Stakeholders should factor the hidden environmental, social and health costs associated with the transformation of agrifood systems into their decision making processes, the United Nations Food and Agriculture Organization (FAO) urged in a flagship report released on Monday.

Unveiled at FAO's headquarters, the 2023 edition of the State of Food and Agriculture (SOFA) report said that the global quantified hidden costs of agrifood systems amount to 10 trillion U.S. dollars a year at 2020 purchasing power parity, representing nearly 10 percent of annual global gross domestic product (GDP).

Adopting a true cost accounting method, FAO estimated in this 154-country research the hidden costs generated by market as well as institutional and policy failures.

According to the study, more than 70 percent of the hidden costs globally are driven by people's unhealthy diets with heavy consumption of ultra-processed foods and foods high in fats and sugars, which lead to diseases and lower labor productivity. This type of loss is most prominent in high and middle-income countries.

Some 20 percent of the hidden costs are environment-related, which are associated with greenhouse gas and nitrogen emissions, as well as land-use change and water use.

The report also highlighted the disproportionate burden of the costs on different countries. On average, the hidden costs of agrifood systems account for 27 percent of the GDP of low-income countries mainly due to impacts of poverty and undernourishment in contrast to 11 percent in middle-income countries and 8 percent in high-income countries.

"Addressing poverty and undernourishment remains a priority in low-income countries, as they account for about half of the total hidden costs quantified in these countries," it added.

In the foreword to the SOFA, FAO Director-General Qu Dongyu called on all stakeholders to take a collective endeavor to transform agrifood systems for the betterment of all.

The agency said it will compile two editions of the annual SOFA report under the same theme to evaluate the situation, with this year's report showing initial estimates and next year's focusing on in-depth assessment to guide the solutions and actions needed.