Chapter 6 making sustainable, healthy diets affordable to all

Key messages

  • Nutrient-rich products are today more expensive (on average) to produce, and therefore to purchase,  compared to other foods such as staples. This is because of high  seasonality, geographic constraints  to growing conditions, and  perishability. Diverse pressures could increase prices further in the future.
  • Healthy diets are unaffordable today for most poor people (and for many nutritionally vulnerable people) the  world over. A recent assessment of  the affordability of a healthy diet  showed a healthy diet to be out of reach for at least three billion  people. Most of those people are  in Asia (1.9 billion) and Africa (965 million). Ensuring that everyone can  afford sustainable, healthy diets is  therefore a formidable challenge.
  • There has been significant progress in  recent years in addressing poverty. An  additional 900 million people reached  the US$10/day threshold (joining the ranks of the global middle class)  between 2007 and 2017.

Most  projections suggest that poverty and  extreme poverty will continue to fall  in the coming decade, although the coronavirus pandemic could reverse  the last decade’s gains. Indeed, a  pessimistic scenario could lead to  an increase in the number of people living in poverty of between 420 and  580 million, relative to 2018. That  would be a catastrophic shift in the  poverty trend.

  • Shifting diet patterns so that  they become healthy will be a  considerable challenge for the poorest countries, and the poor in  all countries. But at country level,  a shift to significantly improved  diets would actually cost less in 86 countries (with a combined  population of 4.2 billion), but  would cost more (at current prices)  in 71 countries (with a combined  population of 4.1 billion), most of which are LMICs.

Four classes of action are needed to  ensure the affordability of sustainable,  healthy diets for all in the future. The scale of the challenge means that  interventions in each of the four are  essential, and need to work in concert:

  1. Pro-poor income growth. This is needed to support greater purchasing power. However, this  must be accompanied by efforts  to make healthier diets more  desirable (see Chapter 7). As  incomes rise, people often shift  their food choices to items that  are less healthy.
  2. Consumer-level taxes and  subsidies on key food categories.  The aim is to shift relative prices in  favour of nutrient-rich foods needed  in healthy diets, and away from  foods that are less healthy.
  3. Safety nets designed to support  diet-quality goals. This is essential  to protect the most vulnerable  from food price volatility during  the necessary transition.
  4. Reduce the cost of nutrient-rich  products through technology  and innovation. Examples include  investments in agricultural research which could increase the productivity  of fruits, vegetables, legume crops  and nuts/seeds; precision agriculture;  reduced food loss/waste; and  improved storage technologies that better protect perishables  along the entire value chain.
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A locally available least-cost healthy diet  based on today’s prices and patterns of  consumption is already unaffordable for an estimated three billion people  around the world. Ensuring that  everyone can afford sustainable, healthy  diets in the decades ahead is therefore a formidable challenge. The scale of the  task requires careful analysis of local  contextual challenges and opportunities.  Policymakers cannot rely on rising  incomes alone to ‘solve’ the affordability  problem. Implementation of policies to promote ‘pro-poor’ growth will be  important, but this chapter sets out  a broader strategic approach which  encompasses further components to  be implemented simultaneously. This  includes measures on technology and  innovation, subsidies, and taxation to reduce the cost of nutrient-rich foods,  and on social protection to protect the  most vulnerable.

Food makes up a large share of the budget of the poor and  vulnerable in all countries (see Figure 6.1). This is particularly true  for poor and vulnerable households in sub-Saharan Africa, South  Asia, and Latin America and the Caribbean. 1 The challenge for  households on low incomes is that even spending up to 75% of their total income on food may not be enough to secure  diets of a sufficiently high quality to avoid ill-health related  to various forms of malnutrition. Based on average estimated  income levels and food prices in 2017, roughly three billion  people across the world were unable to afford a least-cost  healthy diet as recommended by the national governments  where they live. Most of those people are in Asia (1.9 billion)  and Africa (965 million).

However, wealthier countries are not immune to this challenge.  The unaffordability of these diets extends to the poorest in  wealthier countries too. The primary focus of this chapter is  therefore on how policymakers can ensure that healthy and  sustainable diets are affordable to everyone. The affordability of sustainable, healthy diets must be addressed  from both the supply side and the demand side simultaneously  through concerted action in both high- and low-income countries. Many actions are possible at the national level,  but food prices are also affected by global food markets, and  hence by high-income countries’ domestic policies as well as by bilateral trade agreements.

Higher quality sustainable diets  accessed by everyone may cost more or less than they do today.  This will depend on the evolution of dietary patterns, the extent  to which environmental externalities are factored into prices,  how income growth translates into demand in coming years, and the size of the gap needing to be bridged between  insufficient food intake today (among undernourished  populations) and improvements needed tomorrow. It will be  critical for policymakers not only to encourage and facilitate  enhanced production and marketing of nutrient-rich foods,  but also to support purchasing power through higher incomes  via pro-poor job growth and social protection.

This chapter sets out a range of policy actions which together  have the potential to address the challenge surrounding the  unaffordability of sustainable, healthy diets. These are essential  actions to be pursued in an integrated and coherent way,  especially in LMICs. Importantly, it is not axiomatic that higher  purchasing power leads to improved dietary choices in the  absence of improved knowledge (these issues are discussed in the Chapter 7). However, progress in increasing purchasing  power is fundamental to the goal of making sustainable,  healthy diets affordable to all.

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6.1 Progress in addressing poverty and income inequality: a mixed picture

Until the COVID-19 crisis pushed the global economy into a  deep economic recession 4associated with significant job losses,  poverty had been declining for decades. In 2007, only a quarter  of the world’s population lived on more than US$10 per day (i.e. they were not classified as ‘poor’). This rose to more than  one third a decade later, which meant that 900 million more  people reached the US$10/day threshold in just 10 years,  thereby joining the ranks of the global middle class. 5 That  said, there is today a strong rationale for updating national  poverty lines globally, and related estimates of purchasing  power parity. This could better incorporate the reality that if three billion people cannot afford healthy diets as  recommended by their own governments, the latest estimate  of 734 million people living below the international poverty  line (<US$1.90 per day) in 2015 is at the very least misleading. 6  To ensure that people can afford sustainable, healthy diets in future, pro-poor policies and income transfers to support  enhanced consumption (as recommended in this report)  must be framed by a different threshold of poverty; one in  which being poor actually means not being able to afford a healthy diet regardless of place and time.

