How can voluntary sustainability standards help reduce poverty amongst smallholders?

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There are an estimated 500 million smallholder farmer families globally, many of whom make up a large portion of the world’s poor. To achieve SDG 1 “Ending poverty in all its forms everywhere,” poverty reduction interventions must benefit smallholder farmers.

The International Institute for Sustainable Development (IISD)’s State of Sustainability Initiatives (SSI) Review: Standards and Poverty Reduction shows that voluntary sustainability standards (VSSs) have the potential to support broader strategies for poverty reduction for small-scale farmers.

The new study assesses the role of standards in improving three dimensions of poverty: access to resources, opportunities and choice, and power and voice. It examines the criteria of 13 widely adopted standards, reviews the latest evidence of standards in practice, and provides insight from interviews with 57 actors in six commodity value chains in six developing and least-developed countries in Africa, Latin America, and Asia.

Do VSSs cover criteria ​for poverty reduction?​

An in-depth look at the criteria of 13 major VSS reveals high coverage of criteria related to labour rights and working conditions, training and skills development, as well as producer organization and natural resources management, particularly in terms of sustainable farming practices such as soil, forest and water conservation. Some VSSs cover certain aspects more than others, but we see that overall VSS criteria could better address premiums, living income, climate adaptation and mitigation, and the direct involvement of smallholder farmers in decision making and through easier compliance mechanisms. VSS criteria could more explicitly integrate gender equality—for instance, related to women’s access to land, training, and markets.

Do VSSs impact poverty in practice?

Existing evidence suggests that VSS have some positive outcomes on the ground, particularly for aspects with high VSS criteria coverage and supported by national legislation and international conventions.

Studies indicate that VSSs can support access to resources via better prices for certified crops, crop income, improved natural resource conservation, producer organization, and links to supporting actors such as extension and financial service providers and buyers. In some contexts they create opportunities for employment and decent work, and opportunities to manage farmland sustainably (via training on improved farm practices and soil and water preservation). Through their grievance mechanisms and by promoting compliance with labour rights, VSSs can support smallholder power and voice.

It remains unclear whether VSSs lead to overall higher household income, and their impact on land access, diversification, and women’s empowerment appears limited. Producers lack information around VSSs characteristics and how to implement their requirements and do not have direct involvement or say in standards decisions and processes. Evidence related to whether VSSs support smallholder farmers’ access to markets is mixed and remains critical for understanding VSSs’ role in supporting poverty reduction efforts.

Under what conditions can smallholder farmers access VSS markets?

For smallholders to benefit from VSS, they need to be able to comply with and maintain sales to VSS-compliant markets. IISD and UNCTAD conducted 57 interviews with producers, government officials, development organizations, buyers, and financial service providers in six countries and found that smallholder farmers face several key constraints to VSS-compliant market access, including:

  • low producer capacity to comply with and maintain VSS and buyer requirements;
  • limited access to resources, particularly financial resources and market information;
  • environmental constraints such as soil degradation and changing weather patterns;
  • VSS-specific factors, especially the high cost of certification;
  • supply chain structure and power relations resulting in limited direct access to buyers and low bargaining power;
  • and competition, limited market demand, and restrictive trade policies.

Based on interview responses, several enabling conditions must be in place to support smallholder access to VSS markets:

  1. An ecosystem of supporting actors that work closely with smallholder farmers and provide information and training on VSSs, their requirements, the way they operate, and their markets;
  2. Steady and secure market demand for VSS-compliant products and direct links to buyers;
  3. Smallholder producer organizations with strong leadership, business capacities, and bargaining power;
  4. Price incentives for VSS-compliant products such as premiums and price stability;
  5. Smallholder access to financial resources to meet cash flow needs to comply with and maintain VSS requirements

Meeting these conditions is critical for smallholders to sell their products in VSS-compliant markets, and as one interviewee explained, will require “the effort of all actors, public and private.”

The researchers highlight several actions that VSS bodies, value chain actors, and governments can take to better leverage standards for poverty reduction. Read all the research findings and recommendations in the full report here.

Sara Elder
Policy Advisor, International Institute for Sustainable Development (IISD)

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