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Living income as a human right

Millions of farming families in Africa, Asia, and Latin America earn less than a living income. In Côte d’Ivoire, for example, cocoa farming families need to earn at least 500 USD per month but, on average, the poorest half only earns half of that. Can the living gap be closed? Yes, but not by going down the same road. We need structural changes.

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Yuca Waarts is happy to talk to you about actions that you can take to make a difference through your organisation, or together with other stakeholders, including through for instance the establishment of an Inclusive Transformation Fund:

ir. YR (Yuca) Waarts MSc
Senior researcher sustainable value chains

Evidence-based recommendations and strategy design

We evaluate the impact of current and future policies, innovations and interventions on smallholder farming family and worker livelihoods. We do this by working with all relevant stakeholders, with a special focus on the voices and interests of smallholder farming and worker families. Our evidence-based recommendations help policy makers, agricultural and food companies, NGOs and foundations to substantially reduce and close the living income gaps for these people. This involves:

Finding ways to optimise incomes from farming and other income sources (e.g. agroforestry and nature conservation) for different types of households.
Conducting impact evaluations and modelling the expected impact of strategies based on data and literature.
Creating roadmaps with different stakeholders on how to achieve their goals.
Supporting learning processes to enhance household, sector and rural landscape resilience.

Source: Waarts et al. 2024, <L CODE="C27">Unlocking targeted approaches to improve household resilience of cocoa farmers</L>. Adapted from “Pathways to Prosperity - Rural and Agricultural Finance State of the Sector Report” (2019)

Development pathways for smallholder cocoa farming families

There are many different types of households, each with different possible pathways for growing their resilience and income. By considering household needs, aspirations and opportunities for income growth, optimal strategies can be developed to reduce and close living income gaps.

Do you have a question about living income as a human right? Ask one of our experts: ir. YR (Yuca) Waarts MSc

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Yuca Waarts spoke about Living Income during the World Economic Forum in Davos

For societal impact

We aim to contribute to achieving a living income for the millions of people who work in the agri and food sectors and who currently do not earn enough. Earning a living income is a human right. By supporting this, we also contribute to five SDGs: No poverty, Zero hunger, Decent work and economic growth, Reduced inequalities and Partnerships for the goals.

To achieve our aims, we collaborate with a range of partners, including:

Frequently asked questions

What is a living income and what is a living income gap?

A living income is “the net annual income required for a household in a particular place to afford a decent standard of living for all members of that household” (Living Income Community Of Practice). It covers food, water, decent housing, education, healthcare, transport, clothing
and a provision for unexpected events. A living income is a human right according to the Universal Declaration of Human Rights (Articles 23 and 25) and is a milestone on the way to prosperity.
Multiple income sources make up actual income, as shown in the figure. The living income benchmark (top left) differs per country and sometimes even within a country. More
living income and wage benchmarks are becoming available through the ALIGN guidance tool. To establish the gap to a living income, the living income benchmark is deducted from the actual income earned from farming, off-farm income and other income (e.g. remittances).

Source: Living Income Community of Practice

Many stakeholders aim to eradicate poverty (SDG 1). For this goal, the World Bank’s extreme poverty line is used. This was 2.15 USD per person per day as of 2017. The difference between a living income concept and the World Bank extreme poverty line is that the latter communicates the amount needed to meet basic needs, while the living income benchmark communicates the amount needed to afford a decent standard of living. We estimate that, on average, the World Bank extreme poverty line is 40–50% of the living income benchmark.

What is the difference between living income and living wage?

Both the living income and living wage address achieving a decent standard of living for households. However, they focus on different ways of earning an income. Living income refers to self-employed (farming) families
who earn an income through farming and/or through small businesses and (informal) wage labour. Living wage refers to what a hired worker (e.g. in a factory or on a farm) should be paid for a typical worker household to earn a living income. Since the routes to a living income between wage workers and farmers and their families are so different, the analyses of how to achieve a living income for all differ. It should be noted that smallholder farmers often hire workers, so achieving a living income for farmers should also account enable workers to be paid a living wage.

What methods has WUR developed for measuring living incomes?

Together with partners, WUR has developed several open source methodologies and approaches for establishing a Living Income Benchmark (based on the Anker methodology) and measuring actual total household income and the living income gap (based on Living Income Community of Practice guidance materials).