Regardless of the poverty definition or methodology used,  most projections suggest that both poverty and extreme  poverty will continue to fall in the next 20 years, although  the 2020 slowdown of the global economy linked to the pandemic will dampen the pace of progress. 7

One estimate  suggests that the pandemic could reverse the last decade’s gains,  posing a genuine challenge to the poverty reduction targets set for 2030 by the Sustainable Development Goals. 8 Indeed,  the most pessimistic scenario in that study (a 20% contraction  in income or consumption) could lead to an increase in the  number of people living in poverty of between 420 and 580  million, relative to 2018. That would be a catastrophic shift  which would likely increase income inequalities, particularly in LMICs where poverty remains endemic and gains have  been most recent. This prospect has led to calls for massive  resource support for countries whose economies and  household livelihoods are most vulnerable to income losses  resulting from the crisis. One estimate suggests that the  African continent will require a US$100 billion financial  stimulus package from high-income countries. 9

It is certainly possible that this most recent global economic  crisis will increase income inequalities between nations.
Even before the pandemic, it was thought that there could  still be around 500 million people living in extreme poverty  (on less than US$1.90/day) by 2030, mostly in sub-Saharan  Africa 10 (see Figure 6.2). Income inequality also persists  within countries and the people on lowest incomes (less than US$1.90/day) are not just found in low-income countries.  Today, there are more poor people living in middle-income  countries such as Nigeria and Indonesia than in the world’s  lowest-income countries, such as Haiti, Madagascar, or Liberia. This means that governments in middle-income (and even high-income) settings also need to pay particularly  close attention to supporting their own low-income families  to access sustainable, healthy diets.


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Average income inequality appears to have fallen slightly in Latin  America and the Caribbean and in sub-Saharan Africa relative to  its level in the early 1990s, while it has grown in South Asia and  the Middle East/North Africa regions over the same period. 12 In another study of 61 countries, recent average annualised  income growth was found to be higher among the poorest  40% of households than the national average. This means that  in countries such as Guinea, Peru, El Salvador, Uganda and Fiji,  income gains were greater than average among the poorest  families (see Figure 6.3). 13

Unfortunately, there were 34 countries in which income  growth for the poorest 40% of households lagged behind  national averages, including Madagascar, Benin, Sri Lanka and Cameroon. 14 In these countries, many families struggle to afford  even a minimally adequate diet in nutrient terms. The specific  needs of low-income and otherwise vulnerable individuals,  households and communities must be addressed if the goal of healthy diets for all is to be achieved.

These trends confirm the need for careful pro-poor management  of economic growth to protect food consumption of the  poorest (see Section 6.5). The message for policymakers is that measures that support economic growth and tackle  poverty levels and income inequality are all important in  helping to make sustainable, healthy diets affordable. This  problem cannot be overstated.

A substantial proportion of the growth in global GDP up  to 2030 is projected to accrue to low- and middle-income  countries. By that year India’s economy is projected to be  on par with that of the European Union. 15 What is more,  many recently very poor and disaster-affected countries in sub-Saharan Africa including Mozambique, Rwanda and  Ethiopia, were (before the coronavirus pandemic) also expected to more than triple the size of their own economies. 16  Thus, across LMICs there is huge potential for more inclusive  growth that supports purchasing power, making higher quality diets more affordable.


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6.2 The cost of sustainable, healthy diets

Poor households everywhere are already struggling to buy  adequate food, so supporting them to consume diets that are  healthy and sustainable presents a formidable challenge. This is  because nutrient-rich foods typically have relatively high prices  compared to staples (cereals and roots/tubers), and compared to  many ultra-processed packaged foods which are low in nutrients  but high in unhealthy fats, sugar, and salt.

Numerous studies have shown that healthy diets are unaffordable  today for most poor families in countries such as Afghanistan,  Bangladesh, Pakistan, Sri Lanka, 18 Uganda, 19
and Nepal. 20  Indeed,  an assessment of local market price data for 680 foods and non-alcoholic beverages in 170 countries in 2017 showed that most of sub-Saharan Africa and large parts of Asia simply cannot afford  healthy diets as defined by national governments. 21
Countries  such as Mozambique, Central African Republic and Burkina Faso  face a cost of diet that is two to four times average per capita  expenditure on food (see Figure 6.4). 22 In Niger, the healthy diet cost is more than four times what people currently spend  on food. In other words, lack of affordability of even minimally  healthy diets represent a major challenge in LMICs.

What is more, the coronavirus pandemic will have made  nutrient-rich food prices even higher in many LMICs owing to  widespread income losses and price volatility. 23
For example,  in some urban food markets in India prices of chicken, mutton  and tomatoes have increased dramatically since the beginning  of April 2020. 24 Similarly, in Bangladesh vegetable prices have  soared, mainly due to transport difficulties. 25

From a supply side perspective, investments in agricultural  research could increase the productivity of fruits, vegetables,  legume crops (that offer the benefit of natural nitrogen-fixation  in the soil), and nuts/seeds, and could help develop precision  agriculture, reduce food loss/waste and improve storage  technologies that better protect perishables along the entire  value chain. Each of these factors could contribute to relative  price shifts in the 2020s, but much will depend on the extent to which they are prioritised by the public and private sectors. 26

The cost of the diet increases incrementally as the diet quality increases and this is true across all regions and country income groups. The cost of a healthy diet is 60% higher than the cost of the nutrient adequate diet, and almost 5 times the cost of the energy sufficient diet

FAO, IFAD, UNICEF, WFP and WHO (2020) 27


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Currently, there is a wide gap between the price of the kinds of  foods that should be more present in sustainable, healthy diets  and other foods that are either starchy staples (providing mainly  calories) or foods that should be less present in some people’s  diets (such as red meats). Figure 6.5 shows that this pattern is consistent globally and across national income categories.  The most expensive foods on average are animal-source foods  (various meats, eggs, and fish), followed by fruits, pulses, and vegetables.

