficient at all stages of the food chain so as to minimize waste. It would optimize total resource inputs (direct inputs and indirect inputs from natural capital and healthcare) relative to the outputs (food utilization). Maximizing TSP would maximize the number of people fed healthily and sustainably per unit input (direct and indirect). In other words, it would increase overall systemic efficiency.

Instead, the focus on agricultural efficiency, defined in terms of TFP, drives a vicious circle. The more we produce, the cheaper food becomes, and the more our diets become obesogenic. Cheaper food requires intensive agriculture, at scale. This undermines natural capital and increases resource competition, resulting in further intensification and extensification as a means to alleviate pressure on resources and compensate for depleted ecosystem services. Greater intensification leads to more greenhouse gas emissions from increased energy and agrochemical use, in addition to those from the growing livestock sector and land expansion. Extensification means more land conversion and its environmental consequences. Climate change further intensifies pressure on land because it both affects yields (and their resilience) and increases the need for land-based carbon sequestration – for example through afforestation and reforestation, or through negative emissions technologies such as bioenergy with carbon capture and storage. The end result is more degradation, more waste, more ill-health from overweight and obesity.

Contrast this with the prospect of a virtuous circle in which the policy objective is the maximization of TSP, and incentives encourage the delivery of healthy diets, sustainably and efficiently. People eat a wider range of produce and eat less and waste less. Dietary diversity improves nutrition and drives agricultural diversity, creating the opportunity for circular and multifunctional landscapes to re-emerge that foster biodiversity. As health bills go down, money is potentially freed up to incentivize more sustainable agriculture, and, as the system becomes more efficient, in particular from reduced waste and livestock production, land is freed up for nature and climate mitigation. The end result would be a healthier planet, and healthier people.

5. From public good to market failure: the need for new policy

Once the true costs of a global food system predicated on agricultural productivity and low food prices are recognized, further pressure to lower food prices can no longer be perceived as a public good. Rather, by incentivizing the production of agricultural products, for private benefit, through the externalization of costs on the environment and society, the global food system creates a massive market failure (Rocha, Reference Rocha2007). This provides a clear justification for corrective government intervention, to ensure markets efficiently use society's resources (natural capital and public money) to produce social outcomes (in this case improving public health through nutrition).

To move from vicious to virtuous circles, there are numerous policy levers available. This is not to say it is only public policy that can drive change, but there is a clear rationale for government action to correct market failures and to enable people to eat nutritiously and sustainably. Opportunities are discussed in the following sections.

6. Transforming the food system

Optimizing food system efficiency implies a fundamental transformation of the way in which the global food system is organized. Government interventions to increase agricultural and dietary diversity and include social and environmental costs in market prices can help enable such a transformation, but do not address the configuration of the food system itself, which is shaped not only by existing policies and institutions, but also by incumbent interests, social norms and cultural values.

The literature indicates that systemic transformation often starts from niches – technological, social or institutional innovations that embody new visions for how societal needs can be met. Once these reach critical mass they become mutually reinforcing and change occurs rapidly (Jänicke, & Jacob, Reference Jänicke and Jacob2004). Where might such niches emerge in the current food system?

7. In conclusion

The scale of total food system costs is only now becoming clear, as the data revolution allows for more transparent and more comprehensive analysis of the local and global impacts of the drive for cheaper calories. Much has been written about the need to reduce agriculture's environmental footprint and tackle the global obesity pandemic, but these problems should not be considered in isolation. We have argued that environmental degradation and obesity are both related outcomes of a dysfunctional food system that encourages the overconsumption of calories, excessive waste and the externalization of costs onto the environment and health system. A continued myopic focus on agricultural productivity risks perpetuating these problems: the productivity paradox means that increasing agricultural efficiency drives system inefficiency through increased waste, increased environmental costs and increased healthcare costs. A challenge for global development is that endeavouring to ‘feed a world of 7–10 billion’ in the way we are currently fed will create more problems than it solves through driving the vicious circle. As well as being unsustainable, this is iniquitous because the local and global poor disproportionately pay the costs levies on health and environment. Instead, we should change the narrative to empower people to invest in their nutrition for a healthy life, eating food that is supplied by a sustainable food system.

There is an urgent need to move the focus from thinking about agricultural productivity as a proxy for the outcomes society needs, and instead to focus fully on systemic productivity: people fed healthily and sustainably per unit input. In a finite world, we have no long-term option but to find ways to deliver a sustainable food system that provides healthy diets.