Verified Living Income, a pricing model designed to meet coffee farmers’ livelihood needs, was announced today by e roaster, Heifer International, a social development agency, and Sustainable Harvest, a mission-driven speciality coffee importer.
The new pricing model, which is based on fairness, specifies the minimum price that farmers must be charged for their coffee in order to make a living. Within the coffee industry, the Verified Living Income model calls for three focus shifts:
Equip buyers (traditionally “price-setters”) and producers (traditionally “price takers”) with equal control.
Procurement activities should evolve to explicitly approach economic sustainability at the source;
Boost supply chain collaboration and invest in the future of coffee to insure that coffee production provides farmers with a dignified, self-sustaining livelihood.
“We all know and love the coffee these farmers make, but few are aware of the downward price spiral in which they find themselves. “Coffee can be a poverty trap because the farmers who grow it are not sufficiently compensated for their extremely valuable products,” said Cory Gilman, Heifer International’s Strategic Initiatives Manager: Coffee & Commodities. “We conclude that goods such as coffee will not be affordable unless they are linked to living wages at the source. Coffee companies have a huge opportunity to help end hunger in developing countries by paying checked living wage rates, and our methodology proves it.
A pilot study with 38 smallholder farmers from the ASOPEP cooperative in Tolima, Colombia was conducted to improve the Verified Living Income methodology. The pilot study found that with an average cost of production of $1.33 per pound of green (unroasted) coffee, buyers would need to pay $1.89/lb. at the farmgate and $2.89/lb. at the market, using Heifer International’s extensive living income benchmarking expertise in the coffee industry and Sustainable Harvest’s deep producer relationships, origin staff, and expertise in the coffee industry for data collection.
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