Less costly on average in terms of price per unit  weight are staple foods and sugar.

It is important to note that while not all LMICs are fully  integrated into global food trading systems, most are. As a result,  90% of the world’s poor that have an income below US$1.25/day  live in countries where domestic food prices are closely linked to international prices. For roughly 360 million poor people, international food prices are transmitted to their local markets  within three months. 29


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This confirms the role of trade not just  in re-distributing food around the globe, but also in affecting  domestic food prices which are an important factor in the  affordability of healthy diets. 33

Poor households rationally seek to optimise the amount  of calories they can serve to the household for a given (constrained) amount of money available to spend. Feeding  comes before nourishing; that is, allaying hunger is a first-order priority for the poorest households, and for many LMIC  governments.

Adding diversity and quality to a diet is often  seen as a relative luxury that comes with rising income. In terms  of the cost of different types of foods on a calorie basis, the  cheapest sources are of course grains, but also sugar, oils, and  fats. According to data from the Food Systems Dashboard, the  cost of a diet of minimum nutrient adequacy (Cost of Nutrient Adequacy) can be up to 200% of a household’s food expenditure  in countries such as Niger and the Democratic Republic of  Congo (see Figure 6.6). 34

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That said, when considering the price per calorie delivered by  each type of food rather than by weight as discussed above, the  same study found that relative costs are not universal. Fruits and  nuts, for instance, are particularly costly in the Asia and Pacific  region, but much less so in sub-Saharan Africa and the Middle  East. The same holds true for vegetables and pulses. Conversely,  dairy products and eggs are most costly (per calorie) in Africa  and the Middle East, but less so in Asia and Pacific countries. Significantly, nutrient-poor foods that deliver calories are the  least costly everywhere, with little regard for geography. 38

Mapping the price of nutrient-rich foods relative to the cheapest  local source of calories easily explains why so many poor households in LMICs spend so little of their scarce resources on nutrient-rich

foods like eggs, compared with salty snacks, added  sugars and oils and fats.39 Figure 6.7A shows that the market  price of eggs relative to the cheapest available staple food is  very high across most of Africa and Asia. By contrast, Figure 6.7B  indicates that packaged salty snacks are much less costly relative  to staple food sources of calories across most of the world, and  hence are also purchased by the poor because they offer ‘cheap’  calories that do not require preparation or cooking. They are  therefore convenient to give to small children asking for food,  and they are perceived as desirable due to colourful packaging,  enhanced taste, and advertising linking products like these to  aspirational lifestyles (these issues are discussed in Chapter 7).


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That said, it is also important to recognise that affordability  often varies widely within countries (see Figure 6.8). For example,  in Madagascar, the proportion of households able to afford a  nutrient-adequate diet is as low as 25% in some regions, and as  high as 97% in others. The range is from 12% to 78% in Ghana.  Some possible solutions for narrowing gaps in affordability  within countries include lowering prices locally, increasing the  availability of nutrient-rich foods in specific areas, introducing  biofortification or fortifying staple foods, and modifying social  safety nets to help the most vulnerable.

When trends in prices are considered, real prices in many  LMICs have seen a rising trend with inter-seasonal and inter-  annual spikes which directly affect the effective purchasing  power of poor households. For example, one study showed  that while the cost of staple foods (grains, roots and tubers)  remained flat from 2007 to 2016 (aside from spikes that  coincided with food price crises in 2007/2008 and 2011/12),  the price of non-staples rose steadily over the same period,  making staple calories increasingly cheap relative to more  expensive nutrient-rich foods such as pulses, eggs, fruits and vegetables (see Figure 6.9). 41 Nutrient-rich foods tend  to be more expensive in most countries because of high  input costs (labour, water, pest management), high demand  in most markets, and high perishability which constrains  total supply.

While keeping the price of staples steady represents a policy  success for any LMIC with a rapidly rising consumer base (such  as Ethiopia) the gains represented by tackling hunger risk being  off-set by growing unaffordability of quality diets which are  diverse and high in nutrients.

An analysis of food intake data for 164 countries examining  how income and food prices relate to food intake globally  found that while the combination of income and prices is  always an important underlying driver of dietary choice, their  influence varies by food item and by location 42 (see Figure 6.9).  For example, rising incomes raised milk intake most strongly

in sub-Saharan Africa, while fruit intake was most strongly  linked to increased income among older women globally.An important finding was that income elasticities of demand  for foods such as processed red meats and sugar-sweetened  beverages (SSBs) are higher in Africa and South Asia than in high-income countries, meaning the purchasing of these  products is more sensitive to changes in income in Africa and  South Asia. Indeed, mean consumption of SSBs is already higher  in Africa than in high-income countries (see Figure 6.10). 43

The same study found that the poorest households (first income  decile in Figure 6.11) are more responsive to an increase in  income in relation, say, to milk consumption than are wealthier  households (tenth decile in the income distribution). 44 For  poorer households, a 10% increase in income is associated with a large increase in demand for milk, processed meats and  SSBs, while a similar 10% increase in income among wealthier  households generates greater demand for fruit and a negative  response to milk, processed meats, and SSBs.

In other words, product prices matter, but demand for  various products is heavily conditioned by constraints to  purchasing power. Currently, the poorest households within  the 164 countries studied have sub-optimal diets, and the  concern is that even a small rise in income leads them to  consume more foods that may not make their diets healthier.  Indeed, other studies have also shown that policymakers  cannot simply assume that income growth will suffice to shift  consumption patterns towards healthier diets. For example, it has been found 45 that in the context of global reduction  in poverty, the consumption of healthier diets has improved  in most contexts (in resource-poor and resource-wealthy  countries alike), but the intake of food products offering limited nutritional value has also increased in these countries  at the same time. Thus, while the cost of nutrient-rich foods  has to come down in absolute terms, and the relative price of  such foods compared with ultra-processed alternatives must  also come down, the purchasing power of all consumers, but  particularly the poorest, must rise.


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6.3 Who can afford improved diets?

A key question is: what would be the cost of a healthy diet today?

