Almost three billion people in the world suffer malnutrition, that’s one in three people, according to the FAO.
This costs the global economy an estimated €3.3 trillion each year – about two thirds of which is due to micro and macro deficiencies and the rest to obesity.
It’s an arresting figure, and one which the head of the FAO’s economic and social development department Dr Kostas Stamoulis says is adding clout to fight for change.
Balancing the books
“It’s a convincing argument and shows that this thing [malnutrition] costs a lot more than it does to fight,” said Stamoulis, who was assistant professor of agricultural economics at the University of Illinois before joining the FAO in 1989.
"A lot of people only think of the social cost, that it's socially and morally unacceptable for people to be obese or malnourished. But in my view the economic impact is very important too."
According to the FAO’s 2013 State of Food and Agriculture (SOFA) calculations, investing $1.2bn (€1.12bn) annually in micronutrient supplements, food fortification and biofortification of staple crops for five years would generate annual benefits of $15.3bn (€14.37bn) to the global economy.
Here the benefit-to-cost ratio of action was clear at almost 13 to one.
Stamoulis said these figures were starting to hit home. “Things are happening. Governments are paying more attention.”
He said it was about “presenting a government with a menu”, by telling them how much a problem was costing them and how much a policy on, for example, fortification of flour or salt would cost them. This also meant governments could priorities certain nutrients.
The cost of fortifying flour varies, but the Food Fortification Initiative (FFI) says: “Several studies estimate that the cost to fortify flour with iron alone is between $0.05 [€0.04] and $0.07 [€0.06] per person per year.
“The cost of including other nutrients such as folic acid is minimal once the equipment and procedures for fortification are in place.”
The Cost of Hunger in Africa (COHA) initiative led by the African Union Commission and backed by the Economic Commission for Africa and the UN's World Food Programme has been looking at the cost of child malnutrition by country.
Launched in 2012, so far studies have so far been conducted in Egypt, Ethiopia, Swaziland, Uganda, Burkina Faso, Malawi, Rwanda and Chad and are due to be carried out in Lesotho, Mozambique, Madagascar and Mauritania.
The Ghanaian report showed the country was losing 4.6 billion Ghana cedi ($2.6bn/€2.3bn) – or 6.4% of its GDP – every year because of the impact of child undernutrition on increased healthcare costs, added burdens for the education system and later lost workforce productivity.
The report said: “[T]he cost of inaction would be too colossal for the economy both now and in the future and hence [this report] makes a case for Ghana to leverage policy actions for a drastic reduction of stunting and malnutrition in the next ten to fifteen years.”
This shared responsibility of malnutrition has been a common theme for the FAO, which in recent years has been pushing for a whole ‘food systems approach’ from farmer to consumer to state.
“It’s not just a bunch of people out there being hungry and needing a welfare system to take care of them. It’s not about that. It’s so much bigger.”
Simple farming strategies to improve food security and resilience to climate change could be one example outside of supplementation programmes.
The 2016 SOFA report for example estimated that the number of people at risk of undernourishment in developing countries in 2050 could be reduced by more than 120 million through widespread use of nitrogen-efficient crop varieties alone.
The opportunity cost
The FAO works out this socio-economic cost by calculating disability adjusted years (DALYs), which compares the lifespan of someone leading an ‘optimal’ disease-free life with someone who has been impaired in some way.
It’s a complex calculation to make and entails both years of lifespan lost due to poorer health, an ‘opportunity cost’ in terms of mental and psychical capacity and therefore lifelong earnings as well as the any increased costs for a country’s health system.
But getting data on health children in some countries isn’t always possible, and projections are sometimes needed.
“The FAO methodology doesn’t claim more than it can give,” he said. “You need a lot of data. We are presenting a menu of indicators.”
Industry focus on cost
The FAO is not the only one working out the cost of malnutrition and deficiencies.
The nutrition industry has also followed the movement, with trade group Food Supplements Europe (FSE) commissioning a study showing that if all over 55s in Europe took just 1 g of omega-3 EPA-DHA every day the EU could collectively save about €12.9bn in cardiovascular disease health care spending every year.
FSE director of regulatory and scientific affairs Patrick Coppens told us at the time it was a conscious decision to mark out the economic savings of supplementation.
“That realisation [that health care savings can be made through supplementation] I think is new. And it's that realisation that we want to bring over with this study,” he said.
“This is economic data you can hardly ignore. It is something we think should be realised by EU policy makers.”