What a waste. A report that could be the most significant piece of government work on the food system since the second world war has been thrown away with a bucket of Downing Street spin.

Whoever thought it a good idea to have Gordon Brown tell us to address the global food crisis by eating up our leftovers while he and other G8 leaders banqueted in Japan should surely have seen the lampooning coming. The real waste is that an excellent analysis, commissioned by the prime minister, of today's food economy and its structural failures has been buried in the slops.

Food Matters, the report from the No 10 Strategy Unit, represents a radical shift in government thinking. There is a fault line running through it, but it is the first recognition since the 1947 Agriculture Act that not only is a supply of good, affordable food vital to political stability in rich and poor countries, but also it cannot be taken for granted.

The report formally admits to the enormous environmental damage and public-health harms associated with our current food system: nearly one fifth of the UK's greenhouse gas emissions are caused by the way we produce and eat, making food's contribution to climate change greater than that of our whole transport sector; and the costs to the NHS of treating diet-related diseases that are largely preventable is £6bn a year and growing.

It also acknowledges the glaring social inequalities in the system. The poor, who spend a greater proportion of their income on food, not only struggle more as prices rise but are worse hit by the health effects of bad food. The report says that unless we reduce the dependence of agribusiness on crude oil and water - resources that are going to become ever more scarce - we will be exposed to future price shocks. And, yes, it points to the obscene waste. Brown spoke of the 4.1m tonnes of edible food that consumers throw away each year. However, the report also highlights the waste from commercial and industry sources, which account for more than half of what is thrown away.

This report is not just more of the usual digestible pap that ends up in the Whitehall policy bin once past its ideological sell-by date. It envisages the creation of a food strategy taskforce chaired at the most senior level by a permanent secretary in the cabinet office, and made up of permanent secretaries from each of the key departments, all reporting to the prime minister - since a shift to a more economically, environmentally, and socially sustainable food system "will not happen of its own accord".

The government has committed to taking the lead in providing a new kind of system fit for a low-carbon economy. More than a billion meals are served by the public sector in England and Wales every year. Nearly 6 million employees, 9 million schoolchildren and half a million people in care homes, hospitals and prisons are fed by state procurement daily. The government estimates that its own workforce includes more than 3 million people who are obese or overweight. It has the buying power to insist on a different food chain, which could bring about a huge cultural shift.

Yet there is an underlying tension throughout this report that may explain why the Downing Street soundbites threw the food crisis back to individuals and their waste. It recognises that the agribusiness model of food production based on global competition has failed to deliver, but the government remains wedded to the idea that food markets, like all other markets, are best left to regulate themselves. It wants the food chain reshaped but does not want to edit our choices. It wants to run with the free market, yet trade in food has never been truly free.

Concentrations of corporate power in the global food system distort competition. The government has no plan to address them. The US and EU have retained trade barriers and agricultural protections as they urge poorer countries to liberalise food markets. Britain can't wean the US off its farm bills, nor a biofuels policy that diverts a third of the corn crop to petrol tanks at the expense of global food prices. Nor can it persuade the French to reform the common agricultural policy faster. Moreover, the market has no effective mechanisms for putting a price on the things that matter most: the nutritional, environmental and social costs of production.

Brown says it is neither practical nor financially rational for the UK to pursue national food security in isolation from the global market. The report concludes that there is no justification for increasing food production capacity unless we can be globally competitive.

Others are playing a different game. While the US takes back its food surplus for ethanol, Arab states are buying up agricultural land in Africa to secure their own food needs. They are looking beyond the market. In a world of accelerating climate change, growing population and potential for conflict over diminishing resources, what counts as rational market economics one year may look like geopolitical myopia the next.

· Felicity Lawrence is a Guardian special correspondent and author of Eat Your Heart Out: Why the Food Business is Bad for the Planet and Your Health

felicity.lawrence@theguardian.com