A recent assessment of costs suggests that the number of  people unable to afford even the cheapest locally available  healthy diets is roughly three billion in total. 47 48 This is essentially  because healthy diets are estimated to be, on average, five times more costly to purchase than diets that meet only basic  dietary energy needs through starchy staples (such as grains and  tubers). This puts the cost of a healthy diet considerably above  the international poverty line, established at US$1.90 purchasing  power parity (PPP) per day, so it is not surprising that most of  the people unable to afford healthy diets live in Asia (1.9 billion)  followed by Africa (965 million). 49

The Global Panel is not proposing a single reference diet for all societies. The focus here is on helping policymakers identify  how to make a range of enhanced diets affordable in their  local context, while bringing attention to bear on how costs  can change when factoring in the impacts of diets on both  human and planetary health. For example, a recent study on  the potential joint impacts on environment and human health  of shifts in the diet of Swiss families found that a transition  towards a healthier diet (that adhered to guidelines of the  Swiss Society of Nutrition) would be more sustainable than current dietary patterns (a 36% lower environmental footprint).

It would also cost 33% less than their current food expenditure,  and generate roughly 3% fewer adverse health outcomes (in terms of disability-adjusted life years – or DALYs –  associated with NCDs). 50

Similar work commissioned by the Global Panel for this  report assessed costs associated with a shift towards a range  of different diets with varying environmental and human  health impacts to consider how this could affect diet costs  in future decades. 51 This work calculated the costs of diets in 150 countries from all world regions using 2017 prices, covering 463 food items for the benchmark, and projected demand  changes and price effects to 2030 and 2050. 52 53 The dietary  patterns modelled include ones that contain more fruits,  vegetables, whole grains, fish, and dairy, and less meat, sodium, trans fats and added sugars than today. Two variants  were assessed for each of the diet patterns to account for at  least some geographic and cultural variation in food norms.  In the flexitarian dietary pattern, for example, fruit and  vegetable intake would involve an increase of about one-third  globally, ranging from 28% in high-income countries to 100% or more (from very low levels) in low-income countries. Intake  of pulses and nuts would rise three-fold, with larger increases  in high-income than in low-income countries. Consumption  of animal-source foods would fall by roughly a third globally,  ranging from 11% in low-income countries to 60% in high-  income countries. 54


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To determine the ‘external costs’ of dietary choices, two  important components were added: the costs associated  with climate change and the costs of illness relating to sub- optimal diets. Previously published diet-related greenhouse  gas emissions (GHG) were paired with food demand estimates  for the different diet scenarios, differentiated by region of the world. 58 Those were then combined with estimates of the social  cost of carbon, which represents the economic cost caused by an additional tonne of GHG emissions. On the health side,  relative disease risks associated with dietary factors were paired  with mortality estimates country-by-country. The ‘health costs’  derived accounted for both direct and indirect costs associated  with treatments for a specific disease, including medical and  healthcare costs, and the costs of informal care and income  foregone due to lost working days.

Figure 6.12 indicates that at the global level, and in most parts  of the world, the daily cost of various enhanced diets that  incorporate the joint goals of reduced impacts on planetary  and human health would on average be lower than today. Under this fuller cost accounting, the relative costs of healthier  diets were reduced by 12-22% in 2050. This ranges from a  decrease in diet costs by 4% in lower middle-income countries  and by as much as 28% in high-income countries as people  spend more on fruits, vegetables, pulses, and nuts, and much  less on meat, milk, and eggs. The modelled changes at country  level ranged from a reduction of almost 50% in countries with  currently high expenditure on animal-source foods (including  Mongolia, the US, Israel, Denmark, and Greece) to increases in low-income countries in which poor households already  consume inadequate diets (such as Eritrea, Ethiopia, Yemen, and Chad). It is in the latter countries that dietary improvements  to meet intake of all required nutrients would have the greatest  impacts on tackling both hunger and malnutrition in all its  forms. And it is in those kinds of LMICs where most effort  would be needed to make sustainable, healthy diets affordable.

Overall, a shift away from current dietary patterns would mean  that improved diets would cost less in 86 countries (with a  combined population of 4.2 billion), while a shift to significantly  improved diets would cost more (at current prices) in 71 countries  with a combined population of 4.1 billion. The latter finding is not surprising given that three billion people in LMICs are  already unable to afford a healthy diet at today’s prices, so any  improvement in the quantity and quality of their diets will add to  the notional cost over current patterns. This is why policy actions to  make improved diets affordable to all poor families in all countries  is such a high priority as part of the food system transition.

Importantly, however, if policy actions and investments  recommended in this report were to be implemented quickly and  at scale, their combined effects on prices would be to reduce the  overall cost of sustainable, healthy diets including in LMICs. This  costing study also included the potential effects of two additional  cost-qualifying factors: 1. reduced food loss and waste by up to 50%  from current levels. Halving loss and food waste in line with the  SDG target reduced the cost of current diets by 14% on average (9-  17% across regions); and 2. growth policies that have positive effects  on desired outcomes, including higher rates of poverty reduction,  stricter land-use regulation, lower barriers to food trade, and a trend  towards lower meat consumption just in high-income countries. This  scenario was compared with business-as-usual and a less optimistic  scenario that includes changes in the opposite direction.

The outcome of all variables combined – desirable shifts in  dietary demand, a fuller accounting of the diet-related costs of climate change and healthcare, significant increases in foods  available due to reduced loss and waste, and implementation of policies that promote positive socioeconomic outcomes over  time – result in a much reduced cost of, say, a flexitarian diet in 2050 relative to 2017 across most of the world (see Figure 6.13).


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In this projection, there are still some outliers where more work  would need to be done to ensure that everyone could access  this particular diet variant (including Ethiopia, Burkina Faso and  Iraq), but progress towards the goal of sustainable, healthy diets  for all would already be huge. 60

The policy actions underpinning greater affordability of diets are  therefore not only based on making more nutrient-rich foods  available (see Chapter 4) and physically accessible (see Chapter  5), but also on ensuring greater purchasing power of the poor  (this chapter) and stimulating demand (see Chapter 7).

