Driving Farmer Incomes through Responsible Procurement: Insights from the LICOP webinar
Responsible procurement practices and contracting can directly improve farmer incomes. The latest Living Income Community of Practices (LICOP) webinar explored this topic, providing clarity on existing guidance and tools for businesses while simultaneously exploring practical examples.
Farmers are facing mounting challenges, including ageing populations, growing illiteracy rates, high farm costs, and limited access to labour and finance. To address these, farmers need higher prices, long-term partnerships, more capacity building, and greater access to finance. Cooperatives offer a unified approach to overcome these challenges, however, they too require stronger investment in governance, business management capacity, access to finance, and stable buyer relationships.
Regulation and Frameworks for Responsible Purchasing
Evolving regulation has catalysed action and brought attention to the role of responsible procurement practices. During the webinar, Anny Stoikova, Manager of Sustainability Systems and Livelihoods at ISEAL, gave an overview of regulation and frameworks for responsible purchasing. For example, the EU Corporate Sustainability Due Diligence includes living wage and living income, encourages companies to assess purchasing practices to avoid contributing to poverty and exploitation, and encourages the uptake of responsible contracts. The EU Deforestation Regulation requires transparency and due diligence, indirectly supporting living income. As the regulatory landscape evolves, corporations should act to embed responsible practices now, as they are quickly becoming a license to operate.
These are a variety of frameworks that focus on responsible procurement practices, such as ETI’s Common Framework for Responsible Purchasing Practices, VOICE’s Good Purchasing Practices Guidance, IDH’s Sustainable Procurement toolkit, and Fairtrade’s Living Income Reference Price (catch-up on our Enabling Living Income through Responsible Purchasing Practices for more information on such frameworks). These frameworks ensure:
- That procurement practices are transparent, equitable, and fair
- That prices meet sustainable living incomes
- The need for greater transparency and accountability.
Framework on contracting: Responsible Contracting Project
The Responsible Contracting Project’s (RCP) mission is to drive better outcomes for people and the planet through contracts that are more responsible. Daniel Schoenfelder, Lead European Legal Advisor at RCP, gave an overview of the RCP framework which moved from conventional to responsible contracts. Conventional contracts focus solely on the supplier and ensuring perfect compliance – in turn, making the supplier solely responsible for human rights and environment (HRE). Responsible contracting responds to this unrealistic approach by introducing shared obligations for ongoing, risk-based HRE due diligence. It establishes joint responsibility around duty of care, negligence and HRE, prioritising HRE remediations before traditional contract remediation.
At their core, responsible purchasing practices help prevent and remedy adverse impacts – but doing so requires a focus on high-risk areas first.
Sector Guidance: Dutch Initiative on Sustainable Cocoa Purchasing Practices Guidance
The Dutch Initiative on Sustainable Cocoa (DISCO) is a multi-stakeholder partnership with a common vision for cocoa-producing regions that are important to the Dutch Cocoa Industry. Mark de Waard, Senior Program Manager Cocoa at DISCO, shared key considerations from their Procurement Practices Position paper:
- Adequate remuneration: Ensures cocoa farming is profitable and enables farmers to earn a living income.
- Prompt and reliable payments: Prevents farmers from absorbing payment risks and ensures a steady cash flow, enabling farm investment and covering living costs.
- Long-term assurance: Provides supply security, giving farmers confidence to invest in their farms while stabilising and securing market volumes.
Building on this success, DISCO is working on scaling this approach across other European platforms, such as the other ISCO’s, to create a level playing field across Europe. They are also advancing reporting and monitoring, tackling pre-competitiveness barriers, engaging with producer countries to align principles locally, and fostering knowledge-sharing opportunities.
Responsible Procurement in Practice
By 2050, over half of the land suitable for coffee production will no longer be suitable due to climate change. CaféDirect operates with this in mind. Nick Martell-Bundock, Head of Purpose at CaféDirect, showcased their approach to establishing long-term relationships and transparent supply chains. Their ambition: by 2030, every farmer within their supply chain will have the skills, support, and power to achieve a living income. Responsible procurement is a key part of this.
In alignment with their ambition, their efforts include:
- Long-term agreements: For example, a 4-year agreement in Peru with smallholder suppliers.
- Producer data access: Returning farm data (e.g. on soil health and climate) to producers, who can choose to also share with others. Working with Open Data Institute ensures farmer data is protected while remaining accessible and beneficial to farmers.
Ben Rutledge, Senior Advisor on Business & Human Rights at RCP, spoke on the Tea Model Sector Clause (TMC), developed with the Ethical Tea Partnership (ETP). The clause makes due diligence more feasible and effective in fragmented, smallholder dominated supply chains. It was designed with modular language to ensure adaptability across markets.
ETP mandated the adoption of the TMC within its membership model. However, tracking wider adoption is challenging, slowed by cultural clashes – for example, between lawyers prioritising compliance and risk avoidance versus RCP’s emphasis on proactive risk management.
The webinar briefly explored the idea of a “shadow price” for living income – similar to carbon pricing – that could adjust with market shifts. Speakers also highlighted the inseparable link between the environment and farmer livelihoods.
Cross-sector sharing emerged as a crucial step towards closing the income gap and spreading best practices. However, uncertainty around anti-trust competition law often limits collaboration. Some consortiums navigated this by focusing on farmer needs and aspirations rather than individual organisational activities; others worked directly with anti-trust authority for guidance.
Responsible procurement practices and contracting can directly improve farmer incomes. This webinar, part of LICOP’s 2025 series on strengthening due diligence, explored the latest guidance, tools, and real-world examples for businesses looking to implement these practices.