Is achieving a living income for all the ultimate goal?

Achieving a living income is a crucial milestone for prosperity. It allows households a decent standard of living, surpassing the World Bank and national poverty lines. It is the minimum that households are entitled to, based on the Universal Declaration of Human Rights.

Can all smallholder farming and worker households earn a living income?

Substantial increases in income are possible, but achieving a living income for all requires structural change.
Farming and worker families earn much less than a living income or living wage in many agri and food supply chains in low and middle income countries. The majority of the households need to more than double their current income to earn a living income. There are several root causes. They include low and volatile farm gate prices (driven by farmers lacking power and competition between buyers and retailers), small farms, a lack of alternative income opportunities, challenges with input supply and marketing, and high costs of inputs and labour and living standards. This leads to low investments and thus low produced volumes and low total household incomes. In addition, social protection systems are often lacking.

Significant investment is necessary to close living income and wage gaps at scale in these sectors. While individual organisations and companies can help increase incomes substantially, achieving a living income for all requires collaborative efforts from multiple stakeholders.

What can I do to reduce and close the living income gaps of the farmers and workers we work with?

You can take the following steps, which we can support you with:

Establish your ambitions for reducing and closing living income gaps, alongside your other objectives at the organisational level, with all supply chain actors and/or investors, in a landscape or a country. Discuss potential trade-offs between socio-economic and environmental objectives.
Assess and validate the living income or living wage gap for different households and understand the reasons behind it. Use existing data within your organisation or network and collect new information if necessary.
Develop and implement strategies with farmers, workers and their communities to reduce and close income gaps. Set specific targets for different households to ensure your strategies are relevant and effective.
Evaluate strategy effectiveness and share what you learn both internally and externally to facilitate future decision making strategies, including marketing.

Be cautious when setting targets, as they could lead to perverse incentives, favouring better-off farmers and plantations, which could then worsen the situation for the most vulnerable households in a sector. These kinds of developments do not match with the UN SDG principle to ‘leave no one behind’.

What is my ‘fair share’ in achieving living incomes for the farming and worker households I work with?

Due to the different root causes that lead to the often large living income and wage gaps of households, often, no single stakeholder (e.g. a government or company), can be held responsible for closing these gaps entirely.

Different methods identify what a ‘fair share’ would be for companies and governments (e.g. the True Price Living Income module), which can be applied to all sectors and geographies, or the Fairtrade Living Income Reference Price methodology which is available for several coffee, cocoa, coconut and vanilla-producing countries.
We can support you in defining your ‘fair share’ and in designing interventions based on the most recent evidence.

Can I pay a farm gate price per kilogram to farmers or to plantations to ensure all farmers or workers in my supply chain earn a living income?

Due to the often large living income and wage gaps, paying higher prices alone is unlikely to close the living income gaps for all households. Higher prices increase incomes for all farmers, and even if farmers sell smaller volumes or workers work fewer hours, small income increases can be very meaningful because they earn so little. However, higher prices benefit relatively richer households more in absolute terms because they sell much larger volumes or work more hours than poor households.

It matters how much of the volume of a farmer, cooperative or plantation is sold for a higher price. If one buyer raises the price but can only afford this for 25% of the volume, this limits the actual increase in income of supplying households. If a buyer purchases 10% of a plantation’s total volume, the additional income for the plantation is spread across all workers at the plantation, thus limiting the actual wage increase per worker. This affects how price increase impacts can be marketed and communicated.

What is the impact of interventions on yield and household incomes?

There are several meta studies available that shed light on the impact of different interventions on household incomes. These include the following:

What works to increase smallholder farmers’ income? A landscape review: Increase smallholder farmers' income (mars.com)
What works to increase smallholder farmers’ income? Detailed case information: Boosting farmer income: further insights from great cases (mars.com) (the summary) and Boosting farmer income: further insights from great cases (mars.com) (a list with cases and their income growth).
Information on the effectiveness of agricultural certification schemes and standards: Effectiveness of agricultural certification schemes for improving socio-economic outcomes in low- and middle-income countries (3ieimpact.org)

You can also find great resources on the Evidensia platform. Evidensia is a curated public platform that shares high quality research and insights on market-based sustainability action with an independent governance structure.