Closing the income gap: Key takeaways from the Living Income concept application in cocoa, coffee, and palm webinar
Living income isn’t an endpoint—it’s a step toward prosperity. But without collective action, it remains out of reach for millions of smallholders.
In LICOP’s latest webinar, experts from the cocoa, coffee, and palm sectors shared how living income is being applied, the challenges faced by farmers and producers, and practical applications. We heard from:
- Beatrix Richards, Head of Markets at IDH
- George Watene, Program Manager at Kenya Coffee Platform
- Miguel Zamora, Coffee Public-Private Task Force Coordinator at the International Coffee Organisation
- Solomon Boateng, IMS Manager Risk & Certification at Kuapa Kokoo Farmers Union
- Ulrike Joras, Advisor at GISCO
Common Challenges Across Sectors
Despite their differences, there were common challenges across the three sectors that impacted farmer incomes:
Ageing trees and climate change have reduced crop yield, while small farm sizes make it difficult for farmers to earn a living income from their crops alone. Without access to finance or investment, farmers can’t adapt or improve their farm, leaving them vulnerable to worsening conditions.
Farmer’s share of commodity value has decreased. In palm oil, farmers now just earn 8% of their commodity value, half of what they did a decade ago. Market power imbalances allow large buyers and processors to dictate prices. Long supply chains and middlemen taking a large share of the price, driving profits away from producers.
Sector specific barriers
Cocoa: Regulated markets (such as in Ghana and Côte d’Ivoire’s) have the government set fixed (often low) prices to attract buyers, limiting farmers’ income.
Coffee: Fragmented smallholders struggle to negotiate prices, with reported prices ranging (e.g. $3.3/lb to $2.5/lb) and a lack of price transparency.
Palm: Tied-mill systems ensure farmers sell to specific processors at low rates, while middleman exploit bargaining power gaps.
Why Living Income Matters
Living income helps to tackle challenges by providing clear benchmarks to track farmer incomes and measure progress. Establishing living income benchmarks creates accountability. While improving data availability helps to quantify gaps and track impact – ensuring that farmers are not left behind.
Sector-specific drivers:
- Cocoa: Civil society pressure and legislation (such as the EUDR),
- Coffee: 2018-2019 price crisis and the London Declaration
- Palm Oil: links to labour rights and overlapping challenges with cocoa put it on the agenda.
There are notable efforts underway and civil society pressure is contributing to a shift from voluntary approaches to potentially mandatory ones. Increasingly more organisations are committed to reducing the income gap, for example GISCO has developed roadmaps for its members.
Promising Strategies to Close the Income Gap
Farm-level interventions:
- Diversification: Supporting farmers with good agricultural practices, regenerative agriculture, dynamic agroforestry, and intercropping helps diversify income sources and build climate resilience, making them less susceptible to price volatility.
- Farmer-Centred Support: Training and projects must start by listening to the farmers’ needs, ensuring long-last solutions and skills that meet local needs.
Market & Policy Tools
- Long-term partnerships: Establishing long-term partnerships with producers gives farmers stable demand and price security.
- Transparency: Greater transparency helps farmers know real time price for crops and make informed decisions.
- Procurement and Pricing: Ensuring that pricing structures allows for farmers to earn a living income, such as Fairtrade International’s Living Income Reference Prices (LIRP).
The path forward
Progress towards and beyond living income required a smart mix of interventions, such as fair pricing, productivity improvement, diversified incomes, and shifts in procurement practices and policy. This change starts with listening to farmers - their insights are crucial to equitable growth.
While challenges remain, the growing momentum around living income across sectors indicates a turning point, with collaborations and sector-wide commitments showcasing a turning tide towards improving smallholder livelihoods.