New coffee trading model focuses on promoting farmer living income

The Verified Living Income pricing model is based on the realities of coffee farm overheads to foster greater profitability at origin | Photo credit: Livier Garcia

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A trio of sustainability leaders in the coffee industry have partnered to create a new coffee trading model designed to ensure coffee farmers are paid a living wage. According to Bellwether Coffee, Heifer International, and Sustainable Harvest, the Verified Living Income pricing model is rooted in transparency, with prices based on the realities of coffee farm overheads, rather than market forces, to foster greater profitability at origin.
 
In a press release, the companies said the model aimed to equalise power dynamics between buyers and producers, evolve procurement practices to directly address economic sustainability at origin, and boost cooperation across the supply chain.
 
The Verified Living Income methodology was developed through a pilot study with 38 smallholder coffee farmers in Tolima, Colombia. It found the average production cost of green coffee was $1.33 per pound, with buyers needing to pay $1.89/lb at the farmgate and $2.24/lb Free on Board to meet farmers’ living income.
 
Following the study, Bellwether has committed to implementing living income-based pricing throughout its supply chain, with the first milestone of all Latin American coffees targeted for completion by 2023.
 
"Verified Living Income marks a substantive change in the way the industry pays for green coffee. It is a truly transparent, economically viable method of determining how much to pay for green coffee, rooted in farmers' livelihood needs," said Senior Sustainability Manager at Bellwether Coffee, Grayson Caldwell.
 
The companies have produced a white paper on their findings from the Verified Living Income study.