A new coffee trading model has been launched that promises to pay coffee farmers a living wage.
The verified living income (VIL) pricing model sets a minimum price based on the realities of coffee farm overheads, rather than market forces, according to its founders, ensuring farmers can generate greater profitability at origin.
The VIL has been developed by commercial coffee roaster Bellwether Coffee, global development organization Heifer International, and coffee importer Sustainable Harvest.
Data is collected from producers regarding cost of production, farm productivity and land size. This information is then overlaid against a living income benchmark, using a sensitivity analysis model developed by Heifer International, in order to determine the price that coffee farmers should be paid.
A yearlong pilot study was carried out involving 38 small-scale Colombian coffee farmers. It found the average production cost of green coffee was $1.33 per pound, with buyers needing to pay $1.89 per pound at the farmgate to meet farmers’ living income.
Following the study, Bellwether has committed to implement living income-based pricing throughout its supply chain, with an initial milestone set for all Latin American coffees 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 Grayson Caldwell, senior sustainability manager at Bellwether Coffee.
