Reference Document - Public Policy Road Map on Living Income and Living Wage in Global Agricultural Supply Chains (Fairtrade International, Nov. 2024)

Abstract: It is increasingly clear that multi-stakeholder collaboration is required to improve farmers’ incomes and achieve economic resilience and environmental sustainability in international commodity sectors. Each stakeholder group has a unique and significant role to play based on their resources, mandate, and sphere of influence. Governments are central in promoting and ensuring farmers are able to achieve a decent standard of living and leverage the tools and opportunities presented by Living and Prosperous Income methodologies and actions to do so. But governments are not always clear how their actions or the tools at their disposal can achieve Living and Prosperous Income. To address this, Fairtrade International facilitated the creation of a ‘Policy Roadmap’ that provides an in-depth overview of the actions governments can and should take, based on their situation and roles in international supply chains, to advance decent standards of living for agricultural workers and producer families.

This document, along with companion pieces such as The Role of Governments in Enabling Living Income in Global Agricultural Value Chains, by FairTrade Advocacy Office & Sustainable Food Lab, and The Voice Network’s Good Governance for Living Income in Cocoa, provide strong rationale and guidance on why and how governments can support farmers and farm workers to achieve a decent standard of living through the promotion of Living and Prosperous Income.

An additional companion piece on the role of the private sector to advance Living and Prosperous Income, Guiding Steps Towards a Living Income in the Supply Chain (published by Living Income Community of Practice), focuses on why and how the private sector can advance Living and Prosperous Income in line with their own objectives and responsibilities.

Together these documents provide a comprehensive overview of how the private and public sectors can work individually and collectively to achieve the common goals of strong, economically viable, and just international agricultural sectors.

Overview of Roadmap Document: As stated in the introduction to the document:

"The Roadmap sets out options available to policymakers and public authorities to create an enabling environment for ensuring a decent standard of living for farmers and farm workers worldwide… the primary aim is to consolidate existing recommendations into a useful guide for policymakers in both producer and consumer countries of agricultural commodities..Three areas are highlighted where this can be achieved: Through policymaking and regulation (Chapter 2), through the government’s own economic activities (Chapter 3) and through collaborating with and supporting supply chain actors (Chapter 4). The recommendations given in these areas are preceded by an introduction to the living income and living wage concepts and why they matter for government in both producer and consumer countries (Chapter 1)… and closes with concluding remarks (Chapter 5)."

The document goes into depth on the 3 areas mentioned above and then provides a very useful Table 1 (pg. 51–60) that summarizes the different options available to governments presented in the paper. This includes "information on how, when and by whom they can be implemented (and) distinguishes between the EU and its member states, consumer countries in general, producer countries and international organisations (and) whether implementation of a recommendation requires parliamentary involvement or cooperation with other partners, or whether the objectives of the recommendation can be achieved through administrative action. It also indicates how demanding the implementation of a recommendation is and how advanced a government should be towards a living income and living wage in order to implement it. Finally, the table provides information on the relative timeframe for implementation…"

Rationale for Governments’ Participation: Equally of value for the work of governments, the document provides clear and strong rationale for why governments should promote and create the enabling environment for farmers to achieve Living and Prosperous Incomes and how this links to other environmental, social and economic development goals. Below are some excerpts of key text presenting this argument:

"Living income and living wage are concepts derived from the right to just and favourable remuneration and an adequate standard of living that are enshrined in Articles 23.3 and 25.1 of the Universal Declaration of Human Rights (OHCHR, 1948). Building on these rights, Article 7 of the International Covenant on Economic, Social and Cultural Rights (ICESCR) recognises the right of everyone to the enjoyment of just and favourable conditions of work, which ensure remuneration that provides all workers, as a minimum, with fair wages and equal remuneration for work of equal value without distinction of any kind (UN, 1967). In accordance with the provisions of the ICESCR, women, in particular, are guaranteed conditions of work not inferior to those enjoyed by men, with equal pay for equal work, and a decent living for themselves and their families. In addition, Article 11 of the ICESCR recognizes the right of everyone to an adequate standard of living for himself and his family, including adequate food, clothing and housing, and to the continuous improvement of living conditions (pg. 8 of document)."

• Governments have a responsibility to protect human rights and are bound by national and international human rights law in this respect (pg. 10). By supporting a living income and living wages, governments are also supporting a range of fundamental human rights such as adequate nutrition, decent housing, access to education and healthcare. In addition, addressing living incomes and living wages is key for tackling inequality including gender inequality, and is a means of ensuring social cohesion, political stability and peace.
• Inadequate wages and prices create social and environmental costs that are not taken into account in companies’ cost calculations (pg. 10). Regulation that requires companies to identify, prevent or remedy the negative social and environmental impacts of their economic activities can help correct this market failure by requiring companies to internalise the full costs associated with their operations and global supply chains. Government action may also be required where structural constraints in agricultural markets limit companies’ individual efforts to achieve fair prices and wages, or where impacts are systemic to an industry or a particular geographical context. Finally, protection of trade union rights, which are essential to wage improvements, requires effective legislation and enforcement by governments. Higher incomes and wages that allow people to achieve a decent standard of living can, at the same time, benefit a country’s economic development more broadly. They enable farmers to invest in the productivity of their farms, leading to higher production, savings, spending and tax revenues. This, in turn, allows for greater public investment in infrastructure and social services, further supporting a country’s social and economic development. Living wages and incomes can also contribute to the formalisation of the economy by making informal employment and economic activities less attractive (OECD, 2024b).
• Eliminate interlinked sustainability risks (pg. 11): One of the main reasons why policymakers should prioritise living incomes and living wages is that they can help lift farmers and workers out of poverty. Poverty is a root cause of other salient human rights risks in global agricultural supply chains, such as child labour and forced labour, as well as environmental risks such as deforestation and unsustainable agricultural practices. Buyers seeking to prevent, address and mitigate a range of human rights and environmental risks rooted in high poverty levels can do so more effectively if they prioritise wage and income risks.
• Secure long-term supply of agricultural commodities and combat a root cause of rural exodus (pg. 11): Low and insecure incomes in agriculture often result in people leaving the sector. Young people in particular are seeking employment in urban areas or migrate to economically prosperous regions. Paying prices for agricultural commodities that reflect the true cost of sustainable production and allow farmers to earn a living income or living wages has the multiple dividends of providing food security, securing long-term supply and combating poverty as a root cause of rural–urban migration.
• Invest in viable and sustainable agri-food value chains (pg. 11): Improving incomes and wages for farmers is an investment in the long-term viability of the agricultural sector. Adequate incomes mean that farmers in producer countries have the margin to adopt sustainable agricultural practices, invest in skills and technology and move up the agricultural value chain. Consumer countries, in turn, will benefit from a stable supply of sustainable agricultural products, which support their value-added economic activities such as high-value processing, global trading, marketing and logistics.
• Turn sustainability into a competitive advantage (pg. 12): Traditionally, concerns about a country’s international competitiveness have been a reason to keep wages and incomes low. This narrative is beginning to change as international buyers and investors become increasingly alert to the human rights and environmental risks associated with global supply chains and their investments. Producer countries that are able to reduce these risks, including through adequate wages and incomes in their export-oriented agricultural and manufacturing sectors, can gain a competitive advantage by positioning themselves as destinations for sustainable sourcing and responsible investment. Their products will also become more competitive internationally as consumer choices in export markets shift towards sustainable options.
• Advance sustainable development (pg. 12): Almost all countries around the world have agreed on the Sustainable Development Goals (SDGs) and committed to implementing them through national government action (UN, 2015). Policymakers have an interest in supporting living income and living wages, as they directly address the SDGs by advancing the fight against poverty (SDG 1), supporting decent work (SDG 8), reducing inequalities, including gender inequality (SDGs 5 and 10) and promoting responsible production and consumption (SDG 12). Living incomes and wages also contribute materially to the achievement of several other Goals, including elements of a decent standard of living (SDGs 2, 3, 4 and 11), supporting peace and building strong institutions (SDG 16) and partnerships (SDG 17).

Conclusion: Governments have the mandate, interest, tools and responsibility to support farmers to achieve Living and Prosperous Incomes and have a decent, healthy, safe standard of living that provides them opportunities and the ability to support the economic development and responsible management of their farms, landscapes and communities. This document provides guidance to governments on the tools and policy mechanisms available to them to work collectively to achieve these goals. Together with companies, producers and producer groups, civil society, financial and research institutions, and the donor community, the collective action needed to create the enabling environment from producer to consumer can be achieved and the environmental and social costs of agricultural production and trade can be internalized and mitigated. This is fundamental to support farmers’ incomes and efficient, equitable, transparent and just international supply chains. This document and the companion pieces mentioned earlier provide important guidance to the different actors to achieve these common goals.