For decades, the vast majority of coffee farmers around the world have struggled to secure decent, livable incomes through coffee farming—and many are still unable to do so. In fact, today's farmers worldwide make less money on average per pound of coffee sold than they did thirty years ago.
The landscape of the coffee industry has shifted enormously in that same time, yet the reality is that for many, current pricing structures have not kept pace. At Sustainable Harvest, our mission for over twenty years has been to improve livelihoods by securing higher incomes for farming families. Tools like Fairtrade, organic and value premiums, to name a few, have been indispensable and transformative for many coffee farmers—but for many others, they haven't been enough. We believe that we can aim even higher and in doing so, inspire others to join us in uplifting more farming families.
Unless more stakeholders in the industry make a concerted effort to ensure that all coffee farmers receive prices that can enable them to thrive for years to come—and to weather the many other formidable challenges that farmers face—the future of the coffee industry will remain unsustainable and uncertain.
Verified Living Income is a pricing model designed to meet coffee farmers' livelihood needs. Rooted in transparency, VLI determines the minimum price farmers need to be paid for their coffee to earn a living income.
Created in partnership with our roaster partner, Bellwether Coffee, and global development organization, Heifer International, VLI is the first context-specific and farmer-centric pricing methodology. Together, a yearlong pilot study was conducted with the help of ASOPEP, our producer partner in Tolima, Colombia: 38 smallholder farmers from ASOPEP took place in the study, using the cost of production tracking tools developed by CLAC/Fairtrade International.
What is Verified Living Income and how does it work?
Verified Living Income represents the minimum price (farmgate or FOB-equivalent) required to close the living income gap given current production realities. Data is collected from producers regarding cost of production, farm productivity and land size. This information is then overlaid against a Living Income Benchmark, using a sensitivity analysis model developed by Heifer International, in order to determine the price that coffee farmers should be paid.
The Living Income Benchmarks (LIBs) are context-specific and hyper-localized by utilizing regional data that accurately reflect farmers' realities. These benchmarks can then appropriately and fairly identify costs for basic good and services that farming families need. Some of the inputs for the Living Income Benchmark include:
With Verified Living Income, coffee farmers are not paid according to the highly volatile C-market, but according to their needs for a decent standard of living.
“At Sustainable Harvest, our most fundamental belief is that the traditional coffee supply chain must change, and more value needs to shift toward coffee farmers. This has been our mission for nearly 25 years and Verified Living Income now provides an additional actionable standard that more roasters can adopt. The industry has a new opportunity to discover a Living Income price that can assure a sustainable supply chain for years to come; our role will be to help them navigate how to get there."
-Monica Terveer, Director of Sales
To read the full results of the VLI pilot study, fill out the form below to download the whitepaper!