Citi reports hidden costs associated with the food industry are estimated to stand at $11.9 trillion, almost $2 trillion higher than the industry’s current market value, underlining the urgent need to address the food industry’s outsized impact on the environment, climate, and its potential adverse effects on the health and welfare of the global population.
Citi released a new Global Perspectives & Solutions (Citi GPS) report titled FOOD AND CLIMATE CHANGE — Creating Sustainable Food Systems for a Net Zero Future that looks at the global food industry’s role in climate change and offers a set of solutions to help the global food sector reduce greenhouse gas (GHG) emissions. Access full report here.
The report is timely, coming as the world faces a huge food crisis. Spiraling food prices are particularly affecting the vulnerable and food insecure countries, and it is important that we do everything to reduce these pressures in the short term. Citi reports that Climate change will have a devastating impact on food production and global food security, and conversely, temperature increases cannot be limited simply by reducing energy-related emissions; cutting emissions from the global food sector will also be a key element of a journey to net zero.
The report concludes that the global food system is currently not fit for purpose. It not only adversely affects the planet, but also the health and welfare of a significant portion of the population around the globe.
According to Citi’s Liz Curmi, “The global food system has altered our planet more than any human activity. It is responsible for 70% of water use, 80% of deforestation is attributed to food production, 50% of habitable land is used for food production, and the sector is responsible for one-third of all greenhouse gas emissions.”
In fact, hidden costs associated with the food industry (including health-related costs, environmental damage, and rural welfare) are estimated to be $1.9 trillion higher than the industry’s current market value. Unless these hidden costs are addressed they will continue to increase, especially with an additional two billion people expected to join the planet and require food by 2050. The World Resources Institute estimates a 56% food gap between crop calories produced in 2010, and the crop calories needed in 2050.
Given recent geopolitical events, global concern over food security is on the rise.
According to Citi’s Jason Channell, “In the long term, global food security cannot be solved without also reducing emissions and addressing the effects of climate change.”
Food, agriculture, and climate change are inextricably linked – not only is the sector one of the largest contributors of greenhouse gas emissions, but conversely, climate change will have a detrimental impact on food production in many regions.
Limiting the global temperature increase to 1.5°C or even 2°C is simply not possible without tackling emissions from the global food system. Indeed, even if all non-food system GHG emissions were immediately stopped and reached net zero, emissions from the global food system alone under a business-as-usual scenario would likely exceed the 1.5°C temperature limit.
Despite this, there has been limited pressure to decarbonize the sector at a global level. Reducing emissions from this sector is not easy and there is no silver bullet; it will require the adoption of multiple solutions throughout the whole system — from farm to fork.
The report provides a detailed analysis of emissions across the global food system, including emissions on the farm itself, emissions from land use, and emissions pre- and post-production, such as fertilizer manufacturing, transport, and food manufacturing. Land-use change and enteric fermentation are the two largest sources of emissions from the global food sector. However, supply chain emissions have more than doubled in 2019 compared to 1990 levels.
On a regional level, the relative contributions of the agro-food system to total regional GHG emissions from all human activities are the largest in Africa and Latin America — a staggering 60% and 72% respectively. According to Citi’s Ying Qin, “This could be surprising to many, given the global focus on reducing energy-related emissions and the lesser focus placed on food-related emissions.” In these regions, emissions from land-use change make up the largest share of emissions from the food system, followed by emissions generated on the farm. On a country level, China is by far the largest emitter, followed by India, Brazil, and Indonesia.
The report identifies six main solutions for mitigating emissions, including (1) investing in regenerative agriculture, (2) low carbon livestock, (3) halting deforestation (including changes in diets and regulation), (4) reducing food waste, (5) investing in low carbon solutions to reduce energy-related emissions across the supply chain, and (6) investing in innovation such as agtech, animal tech, alternative proteins, and vertical farming.
By implementing just four of the solutions — regenerative agriculture, low carbon livestock, halting deforestation, and reducing food waste — emissions can be reduced by between 6.9 gigatonne of carbon dioxide equivalent (GtCO2e) and 8.1 GtCO2e , or between 58% and 68% of current equivalent emissions from farm gate, land-use change, and food waste. In context, this emissions figure is larger than the entire CO2 equivalent emissions of the U.S. in 2019 (World Bank data). These solutions not only reduce emissions, but offer a number of co-benefits such as more efficient water use, better soil conservation, and better livelihoods which all lead to better global food security.
“Enormous focus has been placed to date on reducing emissions in the energy and power sector, and more recently on the hard to abate sectors such as metals, cement, freight and aviation. However, if we are serious about achieving net zero by 2050, we must now also turn our attention to the “hidden” third of emissions which comes from food and agriculture; reversing the historically vicious circle of food production and climate change, harnessing the enormous positive symbiotic benefits that can come for both from a sustainable food future.” Citi Concludes