Momentum toward a living income for millions in global food supply chains at risk as difficult realities dawn

"Todays bravest companies will be tomorrow's successful ones," says Oxfam

Big food companies have hit a crossroads in their efforts to support a living income for millions of farmers in their global supply chains, and, in many ways, momentum could be slowing.

“We need a break-out. Today’s bravest companies will be tomorrow’s successful ones. It’s time for companies to commit themselves to a living income to shore up the foundations of their supply chains, which we all now see are more fragile than anyone thought,” said Irit Tamir, Director of Oxfam America's Private Sector Department. Oxfam recently published a significant new analysis on the issue.

Oxfam’s report “Living Income: From Right to Reality” is the first in a new series focusing on an issue relevant to inequality in food value chains.  

The report says companies are making progress in recognizing the need for farmers to earn a living income but many gaps and complexities remain. Companies now realize how tricky it is, and many – though not all – are becoming hesitant at exactly the wrong time.

“We are at a significant inflection point now that the issue of living income has become such a welcome strategic priority for smart companies, most of whom realize their supply chains are unsustainable if they continue to be built upon poverty or worse,” said Tamir.

“While a living income is what a farming household needs to earn a decent standard of living, it’s not necessarily just a simple benchmark. Defining and measuring gaps and effective strategies to close them require context -specific approaches."

“The risk now is that many companies will misunderstand or water down the concept or apply it in ineffective ways. There are even risks that companies could cause harm by pushing the most vulnerable farmers out of their supply chains by concentrating on more established farmers instead. This could reinforce social and economic inequalities rather than reduce them.”

“We need companies to move in a more determined and ambitious way while bringing all the perspectives and realities of others into their new plans and practices. There's risk and danger in them doing it alone."

Tamir said that responsibility for solving global inequality has fallen most heavily on the public sector –through regulation like social protection and tax– while the role of the private sector in driving and potentially reversing it has been less analyzed.

“We believe that many companies tend to lack real insight about the income situation and barriers facing farmers in their supply chains. This blindside tends to undermine their corporate strategies and is causing inertia,” said Tamir.

The report says that companies need to make specific, ambitious commitments toward providing a living income in a structural way, across their entire value chains. Companies equally need to establish robust feedback mechanisms accessible to all, including at-risk farmers. 

"Behind the key determinants of farmer income –like productivity, sales, price, and costs– is a huge architecture that has been designed to deliver profits for business and cheap food for consumers, but not a living income for farmers," said Tamir.

Oxfam notes that none of the living income commitments it has reviewed so far have been focused on women farmers as the primary target group. In fact, gender and living income continue to sit separately in many companies’ sustainability strategies. 

“Gender-blind strategies for a living income are failed strategies for a living income,” said Tamir. “We all must do better by putting women front and center. Bringing women to the table in the analysis of the problem as well as at the design stage of the potential solutions. Women actually constitute the majority of the actors at the lower income level of agri-business supply chains”.

The report describes some welcome advances by companies striving to establish living incomes.

Unilever, for example, has made a specific commitment for a living income for "everyone who directly provides goods and services to Unilever" by 2030. German food retailers Aldi, Lidl, and REWE, have made similar, although less specific, commitments.

Olam's Cocoa Compass plan commits to helping 150,000 cocoa farmers by 2030, which is noteworthy  although still less than a quarter of all farmers in its supply chain. Other companies such as Mars and Hershey have published encouraging statements in support of a living income but without making a concrete, time-bound commitment, and plan to achieve it. Nestlé is one of several companies that have begun pilot projects which can play an important role but need to be linked to commitments across their entire value chain.

The report outlines a series of recommendations for companies pursing living income plans, including reviewing their procurement practices and opening up space for farmers to have bargaining power. They should conduct thorough gender analyses to ensure that women farmers are prioritized.