In other words, significantly reduced food loss and waste and  investment in socio-economic development pathways that  better tackle income inequality are essential. Both would help  increase the affordability of sustainable, healthy diets, especially  in middle-income and many low-income countries, while a fuller  cost accounting that included the diet-related costs of climate  change and healthcare in the cost of diets would further increase  the relative affordability to all countries, including low-income countries. It is the combined effects of bringing about a sea-change  in how food prices are determined (whether or not they account  for externalities), and policies that promote pro-poor income  growth and reduced leakage of food from all value chains that  make the goal of sustainable, healthy diets for all a realistic vision.

Much more analytical work of this kind is needed in the years  ahead to better inform and guide policymakers everywhere of the  range of potential costs and gains to be had from actions aimed  not just at promoting more sustainable and healthier diets, but  comparing them to the cost of diets today. Governments and  food industry stakeholders have critical roles to play in ensuring  that nutrient-rich foods, sustainably produced, are made accessible  at price points that make appropriate dietary patterns affordable  to all. Some of the known approaches that need to be prioritised  are explored further in the following sections..

6.4 Coherent public policy actions to ensure that sustainable and healthy diets are affordable

There are several policy instruments which must be considered  by governments which embrace the goal of making healthy diets  are affordable for all. They operate at different parts of the food  system and beyond, although the extent to which each is already  pursued by individual countries varies.

  1. Pro-poor income growth: to support greater purchasing  power (Section 6.5).
  2. Carefully designed consumer-level taxes and subsidies  on key food categories: to shift relative prices towards to  nutrient-rich foods needed in healthy diets (Section 6.6).
  3. Refocusing of safety nets to support diet-quality goals: i.e.  redesign social protection instruments to go beyond income  support to facilitate better knowledge and purchasing power  linked to diet quality goals (Section 6.7).
  4. Reduction in the cost of nutrient-rich products through  technology and innovation: i.e. investments in agricultural  research to increase yields of fruits, vegetables, legume crops  and nuts/seeds; precision agriculture; reduced food loss/  waste; and improved storage technologies that better protect  perishables along the entire value chain (Box 4.5).

Each of the above is essential, given the scale of the challenge of ensuring affordable, sustainable, healthy diets for all, especially  the poorest in society. The aim should be to ensure that these  lines of action work in concert and that their combined effect  ensures the affordability of nutrient-rich foods for everyone  throughout the transition to transformed food systems.

Ensuring a more equitable distribution of income within and across countries is indispensable in the quest for food security, better nutrition and environmental sustainability of food systems.

FAO (2018) 61

6.5 Pro-poor growth policies

Promoting economic growth, and therefore growth in  incomes, is an obvious means to help tackle the affordability  of sustainable, healthy diets. However, this can be a somewhat  blunt policy instrument unless two key conditions are met.

First, it is the poorest in societies that struggle most to access  these diets, but the benefits of economic growth even in low-  income countries can be distributed very unevenly across different  socio-economic groups. It is therefore essential that policies to  support economic growth are ‘pro-poor’. This is very important to ensure that large numbers of poor people can experience the  consequential health benefits of those diets, but also to maximise  the benefit to the natural environment by ensuring everyone’s  diets are sustainable. Any approach to tackling inequality must  understand how prevailing power relations across food system  actors may help or hinder change. A focus on multi-win strategies  and common benefits will facilitate broad-based support.

Second, it has been widely documented that income  growth is associated over time with reduced undernutrition  among poor families.

But other nutrition gains, for example  associated with micronutrient deficiencies and overweight  and obesity, are much less certain. These wider gains are  linked to diet quality and tend not to accrue to the poor  unless supported by government policies targeting the  most disadvantaged regions and households. For example,  accompanying measures would seek to make sustainable, healthy diets desirable, and to inform and empower individuals  to make better dietary choices (see Chapter 7).

Empirical  evidence from the United Kingdom shows that “poor  nutrition and diet-related chronic diseases such as obesity  follow a socio-economic gradient, with worse diets and a greater prevalence of obesity among the poor and less  educated”. 62 By contrast, most of the published literature  suggests the relationship between obesity and SES  (socioeconomic status) is the opposite in LMICs: the  wealthier are more likely to be overweight. Similarly, higher  rates of anaemia are seen in lower socioeconomic groups. 63

While sub-Saharan Africa continues to record the highest share  of poverty globally (absolute and relative), rates of poverty are  falling across the continent, even though Nigeria may have  overtaken even India in terms of the total number of poor  people (in absolute terms) in recent years. 64 The relative poverty  rate in sub-Saharan Africa has fallen significantly since 2000. 65  Countries in Africa that have recently seen the highest GDP per  capita growth also have the highest mean household income  growth, and some of those (such as Rwanda and Ethiopia) have  also seen significant improvements in resolving undernutrition 66  (see Figure 6.14).


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In terms of income inequality, there is disagreement about  whether this will rise globally, as it has done in recent years, 69 or  fall. 70 The Gini coefficient of global inequality has declined (from 69 in 2003 to 65 in 2013), and that trend has been projected to  continue downwards to 61 in 2035 (see Figure 6.15). 71 Figure 6.15  suggests that while sub-Saharan Africa is expected to achieve the  greatest growth in total GDP up to 2035, that region’s more rapid  population growth will see its GDP growth per capita fall behind  that of India, China and other parts of Asia and the Pacific.
Importantly, the biggest beneficiaries of more equitable income  growth are likely to be middle-income economies. 72

At the same time, it is important to remember that while China  and India experienced strong economic growth that has lifted  millions of people out of absolute poverty, this simultaneously  allowed rising levels of in-country income inequality. 73 For example, income inequality (measured using the Gini  coefficient) rose in China from 0.35 in the 1980s (below that  of India) to more than 0.5 in 2015 (above that of Brazil). 74 75
Economists continue to disagree on the potential for inequality  to impair economic growth. For example, China has continued  to grow despite its rising inequality, while South Korea has seen  its overall pace of growth slow over recent decades while its  inequality fell sharply. 76 Nevertheless, the 2015 report from the Organization for Economic Cooperation and Development (OECD) on inequality made the case that in many countries  “inequality is today at its highest since data collection started”. 77

