# Living income > A living income is the net annual income required for a household in a particular place to afford a decent standard of living for all its members, including food, water, housing, education, health care, transport, clothing and other essentials, plus provision for unexpected events. Also known as: living income benchmark, living income gap, LI ## Why does it matter? Low farm income underlies many first-mile risks: child labour, deforestation pressure, side-selling and under-investment in farms. Companies increasingly set living income commitments, and income is a key salient issue in [human rights due diligence](/glossary/human-rights-due-diligence/). ## How does it work? The Living Income Community of Practice describes the concept and methods, including: - **Benchmarks**: the cost of a decent standard of living for a typical household in a region, often using the Anker methodology. - **Actual income measurement**: net income from the main crop and other crops, livestock, off-farm work and transfers, through household surveys. - **Gap analysis**: comparing actual income with the benchmark. - **Strategies to close the gap**: productivity, diversification, prices and premiums, cost reduction, and services. ## Common pitfalls - Using gross revenue from one crop as income, ignoring costs and other income. - Small or unrepresentative samples, leading to wrong conclusions. - Benchmarks from another region or year. - Measuring once, with no follow-up to track change. Farmer1st reaches farmers directly for income surveys, with farmers fairly compensated for their contribution, through its [farmer surveys](/services/farmer-surveys/) service. ## Frequently asked questions ### What is the living income gap? The difference between a household's actual net income and the living income benchmark for its location. Measuring it requires data on all household income sources and costs, not only the price of one crop. ### Is living income the same as living wage? No. A living wage applies to hired workers' wages. A living income applies to households, such as self-employed farmers, whose income comes from several sources. ## Sources - [Living Income Community of Practice, The concept](https://www.living-income.com/the-concept) - [OECD-FAO Guidance for Responsible Agricultural Supply Chains](https://www.oecd.org/en/publications/oecd-fao-guidance-for-responsible-agricultural-supply-chains_9789264251052-en.html)