Sustainability Standards and Commodity Prices: How to better support farmers’ livelihoods
Agricultural commodity markets are often volatile. Over the past 2 decades, they have experienced a higher degree of volatility than ever before. Their precarious nature has also been exacerbated in recent years by extreme weather events, the COVID-19 pandemic, and global geopolitical dynamics that have limited the availability and affordability of key inputs for agricultural production.
Disruptions in international commodity prices threaten livelihoods in producing and exporting countries in developing regions. Price volatility risks and market power are disproportionately distributed downstream in value chains, which means that smallholder farmers shoulder an unfair share of the risks of producing the food and goods we consume. Additionally, many farmers keep receiving low prices at the gate, and their production costs have increased, compromising their already meagre standard of living and holding them back from making much-needed investments in their farms.
Our research shows that agricultural producers associated with voluntary sustainability standards (VSSs) can be better protected from market price volatility and may receive higher prices than those selling conventional products, as well as higher crop incomes. However, VSSs’ ability to improve farmers’ prices and incomes is limited by factors such as a lack of demand for VSS-compliant products, asymmetrical power relations in value chains, and a reliance on international market prices for conventional products when determining prices and premiums for VSS-compliant products.
This webinar explored the findings from IISD’s latest research on pricing in eight sustainable agricultural commodity markets. It provided a series of recommendations for how VSSs can better support farmers in receiving higher prices and incomes and suggested other potential ways to adequately reward farmers for investing in more sustainable agricultural practices.
- Charlotte Eba, Lecturer in Economics and Member of the Centre for African Research on Enterprise and Economic Development, University of the West of Scotland
- Julie Francoeur, CEO, Fairtrade Canada
- Andrea Rusman, Food Transition Lead, Impact Institute
- Emily Stone, Founder and CEO, Uncommon Cacao
- Rupal Verma, Secretariat Advisor for the United Nations Forum on Sustainability Standards
- Steffany Bermúdez, Policy Advisor, IISD
- Cristina Larrea, Lead, Sustainability Standards, IISD