The OECD’s position is that since “income inequality tends to  drag down GDP growth…inequality can no longer be treated  as an afterthought. We need to focus the debate on how the  benefits of growth are distributed.” 78

It is important to acknowledge that income inequality is itself  a global challenge of the highest order. For example, income inequality has risen seven-fold across OECD countries in the past 25 years, with the income of the richest 10% of the population  roughly nine times higher than that of the poorest 10%. 3 79Only in  Turkey, Mexico and Chile has inequality fallen since the mid-1990s,  but in the latter two countries mean income among the wealthiest  households is still 25 times higher than those of the poorest. 80

While there is disagreement about the macroeconomic benefits  of inclusive versus inequitable growth, there is little doubt about the societal benefits of the former, particularly in terms of nutrition. Governments focused on improving nutrition in the poor, such  as Brazil in the 1990s and early 2000s, have managed to reduce the  gap in nutrition benefits between richer and poorer households  at the same time. However, while Bangladesh achieved national  progress in reducing stunting, the relative gap in benefits between  wealth quintiles remained the same in the absence of effective  nutrition programmes that were framed in terms of equity. 81 Sub-national inequalities come in many forms, not just income,  but also in terms of the distribution of undernutrition, commonly  in the form of child stunting (see Figure 6.16).


82

In considering the importance of pro-poor income-growth  policies, it is important for policymakers to understand the  major influence of income on dietary choices, and how these  are constrained by other claims on household expenditure.  This is particularly important because of the relatively high  non-food costs in many low-income countries, including  housing, electricity and water utilities, and quality education. 83  Also, out-of-pocket spending on healthcare represents a huge burden to low-income households, particularly  those in low-income countries. 84

As argued in Chapter 1, while the absolute costs of healthcare  and lost productivity foregone due to poor quality diets are much higher in high-income settings, the relative burden  for lower-income countries is much greater. Overall, food  affordability is a relative concept that encompasses the market price of food in relation to other household expenses and  household income. 85

An analysis of World Bank prices of food versus other household expenditure across 159  countries showed a declining cost of food relative to  housing or transportation as incomes rise (in terms of gross  national income). 86 Finally, while incomes and relative prices both matter to  purchasing power, so too does predictability in purchasing  power, which can be eroded by runaway inflation.

National  policies are required to better track and manage inflation  and to ensure that food and non-food items are affordable.

6.6 Fiscal policies to address affordability and shift consumption patterns

The World Health Organization (WHO) views shifting price  policies that address affordability and purchasing incentives  as a key policy agenda. 87 While some governments and  donors are reluctant to promote public sector engagement  in markets that would potentially ‘distort’ price signals, there  is growing evidence that targeted product-specific taxes and  consumer-focused subsidies (linked to fresh and/or nutrient-  rich food procurement) can be a viable option for promoting  health outcomes. 88 For example, the United Arab Emirates  plans to introduce a 50% excise tax on sugar sweetened  beverages (SSBs); the aim is to “reduce consumption of  ‘unhealthy products’” 89

The WHO highlights that “evidence suggests that price policies  applied to food can influence what consumers buy and could  contribute to improving health by shifting consumption in the desired direction and supporting healthier diets”. 90 In that  sense, the main effect of price intervention is to influence  point-of-purchase decision-making by shifting relative prices among products (not by setting prices). This can encourage the  purchase of the more nutrient-rich foods and close substitutes.  Accumulating empirical evidence from around the world shows  that the impact of any price intervention is determined by the  extent to which the price increase or decrease is passed on to  the person buying the food. The de facto effects of taxes and  subsidies depend on the way that they are designed, and there  is likely to be a knock-on effect for foods and/or nutrients  beyond those that are targeted.

Taxes seem to be most effective when applied to foods that  do not support healthy diets, for which there are similar untaxed nutritious alternatives. Targeted subsidies on fruits  and vegetables also appear to be effective at increasing the  consumption of those foods. 91

For example, where taxes are concerned, a systematic review  analysing about 100 studies suggested that when implementing  taxes, the price of products deemed to be ‘unhealthy’ should  be increased by at least 20% to reduce consumption. 92 One randomised experiment in New Zealand changed the relative  prices of foods for 1,132 shoppers by imposing a tax on SSBs and  on foods with high sugar, sodium, and saturated fat content,  and/or a subsidy on fruits and vegetables. 93

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The authors found  that price increases on foods high in saturated fat, sugar, and salt  led to a rise in ‘healthy food’ purchases, and that “a combination of  different tax and subsidy policies might be the most effective way  to improve diets and decrease diet-related chronic diseases”. 94  Indeed, a review by UNICEF of high-income country case studies  where sugar taxes have been applied concluded that while the  large-scale effects of these taxes as a means of reducing child  obesity will take more time to be measured, most countries have so far applied tax rates which are “much lower than  recommended”. Also taxes alone will typically need to be part  of a system-wide approach that applies complementary policy  and programme interventions to be successful. 95

Similar examples are emerging in middle-income settings, such  as local authorities in Jakarta offering tax breaks (representing  indirect subsidies) for restaurants that make calorie counts  explicit on menus, and Nigeria’s reallocation of long-standing  fuel subsidies towards maternal and child health and nutrition  programmes. 96 There are also examples of ‘twinned’ initiatives  such as the ‘Nutrition Smart City’ activity pursued jointly by  the cities of Pune in India and Birmingham in the United  Kingdom; these city authorities engage bilaterally to define  policies and pilot programmes that are intended to tackle all forms of malnutrition. 97

To date, many such initiatives show promise, but there are  still few examples in low-income countries. That said, a recent modelling exercise used import tariffs which tend to be applied  differently to processed versus unprocessed foods,

as a proxy for ‘taxes’ which shift relative prices between the two categories.

The study considered how price interventions could affect health  outcomes across sub-Saharan Africa. 98 It was found that an  increase in tariff differences between highly processed and less  processed foods could indeed be an effective measure to reduce  obesity even in low-income African settings, but that these kind  of policy interventions must be applied with great care.

