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.
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 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.
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