Learning Event summary
About the event
There are many ways to move towards a living income through policy levers. One of these is by collaborating to identify price-mechanisms and policies to improve farmers’ living income. A prominent example of this is the Living Income Differential (LID) in West Africa.
The LID was the result of a joint initiative of the Ivorian and Ghanaian governments to address the sharp drop in world market cocoa prices, which reduced farmers’ incomes and governments’ revenues from cocoa. The LID is a $400 per ton premium on cocoa exports, to be paid on top of the world market price. This case study describes the process of the LID development from a planned floor price, which was changed into a premium on the export price and which initiated public-private discussions about an Economic Pact.
It heavily involved governments in producer countries, those in exporting countries, companies (both leaders and laggards) and civil society.
This case yielded several lessons for policy-oriented living income practitioners, including the need to:
- understand how the future market functions and put pressure on market actors to develop trading systems which support living income-oriented measures
- look beyond premiums alone, and combine action with other supportive policies such as stabilisation funds and supply management
- look at sector-specific living income interventions in a wider context
- involve more (cocoa) producing countries and other stakeholders in future initiatives
- allow company activities for parts of markets – provided there is full transparency
- consider regulations in consuming countries and how this might influence ‘farmer-friendly’ procurement practices
In this workshop, we will unpack these lessons and see how they can be translated to similar initiatives, as well as share other examples of price-setting policies.
This is the first in a three-part series exploring living income policy case studies. Register for other two sessions on integrating the living income into the CSDDD and Vietnam’s national coffee sector strategy.
Publication links:
- Read the Living Income Differential (LID) case study here: Components for creating living income policy initiatives: The case of the Living Income Differential (LID)
- Read the full report here: Components for creating living income policy initiatives: Insights from 3 policy case studies
- Read the complementary explainer ‘Functioning of the futures market’ here: Functioning of the futures market
Project researchers:
- Joost Backer, Lead Project Researcher
Joost brings over seven years of experience in sustainable agricultural supply chains across 15+ sectors, working with national governments, multinational corporations, NGOs, and foundations. His expertise spans policy design, multi-stakeholder coordination, and systems and trends analysis. Joost is based in Amsterdam and currently works on a guidebook for transition professionals in international trade, sustainability, and development. He has previously worked for NewForesight – the sustainability consultancy for systems change. Feel free to contact him at [email protected]
- Anna Laven
Anna is a social scientist and senior cocoa value chain expert with 20+ years in the sector as a researcher and adviser. She has deep knowledge on major sustainability topics, including living income, gender equality, farming household segmentation, and price mechanisms.
- Christopher Wunderlich
Christopher has over 30 years of experience in international development and sustainable commodity trade, with a particular focus on sustainable agriculture and the coffee sector.
With contributions on the LID case study from:
- Friedel Hütz-Adams
Friedel Hütz-Adams has been a researcher at Suedwind-Institute since 1993. His research interests are in cocoa, coffee, palm oil, automotive and technology value chains. He is a well-respected expert in the sustainable cocoa field, having co-authored several Cocoa Barometers and an active participant in the VOICE network. In this report, he co-authored the LID case study with Anna Laven.
We would also like to thank Abdulahi Aliyu, Global Program Director, cocoa and coffee at Rikolto International for his contribution detailing Rikolto’s experience with policy, facilitation, and system change.
With support from:
