Why did we prioritize this impact area?
A quarter of the global population -almost 2 billion people- is dependent on smallholder agriculture for their livelihoods. Unfortunately, despite producing almost half of the world’s food, most smallholder families are living in poverty and lack access to markets for their goods.
Inclusive business models, or value chains, seek to build sustainable, win-win relationships between suppliers and buyers. These types of trading relationships can be a powerful tool to increase the value received by rural providers at farm-gate, improving the livelihoods of smallholder families.
What are we measuring?
We collect data specifically on the income -at farm-gate- that a farmer earns from the cropping system(s) being financed by Isidro, and its contribution towards covering cost of production and reaching the Living Income Benchmark. We also track a few secondary, proxy measures for livelihood gains, such as, the percentage of the company’s overall revenue which ends up directly in smallholder’s pockets, the SME’s access to finance and their implementation of a transparent pricing strategy with farmer suppliers.
How do we support our clients to scale their impact?
We help clients hone their impact thesis, by strengthening inclusive business models which deliver additional value to farmer suppliers. This support may include the development of a transparent pricing strategy or policy, setting a farm-gate price framework based on cost of production or the living income benchmark, or the use of targeted premiums to improve the livelihoods of their suppliers.
How do we measure, verify, and report on progress?
After approving an investment, we conduct a baseline on the company’s pricing strategy, and farmer suppliers’ average crop income. Then, on an annual basis, we track how much revenue is being distributed at farm-gate to the average farmer supplier, and how that compares to market prices. We also evaluate the SME’s access to finance and their policies and practices around transparent pricing. Periodically, over the course of a loan, we conduct more in depth evaluations to measure changes in income, whether farm-gate income is covering the farmer’s average cost of production plus a margin, and finally, what percentage of a living income is being covered by crop/agricultural income.
Catholic Relief Services is a member of the Sustainable Food Lab (SFL). SFL co-hosts the Living Income Community of Practice, which develops tools and resources for work on living income.
