Sustainability of agriculture and food urgently needed, but who pays for it?

A close up of vegetables in a stall in the market hall

Climate measures are crucial to make agricultural and food systems future-proof. Although climate regulations affect food prices everywhere, the differences between continents are large. In rich countries, increased production costs can be absorbed in the long production chains, while in poorer countries, 'unaffordable price increases' can lead to food shortages. 

The rising cost of food is being driven by factors including energy costs, geopolitical tensions, labor shortages and crop failures due to climate change, a new study from a German university says.

Ironically, food production itself is a major contributor to climate change. However, measures such as carbon pricing and sustainable agriculture come at a cost that affects both producers and consumers. The question is: who pays for these climate regulations on food production?

According to a study by the Potsdam Institute for Climate Research (PIK), regional value chains play a key role. In rich countries like the US, agricultural costs account for less than 20% of the total food price, compared to 70% in regions like Sub-Saharan Africa. This difference illustrates how food chains function globally.

The consumption of processed products has a large ecological footprint. In wealthy countries, residents spend a lot on luxury products and eating out, while in poorer countries, staple foods absorb a larger share of income. Climate measures therefore have a heavy impact on consumers in low-income countries. Producers in these regions pass on price increases one-on-one, which threatens food security.

The PIK study simulated two scenarios: one in which climate measures are strictly applied and one in which everything remains the same. In rich countries, consumer prices rise by a factor of 1.25 by 2050, while prices increase by 2.73 times. In poorer countries, the effects are more severe: consumer prices rose by a factor of 2.45 and producer prices by 3.3. 

Without ambitious climate action, the world's population risks even higher food prices due to extreme weather events and disrupted supply chains. Investments in sustainable agriculture and fair carbon pricing can help overcome these challenges. Financial support for vulnerable populations and regions is essential to make the transition just and ensure security, the German study concludes.