The second step to addressing living income in your supply chain is to assess living income gaps and income drivers. Collaborate with other stakeholders for data sharing, data validation, process facilitation and to pool financial resources.
Identify what income data is needed
A living income gap represents the value that a household would need to earn on top of their actual income, in order to meet their basic needs.
Farming households have diverse income streams that include on-farm, off-farm and other income sources; and many households produce more than one crop on their farm. Therefore, it is ideal to have data beyond the income from your crop of interest, also referred to as a focus crop, as the focus crop might not represent the largest contribution to household income.
Income drivers form a key part of the data you will need to develop your smart-mix strategies to close living income gaps. Thus while collecting actual household income, IDH recommends collecting data on the income drivers to understand the total household income, the contribution of the focus crop to total income, and to have useful information that will inform your action-plan.
Identify where and with whom to find income data
To calculate income driver values and actual household income, you will need access to household income data which could be found from a range of sources: within your company’s database, amongst your partners, and/or through publicly available data. Collaborating with other stakeholders can increase data availability and reduce costs for data collection. Consider how the below stakeholder can contribute to accessing income data:
- Producing country government: sharing of national, ministry-level and local statistics; data validation;
- Certifiers: farmer datasets, audits, evaluations and facilitation of farmer engagement;
- Traders and manufacturers: farmer/management information systems, sustainability project evaluations and facilitation of farmer engagement;
- Buyers: farmer/management information systems and sustainability project evaluations;
- Farming households and producer groups: self-report and farmer/management information systems;
- Donors and multilateral institutions: datasets and project evaluation data; and
- Academy, researchers and NGOs: datasets, models and research and primary research.
Even after engaging multiple stakeholders and sources, you may find that data points are missing. Therefore data might need to be collected, either through surveys, Farmer Field Books or other means. Each data collection approach has pros and cons related to accuracy, reliability, representativeness, time and cost – for both data collectors and farmers.
- It is important to have data that is accurate enough to plan your strategy, but don’t let get in the way of progress during data collection. Every data collection approach has downsides and data can be debated – what matters is being informed about the current situation enough to take effective action, acknowledging that more data and insights will be obtained along the journey and course-correction is inevitable.
- If you have existing data on some income drivers but not others, choose the relevant module(s) from IDH’s Income Measurement Survey for your farmer survey questions.
- What income data is available within your company?
- Who among your partners has access to existing data around farming household income within your supply chain’s priority areas?
- What relevant income data do you and your partners have and what data points are missing?
- For missing data, what method of data collection will your company and/or partners use?
- What is your budget for data collection and analysis? Who else can contribute?
- Which existing or new partners will be required to support data collection and analysis?
- Income Measurement Practitioner’s Guide
- Key Tradeoffs Between Income Measurement Toolkits
- LICOP’s Guide on how to estimate farmer household income
- LICOP’s Income measurement practitioner’s guide
- LICOP’s Key trade-offs between income measurement toolkits
- Agri-Logic Farmer Field Books
- IDH Income Measurement Surveys for coffee, tea and cocoa are farmer surveys that help gather income data and essential variables
Calculate living income gap in priority areas
The living income gap is equivalent to the difference between the living income benchmark and farmers’ actual income. Once you have the living income benchmark and actual household income, you can calculate and visualize the living income gap using consistent methods.
We suggest you start by calculating the living income gap for high-risk and priority areas. This will allow you to take immediate action to tackle supply chains and sourcing areas that are most at risk of large income gaps or most critical for supply security.