Once you have identified the living income gap, it is important to take immediate action to address how to close it. Data-driven tools and partnerships will help you to take appropriate and effective actions through a “smart-mix” of strategies, and target setting and monitoring will help track progress.
A “smart-mix” of strategies to close the Living Income gap
Rarely can we close living income gaps by targeting a single income driver, by using a single intervention or by acting alone. We need a combination, or “smart-mix” of strategies that target multiple income drivers. To achieve long-term, sustainable results these interventions must often take a multi-stakeholder approach and go beyond individual actors.
Strategies that can improve income drivers go far beyond addressing changes in the farm system and household behavior. These strategies range from service delivery for improved production and processing, to brand and consumer engagement, to improving the enabling environment. See below for six strategic areas that multiple stakeholders can address in their multistakeholder intervention strategy. Each of these strategies should influence an improvement in one or multiple income drivers, or the underlying conditions that enable an improvement in income drivers.
IDH is collaborating with key partners to co-create practical guidance, a common agenda and drive action on these strategic areas. To fast-track the transformation of procurement practices to reach living income ambitions, IDH partnered with the Mars/Farmer Income Lab. Together, IDH and the Mars/Farmer Income Lab will develop a procurement agenda, test and open source this with the living income community, pilot innovative procurement practices, and share learnings.
Analyze opportunities and limitations to close gaps
When closing the living income gap, we need to look at where each of the income drivers is now, and how much improvement is practically obtainable for each income driver according to household segments. The degree to which each can be improved, and what the obtainable level for each value is, should be assessed based on the sector, supply chain and local context. You can use existing data and experience as well as stakeholder consensus.
There are a range of data-driven tools available to help you to assess the current status of each income driver and model the impact of achieving obtainable improvements for each income driver. Modeling should take into account how each income driver can be improved, the effect these actions will have on other income drivers, and the total effect interventions might have on closing the living income gap.
- Farmers and farmer groups are essential stakeholders in action analysis and should be consulted about their vision for household and community improvements.
The following questions can help guide an initial assessment of relevant interventions to take.
- When developing a smart-mix of strategies, what is an obtainable level, or improvement, for each income driver based on local context and supply chain considerations?
- What combination of interventions are needed to increase the impact on incomes?
- What assumptions are being made about how interventions can impact one or several income drivers?
- Are the interventions aimed specifically at driving income increases, or are there other intentions, such as stabilizing cash flow?
- How might you design your smart-mix of strategies to be intentional towards gender dynamics and, at minimum, not exacerbate gender inequality?
- Which partners need to be on board to strengthen interventions to realize improvement for each driver?
- How might you segment farmers to take appropriate action to close living income gaps?
- IDH Service Delivery Model (SDM) Analysis maps current income drivers and models attainable improvement, with service providers at origin based on service provider strategy and Profit & Loss modeling for service providers and farmers;
- IDH Task Force for Coffee Living Income (TCLI) Strategy Handbook on Effective Sourcing and Pricing Strategies to close the gap and Farmer Income Lab’s report ‘What works to increase smallholder farmers’ income?’ can help to provide evidence of what works to increase farmer income;
- IDH Gender Tool to conduct a gender analysis;
- Join IDH and test the Farmfit Segmentation Tool to identify what type of farmers you are working with and get inspired of what services can be most relevant;
- Coming soon: IDH Income Driver Calculator (testing phase), uses existing data on income drivers and living income benchmarks to model the effect of obtainable income driver improvements on actual income.
Partnerships are central to the living income roadmap. Collaborating with multiple partners will help you close the living income gap, particularly when significant gaps exist that require more systematic, multi-stakeholder action.
Partner with lead actors across the interventions you decide to take, including supply chain partners, service providers, buyers of other products, government, civil society, research institutions and financial institutions. Make sure you align with local or national governments where you source and operate, to see how you can best collaborate, for example through government programs or investment plans.
In addition, there are numerous sector-specific and multi-sector coalitions to consider, some of which IDH convenes or partners with. Collaborating in a coalition is especially recommended when a company’s leverage is limited, the income gap is large, and the supply chain is sizable and diverse.
- Sector-specific coalitions:
- Cocoa: The Alliance on Living Income on Cocoa (ALICO), The Swiss Platform for Sustainable Cocoa (SWISSCO), German Initiative on Sustainable Cocoa (GISCO), Beyond Chocolate, Dutch Initiative on Sustainable Cocoa (DISCO);
- Tea: Small Tea Growers Platform (STGSP);
- Spices: IDH Sustainable Spices Initiative (SSI), IDH Sustainable Vanilla Initiative (SVI);
- Coffee: International Coffee Organization (ICO), IDH Sustainable Coffee Platform Indonesia (SCOPI);
- Retailers: German retailers working group on living income and living wages.
- Multi-sector coalitions:
- Beyond your companies’ operations and partnership ecosystem, which additional resources and partners are needed to improve each income driver within your target area?
- If significant living income gaps exist, which multi-stakeholder partnerships will you join to close living income gaps?
- LICOP Living Income Activity Dashboard provides an overview where stakeholders can write what they are working on, what they need collaborators for, or where they can collaborate and how to get in touch;
- ALIGN source map lists where living income/wage initiatives are taking place across different actors in various countries.
Develop targets and action plans
Once you have established which new and/or existing partners and coalitions you will work with, you will need to develop targets and action plans to close living income gaps according to household segments. Consider what you can act on immediately versus what you will build on in the long-term.
- Farmers and farmer groups are essential stakeholders in taking action, therefore they should be seen as co-creators and co-implementers of action plans.
- Based on your partnerships and obtainable income driver improvements, what targets do you have to close living income gaps, and over what time period?
- What specific steps does your company need to take to build necessary partnerships?
- How will your company access and deploy internal and external resources to communicate publicly?
- What actions will others lead or invest in? Are they clearly documented, with deliverables and timelines?
- Does your action plan leverage efficiencies and reduce redundancies to maximize resources and minimize duplicative efforts and costs across stakeholders?
Develop monitoring and reporting plan
Finally, you will need to track and monitor performance on income improvements, so you can continually refine your strategy and targets. This will also allow you to share results and assist you in telling a credible story about your sustainability efforts.
- Ensure farmers are represented in your multistakeholder monitoring plan, be it through producer group representatives or through direct representation. Farmers are significant partners in this journey, and their inclusion and feedback are essential for continuous improvement and success.
- Developing a monitoring and evaluation framework can get complicated. Determine what you need to know to capture significant metrics and key performance indicators (Suggested KPI list coming soon).
- What is your monitoring plan and does it adequately link your intervention activities to income driver data? Which method(s) will you use?
- How often are you collecting income driver data?
- Does your monitoring plan enable course correction?
- Which stakeholders and teams needs to be involved in monitoring and course-correction, and when?
- UN Guiding Principles Reporting Framework provides useful guidance on how to communicate and report on targets and progress.