As with all policy actions which focus on one food or nutrient,  there can be potential unintended outcomes due to people  substituting one or more foods in their diet because of changed  relative prices. Taxes on foods deemed to be unhealthy will  affect some families, but not all. The same applies to subsidies  on consumer prices supporting nutrient-rich foods. While  national policies must seek to tackle multiple nutrition and  health problems simultaneously, single policy instruments alone  rarely solve complex problems. 99 100 An integrated approach,  using multiple policy instruments that account for possible side-effects, is usually preferable when seeking to encourage  people to eat differently. Encouragingly, the number and quality  of studies and reviews of interventions is growing fast, leading  some researchers to conclude that it can already be agreed that  measures seeking to modify the prices of targeted nutrient-rich  foods are “effective in improving population diet by modifying what people buy”, and that contextual complexity should not  stop policymakers from adapting policy instruments, including  fiscal interventions,to improve people’s diets and health. 101

 

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As such, it is important that economic assessment of policies  should consider the impact on purchases of targeted and  non-targeted products and on dietary patterns. Policymakers  must also consider whether policies should target the whole  population or specific groups, since the former offers an opportunity to generate higher tax revenues which can be spent  by governments to implement transition steps, while the latter  could be easier to implement due to less consumer or food  industry lobbyist push-back. Targeted approaches generate less income but can achieve more lasting behavioural change.  Both represent important opportunities for action in this area,  but public support will also depend on how people perceive  the value of public actions using taxpayers’ money. A recent  study on the acceptability of policy bundles in China, Germany  and the US found that public support may be enhanced by earmarking revenue from taxes, particularly if the revenue  is put towards programmes for low-income households. 102

6.7 Social protection to support healthy diets

The importance of effective income transfers to the poor cannot  be underestimated. Besides playing a key role in promoting social  protection and greater equity of purchasing power, they can also  help protect the most vulnerable during the transition, when  food price uncertainties may arise.

Diverse social programmes – including conditional cash transfer  programmes, labour and production inclusion programmes and social pensions – have long been implemented under the  broad rubric of social protection, particularly in Latin American  and Caribbean countries. The aim of these programmes has  traditionally been to end poverty, enhance food and non-food  consumption in ways that promote well-being, and sometimes  to reduce inequalities. 103 Many governments introduced these  measures, with shorter-term goals of income and livelihood  support, in response to the economic shock resulting from the coronavirus pandemic (see Boxes 6.1 and 6.2).

Box 6.1: COVID-19 and the economic downturn

The coronavirus pandemic has caused a substantial global economic shock. The resulting global economic downturn increased unemployment and loss of incomes, particularly among low wage earners in all sectors, and forced the hand of governments to try to compensate through  a variety of fiscal stimulus packages. The global outlook in terms of growth was projected by the International

Monetary Fund (IMF) to fall by 3% in 2020 (as of mid- April 2020 104), compared with a January 2020 projected increase of 3.3%. 105 Recent projections of the economic ramifications of the pandemic suggest that at least 181 million people will have been pushed into poverty (earning less than US$1.90/day), and that the majority of these will be in sub-Saharan Africa. 106

Box 6.2: Ehsaas Emergency Cash: a digital  solution to protect the vulnerable during  the COVID-19 crisis in Pakistan

The coronavirus pandemic has impacted livelihoods on  an unprecedented scale. According to one estimate, it has  negatively affected roughly 160 million people in Pakistan.  In response, the Government of Pakistan allocated 203  billion Pakistani rupees (Rs.) (US$1.23 billion) to deliver  one-time emergency cash assistance to 16.9 million  families at risk of extreme poverty. 107 Given family sizes, this  represents nearly 109 million people or half the country’s  population, representing the largest and most extensive social protection intervention in the history of the country.  Each family received Rs. 12,000 (around US$75) to provide  immediate nutrition subsistence needs. 108

Digital capabilities established over the past year as part  of Ehsaas, Pakistan’s new poverty alleviation framework,  were adapted to deliver Ehsaas Emergency Cash. This  enabled payments to be linked to unique national  identification numbers, the National Socioeconomic  Registry and wealth proxies (travel, taxes, billing, assets  ownership data and government employment status).  Payments were biometrically verified.

The programme demonstrated that by combining  phones, internet connectivity, and national IDs, a  demand-based system can be created to enable those  in distress to seek social support during times of crisis. As such, it may provide useful lessons for other countries  which utilise unique personal identification systems.

As of mid-June 2020, 195 countries had introduced or  were planning some sort of social protection activity specifically to buffer the economic impacts of the COVID-19  emergency: more than 270 interventions involved cash  transfers (across 131 countries), and roughly 143 were based  on voucher or in-kind food transfers through schools. 109

In a sample of 18 countries that expanded coverage of  cash transfers from pre-coronavirus levels, the expansion  represented a 233% growth in participants on average,  with countries such as Nigeria and Myanmar increasing  their coverage by more than 1000%. The value of all such  interventions (if well designed, implemented and funded)  includes buffering and enhancing food demand, as well as  applying any work conditionality to activities that support  more effective food system functioning. 110 A few examples  tracked by the IMF:  111

  • Afghanistan saw food price spikes in early 2020 as Pakistan closed its border and panic buying ensued,  until the government sought to shift its wheat imports  from Pakistan to Central Asia and worked with private  wholesalers to release food stocks to bring prices down.
  • Kenya allocated 40 billion Kenyan Shillings to emergency social protection and cash transfers, food relief, and a range of medical priorities. It also proposed a package  of tax relief measures, including full income tax relief  for persons earning below the equivalent of US$225  per month.
  • In The Gambia, emergency powers were invoked by the President to freeze prices on essential food (including rice, meat, fish, and cooking oil) as well as non-food items, such  as soap, and sanitisers.


112

Box 6.3: What do we know about affordable diets? The case of Chile

Chile has been successful in achieving substantial economic  growth and as a high-income country, now has one of the  lowest rates of undernourishment in the region 113 (3.3% in 2015-2017). 114 Meanwhile, adult obesity has more than  doubled since 1980, reaching 28% in 2016, the highest in  South America.

