05. March 2019

Enabling food producers to earn a living income: how can business do its part?

Ioan Nemes (Oxfam Novib), Noura Hanna (Rainforest Alliance), Leon Mol (Ahold Delhaize) discussing about strategies how to close the income gap of smallholder farmers. Photo credit GIZ

Keeping small scale food producers in extreme poverty probably isn’t on your shopping list. But far too many products on supermarket shelves are produced by small scale farmers who don’t earn enough to afford a decent standard of living for themselves and their families. When companies step up to their obligations to do better, what should they do to ensure that farmers producing the food we eat earn a living income?

This was the question 70 participants from food retailers, certification bodies, NGOs and think tanks grappled with at a one-day workshop organized by the Living Income Community of Practice, Oxfam Novib and Fairtrade on February 1st in Bonn, Germany. The day’s discussions highlighted a number of practical steps that companies can take, as well as ways that certification bodies, NGO’s and others can support them and hold them accountable for their progress.

First, participants discussed what a living income actually means for small scale food producers in developing countries. A living income is defined as the amount of money a household needs to afford a decent standard of living in terms of housing, food, essential services and a small margin for unforeseen events, for example a weather-related disaster or a serious illness among a member of the household. Typical costs and preferences vary from place to place so what counts as a living income for a family of five in a cocoa-growing region of Ghana will be different from that of a similar family in a cocoa-growing region of Côte d'Ivoire. For farmers, earning a living income means escaping poverty and working towards a better future. For Oxfam and other organizations that support poor farmers, living income calculations help set the goal we are working to help farmers achieve, informs the discussion around value distribution is supply chains and helps us create and advocate for projects and policies that help defeat poverty.

The United Nations Guiding Principles on Business and Human Rights, the OECD Guidelines and related publications, international human rights law and the Sustainable Development Goals all highlight the duty that companies bear to respect the rights of workers and farmers in their supply chains and to do their part to eliminate poverty worldwide. According to speaker Ioan Nemes of Oxfam Novib, companies can take an important first step towards fulfilling these obligations by embedding a living income for producers in their policies, systems and operations. They can then make living income a reality by supporting farmers and workers to organize themselves in order to increase their negotiating power, by offering them fair deals and by providing access to effective grievance and remediation mechanisms. Companies can invest more in measuring their outcomes and impacts, for example through Human Rights Impact Assessments. It is also important that companies are transparent about their due diligence efforts and findings and that they use their leverage with other influential actors, like local authorities, to create the enabling environment for living incomes. Arjen Boekhold from chocolate manufacturer Tony’s Chocolonely told the story of how the company puts these principles into use by ensuring traceability in their cocoa supply chain. For them this means paying a higher-than-market price to farmers, supporting farmers to diversify their crops and farm more productively and building durable relationships with supplies. Leon Mol of retail group Ahold Delhaize shared how one of his company’s brands Albert Heijn is working towards a living income for cocoa suppliers by working with existing suppliers to adopt principles pioneered by Tony’s Chocolonely. According to Mol, big retailers are willing to collaborate with each other at a pre-competitive level to improve conditions for small scale farmers while leveraging new distributed ledger technologies like blockchain or chain point to improve transparency and traceability in value chains.

Certification bodies and NGOs have a role to play supporting these efforts. Peter d’Angremond of Max Havelaar NL spoke of how Fairtrade has helped farmers demand and win better prices for their crops while also strengthening producer organizations and farmers directly to diversify and improve their farming practices. Noura Hanna of Rainforest Alliance added that certification bodies can help pilot and scale new ideas for supporting farmers and can convene and share learnings among companies, NGOs and other stakeholders. She also stressed that national and international laws can have a strong impact on improving livelihoods for farmers: civil society can do more to demand that tax, agricultural and labor policies work in favor of small scale farmers. Ioan Nemes reminded the participants that as long as human suffering remains widespread in agricultural supply chains around the world, as documented in Oxfam’s “Ripe for Change” report, companies who earn revenues from international trade carry the primary responsibility for respecting human rights. They should not only rely on certification and social audits, but should engage with local farmers and workers, trade unions, civil society and governments to ensure that our food systems deliver fairness to the men and women who work hard to deliver food to our tables.

See the following links to access the presentations from the day: 1) Introduction to Living Income, 2) Practical Application of Living Income and 3) Living Income and Due Diligence.

To learn more about Oxfam’s work on living incomes in supermarket supply chains, please see Oxfam Novib’s report “Dutch Supermarket Supply Chains: Ending the Human Suffering Behind our Food” and check out Oxfam Novib’s recent blog on the new due diligence policies

and commitments Dutch supermarket Albert Heijn recently published. For more information on Oxfam's work on Living Income please contact Anouk Franck (Anouk.Franck@oxfamnovib.nl) or Ioan Nemes (Ioan.Nemes@oxfamnovib.nl)