The Living Income Community of Practice recently held a two day annual event in Bonn on the 30th and 31st of January 2019 to support learning, action and collaboration around the topic of Living Income for smallholder farmers. A main objective of the Community of Practice is to provide methods and guidance on measuring and reporting actual and living incomes and understand the gap between these. This blog explores key reflections from the first day of the event, focused on this objective.
The day covered all elements of income and benchmark calculation from living incomes’ key underlying concepts, work to date on living income benchmarking, the calculation of actual incomes for comparing with benchmarks, measuring and monitoring income change and setting targets to a session looking at the similarities and differences between living income and living wage.
Benchmarking Living Income
The importance of coordinating around Living Income benchmark measurement was highlighted on a number of occasions across the events’ measurement day. Participants expressed strong support for aligning around benchmark figures, recognising that Living Income benchmarks could have significant power to influence policy, shape interventions and drive collective action for smallholder income improvement (as the 2 degrees target does for the issue of climate change).
The presentation of the Community of Practices’ two pilot Living Income benchmarks in Ghana and Côte d’Ivoire, using the Anker & Anker method, highlighted the importance of robust benchmark measurement. In this session, ensuring credibility was described as one of the key components of benchmark development. This is achieved through continuous stakeholder engagement, a non-biased process, the inclusion of technical backstopping and transparency around a benchmarks’ scalability. Involving government was also mentioned as one of the key factors for securing an actionable and widely accepted benchmark.
Throughout the day, attendees identified several requirements to support them in undertaking benchmarking processes. One of the most prolific was the need for guidance and tools to develop a benchmark using the multifaceted Anker benchmarking methodology. Also due to the benchmarking process’ time and resource intensive nature, the need for clearly defined methods for updating living income benchmarks was also discussed.
Calculating actual incomes
The session ‘calculating actual income for comparison with living income benchmarks’, exposed a number of challenges inherent to calculating actual incomes. These included farmer recall error, poor record keeping, issues in the valuation self-consumed crops, and heterogeneity amongst farmers making income generalisations problematic. These issues can be addressed by asking the right questions, making adjustments and corrections using secondary data, and getting creative by looking for alternative indicators or proxies (particularly when trying to evaluate the effectiveness of initiatives or understand local dynamics).
This same session also laid bare a variety of approaches for measuring actual incomes, and highlighted that the method and metrics chosen have significant implications for the final income figure, and subsequently the size of the income gap. To enable comparability of calculations, and for organisations and initiatives to align on reporting, guidance is in high demand around the right measuring stick to use. The variety of use cases for calculating actual incomes however (i.e. to monitor the current situation or assess the efficacy of interventions), and the resource constraints of many organisations, makes aligning on an all-encompassing actual income methodology very challenging.
A subsequent technical meeting tried to differentiate use cases for actual income calculation in beginning to explore development of appropriate guidance to support actual income calculation. It was argued that preliminary guidance could focus on agreement on cross-cutting metrics (e.g. use of household vs family size), measurement non-negotiables and key principles, and the suggestion of accurate proxies; all of which would be informed by already successful attempts to measure smallholder incomes.
Monitoring income change
Many of the challenges identified for calculating actual incomes were reiterated in a session on measuring and monitoring income change and setting income targets. One of the main challenges to monitor incomes is that there is a need to identify actionable metrics that represent income, that are also easy to monitor. There is an aim to get metrics standardized but this becomes challenging due to a high context dependency (e.g household size, economy of the region and heterogeneity amongst farmers) and a high variability of results across regions (e.g cultural differences). Indeed, it became clear that the definition of standard indicators for benchmarking is useful but those need to be then implemented having the local context in mind. One of the tools in the process is to use local researchers, which hold knowledge, connections and local expertise.
Living Income and Living Wage
During the final session, and at various other points in the day, the interrelatedness of the Living Wage and Living Income concepts in agricultural supply chains was highlighted. There are many conceptual similarities between the two, as well as some critical differences, considerations and implications. The realisation that they both play a role in most supply chains, highlights the importance of not considering them in isolation and exploring the level of overlap further. These conversations considering the two concepts were only preliminary, and the Community of Practice plans to explore them together in more detail going forward.
A huge thank you to all of those who contributed to the event. To see who presented in each of the sessions click here to review the event agenda.
To access all of the presentations and resources from the event visit: https://www.living-income.com/bonnevent2019