IDH’s living income roadmap helps companies, along with other stakeholders, take ambitious, aligned actions to close farming households’ living income gaps. The roadmap provides a logical framework with useful resources to help guide your company’s journey to close living income gaps in your supply chain. This framework includes a range of steps, guiding questions and data-driven tools that are designed to be dynamic, meaning that the roadmap will change as we learn. It highlights the need to use comparable data, engage in multistakeholder partnerships and take immediate action. While there are five steps, these are iterative and may be taken at different times or in parallel.
The Living Income Community of Practice (LICOP) has provided ample leadership and resources in this space. IDH is leveraging the work of LICOP and organizations part of LICOP in this roadmap, which embeds LICOP guidance documents and tools, alongside those created by IDH. IDH is a member of the LICOP Strategic Advisory Committee and LICOP Technical Committee.
Through the Living Income Roadmap community and in program coalitions, IDH works together with many companies and organizations. Specifically under step 4, we have partnered with the Mars/Farmer Income Lab (FIL) with a focus on inspiring transformation in procurement practices of businesses to contribute to closing living income gaps. FIL is a “think-do” tank, supporting companies to address poverty in agricultural supply chains. Both IDH and FIL believe that innovative procurement practices are an important element of the smart-mix of interventions needed for smallholders to reach living income.
To act on living income, companies need:
- A solid foundation, internal alignment and an understanding of living income in priority areas;
- Data to identify the living income gap and income drivers;
- Uniformity and stakeholder alignment in how living income gaps are calculated;
- Practical multistakeholder solutions to remove barriers and close living income gaps; and
- Access to data and best practices to facilitate learning on how gaps can be reduced over time.
Living income is about households having the ability to afford a decent standard of living. It is defined as 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. This is referred to as the living income benchmark. Elements of a decent standard of living include access to food, water, housing, education, healthcare, transport, clothing and other essential needs, including provision for unexpected events.
When thinking about income, as opposed to wages, it is important to recognise that the income that a household earns can come from multiple sources. In the case of smallholder farmers for example, income can be earned through off farm business or labour and remittances in addition to crop sales. Therefore, actual income is a composition of the following elements: net farm income, net off-farm income and other sources of income.
The difference between the living income benchmark and actual income is referred to as the living income gap. Living income gaps vary significantly across geographies but are understood to be significant in the food and agriculture sector, representing around 50-94% for the average smallholder farmer household.
Companies that join will become Friends of the Living Income Roadmap.
This is a commitment-free learning community through which IDH will facilitate informal information exchange between interested companies and keep them informed on general progress in the space of living income. This community will come together a few times per year, and Friends will be invited to submit questions that they wish to have brought to the table.
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