Following this economic success, the country has embarked  on a search for ways to make healthy diets affordable to all.  An analysis in Chile from 2015 shows that the costs for the  government to achieve this goal would be almost 2% of the  annual government budget.

The Chilean Ministry of Health, Pan American Health  Organization (PAHO/WHO) and United Nations Economic  Commission for Latin America and the Caribbean (ECLAC)  compared the Basic Food Basket (BFB), (calculated from periodic household expenditure surveys 115), with  a constructed Quality Food Basket (QFB). The analysis estimated what share of the population in different income  brackets could afford the more nutrient-rich foods.

The construction of the QFB was achieved by adjusting  weights of items in the BFB to improve overall nutrient  composition. Based on Chile-specific dietary guidelines, 116  some of the changes made in the diet were:

  1. reduce simple carbohydrates, added sugars,  and highly-processed foods;
  2. increase the share of ‘healthy’ proteins, while  reducing red meat;
  3. reduce the consumption of sugary drinks;
  4. increase high-quality fibre; and
  5. limit consumption to 2000 kcal/day.

Having constructed the QFB, it was valued (using official  information from the National Institute of Statistics). The per  capita monthly cost of the higher quality diet was roughly  US$84, or almost 35% higher than the cost of the basic diet. The  capacity to afford the QFB is based on the minimum income  that a household would need to have to be able to afford  this diet, estimated at approximately US$224.5. Overall, 27%  of Chile’s population could not access the QFB, and this share  was far higher for the poorest sectors, reaching to over 85% of  the poorest 20%. The cost of a policy that would subsidise the  gap between both baskets for 27.1% of the population would  represent almost 2% of the annual government budget. 117

While many of these government initiatives have been unavoidable,  the cost of public sector protection and/or stimulus programmes,  coupled with the downward pressure on incomes, has added  significantly to the pre-existing burden of poverty across Africa and  Asia (and parts of Latin America), further increasing the pressure  on low-income governments and poorest citizens. As of April 2020,  more than 90 countries had applied to the IMF for emergency  funding to deal with the crisis. 118

There are many non-crisis examples of governments using cash  or other income transfers to poor and vulnerable groups (with  or without various forms of conditionality). Some support the  purchase of nutrient-rich foods (e.g. in Bolivia, for poor pregnant  and lactating women) and/or promote positive health outcomes  more generally (e.g. Mexico). In Latin America, there are currently an estimated 130 million beneficiaries of conditional cash transfer  programmes, which include income support measures associated  with undernourished children (see Box 6.3). 119 However, these  programmes are less widespread in Africa and Asia, and many  have yet to be designed to address diet quality effectively as well  as nutrition. For example, most social safety nets still need to be  redesigned to include counselling on healthy diets and health  education, to facilitate access by beneficiaries to nutrient-rich  foods (and nutrient-rich snacks and beverages) or introduce  rewards for transfers or vouchers spent on nutrient-rich foods. 120

Globally, conditional cash transfer activities of

various kinds are  particularly effective at targeting the poorest, compared with unconditional cash transfers, free meals in schools or public  works, including cash-for-work or food-for-work (see Figure  6.17). 121 There is therefore a case for governments and donor  organisations to focus on income-transfer interventions tied to  accessing nutrient-rich foods, provided they are well-designed  and well-implemented. 122

The redistribution of income through taxes, cash transfers and  social protection has been shown to reduce income inequality  in OECD countries. The resulting reduction in inequality, after transfers, can be relatively small in a country such as South Korea,  where incomes are already more equitably distributed, or Mexico  which has high initial inequality and where transfers make some  but limited difference. By contrast, in countries such as Ireland,  Greece and Austria, the role of transfers is significant in reducing  inequality through effective pro-poor transfers. 123 In other words,  to increase the purchasing power of the poorest households,  resources have to be adequate and well-targeted to those at the bottom of the inequality curve. Only this way will they  be able to afford to eat foods that are today relatively more  costly than others.

In the next chapter, the importance of making affordable,  healthy diets desirable is considered. Even if consumers are able  to afford sustainable, healthy diets, they will not necessarily  choose them if they are not deemed desirable. A range of  actions for policymakers are therefore suggested to encourage  people to make more informed choices.

Box 6.4: Pathways to multiple ‘wins’: sustainable development of China’s Loess Plateau 124

The Loess Plateau in China’s Northwest is home to 50 million  people. Centuries of overuse and overgrazing led to one of the highest erosion rates in the world and widespread  poverty. The restoration project, which began in the 1990s  and involved the World Bank and the Chinese authorities.  It aimed to return this poor part of China to an area of  sustainable agricultural production, to increase incomes,  and to restore the Plateau’s ecosystem, considered by many  as beyond help. Many lessons have been learned and the  successes were many and varied: 125

  • Over 2.5 million people were lifted out of poverty. Incomes doubled, and people in project households saw their incomes grow from about US$70 per year per  person to about US$200 through enhancing agricultural  productivity and diversification.
  • Employment rates increased. More efficient crop production on terraces and the diversification of agriculture and livestock production created new  on-farm and off-farm employment. During part of the project, the employment rate increased from  70% to 87%, particularly increasing opportunities for women to work.
  • Food security increased. Previously, frequent droughts caused crops cultivated on slopes to fail, sometimes necessitating emergency food aid. Terracing increased

average yields, and significantly lowered their variability.  Agricultural production has changed from generating a  narrow range of food and low-value grain commodities  to high-value products. During the second project period,  per capita grain output increased from 365kg to 591kg  per year.

  • The project significantly contributed to the  restructuring of the agricultural sector. This  included adjustment to a market-oriented economic  environment and created conditions for sustainable  soil and water conservation.
  • The project encouraged natural regeneration.  This restored grasslands and tree and shrub cover  on previously cultivated slope-lands. Replanting  and bans on grazing allowed perennial vegetation  cover to increase from 17% to 34% (see Figure 6.18).  The project also led to enhanced soil conservation  and carbon sequestration. 126 127

The physical and economic development of the Loess  plateau with sustainability as its goal demonstrates what  can be achieved through close partnerships, appropriate  policies, technical support, and active participation of the  people. It is estimated that as many as 20 million people  have benefited from the replication of the approach throughout China.

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