A Living Income—What Does It Mean for Coffee Producers?

Experts share how the industry can build a more sustainable future for coffee farming communities.

BY SUNGHEE TARK
FOR BARISTA MAGAZINE

Featured photo by Kayla Paramajna

On days when the farm requires less attention, especially after the last bags of her family’s harvested green coffee leave the port, Ericka Mora spends most of her time in her turquoise-walled kitchen. The modest kitchen that feeds her family of five becomes a busy laboratory—and an essential generator of income—as she grinds, brews, and crafts coffee for infused products she can sell at the market for extra money. A mother of three, Ericka is a third-generation smallholder coffee farmer overseeing the operation of a micro-mill in San Marcos, Tarrazú, Costa Rica, with her family.

A couple of years ago, Ericka and her family decided to introduce secondary products—creamy coffee liqueur and roasted coffee—in addition to other agricultural crops like avocado on her farm, to diversify the family’s income sources. “It was important to look for ways to increase sources of income to support the family,” she says. “Coffee has been our source of income for years and has allowed us to grow our family. However, coffee production and prices aren’t stable, and it’s hard to predict how much my family and I can earn from coffee production and invest towards the family and the farm.”

Navigating a volatile industry

For many smallholder coffee farmers like Ericka, coffee hasn’t been a financially viable crop on its own for years. Of course, there are good years—the bumper years, some call them—where trees deliver more volume, but those always end when global market forces bring the per-pound price down. There are also other years where the per-pound price is higher than usual, generally due to a global shortage of coffee, with growing demand, and many times, as a result of climate change effects such as droughts affecting supply.

It’s hardly surprising to anyone working in coffee that we are currently living through the worst coffee-price crisis in decades. To make things worse, climate change has increasingly affected the production of coffee, while volatile coffee prices, racial and gender inequality, and other social injustices have continued to threaten the foundation of the coffee value chain: coffee-farming communities. Year after year, our beloved coffee industry becomes ever more fragile. And over and over again, the same people suffer for the fragility of the system.

The price for this unjust arrangement has been high. According to a report by Enveritas, 44% of the 12.5 million smallholder coffee farmers globally live in poverty, and 22% in extreme poverty. In other words, more than 5.5 million coffee farmers are living below the international poverty line of $3.20 a day worldwide. Because growing coffee has meant living in poverty for a vast amount of producers in coffee, an increasing number of organizations, including fair trade, Heifer International, the Rainforest Alliance, the Sustainable Food Lab, and ISEAL, have pointed to the concept of living income for smallholder coffee farmers.

What is the problem + what is living income?

In the buyer-driven supply chain that is coffee, power continues to lie in the hands of the buyers as producers struggle to make ends meet. The coffee industry has grown on the shoulders of producer poverty, and thus younger generations see coffee production neither as an attractive opportunity, nor a feasible future path for themselves. Without the promise of a vibrant future of coffee production, the sustainability of the industry is largely threatened.

This is why the conversation on living income has been drawing increasing attention. Derived from the concept of fair remuneration in International Labour Organization and United Nations guiding principles of human rights, the Living Income Community of Practice—which is an alliance of partners dedicated to the concept of thriving, economically stable rural communities being linked to global food and agricultural supply chains—defines living income as “the net annual income required for a household in a particular place to afford a decent standard of living for all members of that household.”

The concept goes beyond traditional poverty alleviation to attain a decent standard of living that ensures access to a nutritious diet, water, housing, education, health care, transport, clothing, and other essential needs including farmers funds for emergency situations.

The International Coffee Organization (ICO)’s private-public task force for living income similarly refers to the concept of prosperity in its living income definition. “Living income is intended to be a threshold that is quite above the poverty line,” says Stephanie Daniels of the Sustainable Food Lab, which is one of the partners that make up the Living Income Community of Practice. “So the concept is not that you can survive, but you have some stability and you have a decent standard of living. And if you have a shock—for instance, an outbreak (of a coffee disease), etc.—you have some margin to deal with that.”

Producer Karla Boza agrees: “In coffee, we talk a lot about farmers receiving a fair price for their coffee. Generally speaking, people mean prices that (are) enough to cover the farm-related expenses.”

However, Karla argues, this is not enough. “I’ve seen time and time again farmers having to ultimately sell their farms because they can’t afford medical treatment or other basic living costs. Farmers and farm workers need to be able to access dentist appointments, eye checkups, and even haircuts,” says Karla. “We can talk all we want about ‘fair prices’ covering costs of production, but that’s a very low standard.”

Karla speaks passionately about the importance of living/thriving income. “Living income should ultimately allow you to have a good standard of living—an income that allows you to invest in your business, your workers, and yourself. For example, you can now invest in skills development, education, retreats, and vacation if you feel like it. It should allow you to actually enjoy your job and your life,” she says.

To Ericka, it also means being able to pay her staff a living wage. “Earning a living income is getting compensated fairly for the work that we do to pay for personal, familiar needs and grow within the community. But it is also (earning enough) to pay all the collaborators that help us on our farm, and for the supplies that we acquire fairly. Living income has to always go both ways.”

