LIRP will accelerate action to improve farmers’ income for any Fairtrade product grown by smallholder farmers
To help companies take action to improve farmer incomes, Fairtrade International has announced it is now offering a streamlined process to develop origin prices that support living incomes for any certified product grown by smallholder farmers.
The ’Living Income Reference Price (LIRP) on demand’ offering is an extension of Fairtrade’s data-driven globally recognised model for developing Living Income Reference Prices.
This is the price a typical farmer household with a viable farm size and a sustainable productivity level needs to receive to achieve a living income from the sale of their crop.
Fairtrade has developed a five-step approach to estimate precise Living Income Reference Price solutions.
The approach includes a pre-assessment process, where Fairtrade identifies the product and origin specifications for which reference prices should be generated, as well as where all relevant inputs and work steps needed are mapped out along with the time necessary for each step; the definition of the sustainable model, where the local context and product knowledge is used to contextualise the model to optimally reflect the reality that farmers are facing; data collection and analysis, where data is gathered through qualitative methods and then Fairtrade analyses the data to estimate key parameters of the pricing model and a first approximation of what a LIRP could look like; stakeholder validation, where the parameter values and the provisional reference price are presented to key stakeholders in a validation workshop; and finally the report stage, where Fairtrade creates a written report to explain model and parameter values, as well as the resulting reference price.
The ’LIRP on demand’ can be completed between three and six months, and to ensure the validity of the prices, the service offer includes annual updates for inflation for four years.
“We believe that businesses must play a part in achieving sustainable livelihoods for farmers, and we see momentum in the market from leading retailers and brands,” said Carla Veldhuyzen van Zanten, senior advisor of sustainable livelihoods at Fairtrade International.
Fairtrade established its first Living Income Reference Price for cocoa in 2019, and since then has carefully estimated prices for a number of other products including mangoes.
