Equitable distribution of value and risk represents an opportunity for business to not only improve livelihoods among smallholder farming households, but ensure reliable, resilient supply chains. Today, a group of senior leaders from business, governments, civil society, and financial institutions gathered at a side event to the World Economic Forum in Davos to explore ways to overcome barriers and enable more efficient value distribution in favor of smallholder farmers.
An efficient and sustainable value chain is one that assures fair distribution of value and risk. Currently, smallholder farming households often shoulder the greatest burden of risk in supply chains, from volatile prices to the effects of climate change. This burden represents a serious threat to livelihoods and market stability. The COVID pandemic and global conflict only exacerbate the problem, increasing the income gap even further.
“Our goal is value chains where risk is shared, and farmers can maintain a viable business that supports a living income. For too long our market has focused on value extraction. Now we need to reorient ourselves to value creation from the first link in the supply chain all the way to the consumer,” said Daan Wensing, CEO of IDH – the Sustainable Trade Initiative, at the side event. “If we don’t train our focus across the entire supply chain, it will eventually collapse.”
The side event, Accelerating Change Through a Global Coalition on Living Income, was co-hosted by IDH – the Sustainable Trade Initiative (IDH) and Wageningen University (WUR). Participants included Her Majesty Queen Máxima of the Netherlands in her role as the United Nations Secretary-General’s Special Advocate for Inclusive Finance for Development (UNSGSA), executives from Nestlé, JBS, Unilever, Standard Chartered Bank, senior representatives from the governments of Côte d’Ivoire and Ghana and more.
Her Majesty Queen Máxima emphasized that this meeting was extremely timely. As the highest risk is placed on those who can least afford it, the smallholder farmers all over the world. Financial Inclusion is not enough: ‘We should not only increase the living income of the smallholder farmer, but also build their resilience’.
Facilitators challenged the group to consider how their trade systems could be overhauled to distribute risk and value more equitably in their value chains. They explored the barriers to system transformation at the individual and organizational level.
This meeting is part of a longer journey, co-developed by IDH, WUR and others, to design a Multi-Stakeholder Framework for Action. This framework will inspire pathways for improvement for farmers and businesses, including concrete interventions and points of collaboration.
TheMulti-Stakeholder Framework for Action on Living Incomes will rely on a shared understanding of the challenges and opportunities for improving incomes. The scale and scope of the problem with value distribution is so large that no single actor or intervention can fully address it. The framework can help clarify the roles and responsibilities for finding solutions that include the perspectives of a wide swath of stakeholders, from the private and public sectors to farmer representatives, the financial sector and civil society.
The framework is part of IDH’s Living Income Roadmap, which contains a range of steps, guidance questions, and data-driven tools to help companies, governments, investors, and civil society organizations close living income gaps. The follow-up of this event will take place on 14th of June, during the Living Income Summit in Amsterdam.