For a few years already, various actors from both the private and public sectors have dabbled in the concept of living income for farmers. The realization that fair prices alone cannot guarantee the well-being of farming families and the sustainability of the industry seems to have sparked the movement. Nonetheless, the complexity of the issue and the context that farmers are in has posed potential challenges for coordinated industry-wide actions toward ensuring farmer living income.

For instance, according to a report issued by Fair Trade International, farming families’ reliance on coffee as a primary source of income varies greatly by region: Indonesian farmers were found to heavily rely on coffee as a primary source of income, while Kenyan farmers were reported to rely on other sources of income other than coffee for living. They also found that while Tanzanian coffee farmers have high coffee profitability, it doesn’t translate to farmers earning a living income from coffee due to low production quantity.

Moreover, the IDH’s coffee TCLI report addresses this complexity further by looking at varying archetypes of production and sourcing. According to the report, farmers’ ability to make a living income will be different if they are a specialty-coffee producer versus conventional. And those with certifications and/or access to the “high-value consumer experience” market that encompass sustainability plans and brand recognition also fare better. Farmers’ ability to earn a living income is further influenced by the sizes of their farms, distance to the market, infrastructure in their communities, and even the languages they speak.

What buyers don’t know

It is not an easy concept to understand even from the buyers’ perspective. While you may be aware of how much you pay for your coffee, it is hard to know what the price means in the context of living income. “In our industry, there tends to be a singular focus on (free on board price), likely because it is one piece of information that can be easily accessible; however, it doesn’t necessarily mean much in the context of a living wage,” says Jason Long of Cafe Imports, hinting at the complexity of the issue.

“To put that pricing into context, you would need to know FOB, farmgate, cost of production, local income needs, currency rates, and other various local economic factors to determine what a true living wage or competitive pricing is for that particular country or region,” adds Jason.

The complexity of the issue and variation in context has meant that coordinated industry-wide cooperation has been difficult. To streamline the private and public sectors’ efforts, share learning across sectors and countries, and also to encourage collaboration between public and private sectors, the ICO launched a public-private task force for living income. “ICO’s taskforce is an attempt to have consistent dialogues across actors and sectors to really talk about the concept and if we could come to a common definition and an alignment and acceptance of that definition,” says Stephanie.

She goes on to explain that in addition to alignment in values and definitions, the complexity in the living-income concept and approach means that both private and public sectors have to come together to achieve the goal. In the case of the private sector, those within it can influence the system by being intentional about how they source their coffees. Terms of the trade and long-term relationships that are based on trust and mutual growth, and using one’s market presence—i.e., your brand recognition or accessibility to the consumer base—to influence the wider industry have the potential to create long-term impacts to ensure living income for farmers.

Making a lasting impact

I asked Smayah Uwajeneza, who worked with women producers in Rwanda extensively through her former position with Question Coffee in Kigali, about her experiences and whether she’s seen these conditions line up for producers to earn a living income. “There are different models and projects that are coming into place to enable coffee producers to earn a little bit more income,” which is focused on creating “the conditions” for farmers to prosper, says Smayah.

For instance, with support from buyers, some producer groups have successfully introduced new business activities such as coffee tourism and beekeeping to “earn more income that would allow them at least two meals per day and afford other essential needs,” she says.

This diversification protects farmers when the market is bad for coffee, in case production is challenged due to climate change, for example, while ensuring a farsighted view that is focused on farmers’ well-being. And at times, it can also support farmers to have an alternative choice, or even an exit strategy, if coffee no longer works for them.

Jason proffers the importance of transparency, traceability, and living income, and their ties to the sustainability of the industry. Working closely with Cafe Imports’ on-the-ground staff and exporters, Jason says, “We are designing internal systems to help us consistently and accurately assess how our pricing can continue to improve and help offer a competitive living wage for coffee farmers who are faced with the opportunity to pursue more financially advantageous crops for their land.”

None of what Jason mentions is possible without transparency and traceability. While these two factors alone do not guarantee a living income nor sustainability, without them we aren’t able to fully comprehend the context, and determine whether producers are earning a living income and are thriving in their farm businesses.

This is all to say that it is not an easy task to define how living income can be ensured for coffee farmers. Yet, it is clear that conversations on living income for coffee farmers are imperative for a strong, equitable, and sustainable industry.

“I think coffee can be a pure source of prosperous livelihood to not only those who consume it as it has been, but also to those who live their lives growing it,” says Smayah. She notes, however, that such prosperity is not possible with the current structure that only benefits those “that drive the coffee trading markets” and with “coffee prices that suppress the coffee producers from earning a sustainable living.”

This is a condensed version of an article that originally appeared in the June + July 2021 issue of Barista Magazine. Read the full article and more of the issue online here for free.

ABOUT THE AUTHOR

Sunghee Tark (she/her) is the co-founder of Bean Voyage, a feminist organization that collaborates with smallholder womxn coffee producers to build an equitable coffee value chain. She is also a freelance coffee writer, Specialty Coffee Association LEAD Scholar, and Re:Co Fellow.

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