In recent years, there has been a vibrant international community of academics and activists promoting standards for paying small-scale farmers and workers in developing countries a decent “living income.” Although agreement has been reached on a common measurement approach, much less progress has been made in defining operational strategies to close the living income gap.
There are various reasons why smallholder farmers fail to achieve the subsistence income standard. This is often due to resource constraints, particularly land and capital constraints, limited access to knowledge and information, unequal market conditions, limiting opportunities to improve value chain efficiency, and land and labor productivity. This is likely due to a failure of the governance system that limits the
Living income inequality not only affects prospects for sustainable and inclusive livelihoods, but is also considered a cause of food and livelihood insecurity and other socio-economic barriers that impact human rights in supply chains . Failure to meet minimum living income standards severely hampers farmers’ resilience to shocks. Therefore, it is important to elucidate the main determinants of living income and understand its dynamics.
Recent living income estimates (2022) are: anchor methodology Cocoa farmers in Ghana earn US$1.96 (GH¢15.28) per person per day for farm sizes up to 4 hectares and US$298 (GH¢15.28) per month for a family of five (2 adults and 3 children). Fixed at ¥2,324). While this benchmark is valuable in providing the industry with a reference point to improve farm-level prices, it hides insight into the structural requirements for lifting farmers out of poverty.
For many farmers with small plots and less than half the yield levels used in reference studies, reaching the subsistence income benchmark appears to be rather impossible. Furthermore, even if a subsistence income threshold is reached, there is no guarantee that farmers will be able to meet a standard of living that structurally overcomes extreme poverty. The subsistence income agenda distracts from some important socio-economic realities that smallholder farmers face.
- Smallholder farmers receive income from multiple sources
Smallholder farmers engage in multiple (food and cash) crop production and also earn income from off-farm work, self-employment, and off-farm employment. This diversification of income sources is a strategy to reduce risk. Increasing living incomes is not only related to higher prices for agricultural products, but also primarily requires farmers to be able to engage in a variety of activities. Therefore, high yields that require the use of more farm labor are less attractive as they limit income and risk diversification opportunities for smallholder farmers.
- Earning a living income requires spending on agricultural products and labor.
The current definition of living income includes nutritious food, clean water, adequate housing, education, healthcare, and other essentials, plus a little extra or savings for emergencies. It will be. This means that the livelihood of rural households is primarily considered in terms of consumption. Expenses necessary to earn a living income are usually made before this income is earned. Advance financing provisions should therefore be available to purchase inputs and remunerate family and wage labor in order to have a reasonable prospect of reaching a living income.
- Living income must also include savings for asset formation.
A living income strategy focuses on household spending to ensure a healthy diet and decent living conditions. Savings are included only for emergency purposes and to help households withstand unexpected shocks or sudden income shortfalls. To maintain a living income, farmers require reasonable profits and access to critical assets (land employment, purchase of seeds and farming tools) that can only be obtained through structured savings and credit mechanisms.
- Increasing your living income requires different investment strategies
Rural income shortfalls are caused by a variety of factors, including limited yields and low market prices due to too small fields and uneven product quality. These underlying reasons for income shortfalls need to be addressed with specific strategies that require significant investments in assets, training, and agricultural inputs.
- Constraints on living income can only be overcome through public investment.
Most strategies to reduce living income inequality focus on farm-level measures to increase resource productivity or market-based strategies to increase prices. Local farmers, traders and chocolate brands are considered primarily responsible for increasing their income.
However, low prices and productivity stagnation also depend on structural conditions such as access to roads and energy, local extension services and market information systems. Public investment in local infrastructure, including social services and stronger institutions (cooperatives, women’s self-help groups), is essential to help farmers overcome extreme poverty.
conclusion
In summary, the current concept of living income needs to be significantly revised and strengthened to include more than just a description of its components. Improving smallholder farmers’ labor remuneration, asset generation and external infrastructure are essential to achieving and sustaining viable livelihood income strategies.
>>>Ruhrd Ruben is Distinguished Professor of Impact Evaluation (emeritus) at Wageningen University and Research in the Netherlands. He has published widely on the role of smallholder farmers in tropical food value chains, the effectiveness of rural cooperatives, and the impact of certification. He was Head of the Independent Policy and Operational Evaluation (IOB) Department at the Dutch Ministry of Foreign Affairs, Professor of Development Effectiveness and Director of the Center for International Development Affairs (CIDIN) at Radboud University Nijmegen. You can contact him at: Ruerd.ruben@wur.nl
Priscilla Serinam Opoku is an independent sustainable development consultant working to promote the well-being of vulnerable people and smallholder farmers in the cocoa sector. You can contact her at opokuselinam@gmail.com