Agricultural producers are custodians of natural resources and the environment; they value the health of the environment that sustains their livelihoods, but their stewardship is challenged by economic interests. A successful agrifood systems transformation must, therefore, recognize their unique position: they are on the front line of climate change impacts and bear a significant share of the burden of adopting sustainable practices. While the necessary changes are warranted for society, the benefits of addressing hidden costs are realized all along the supply chain, and producers are not always justly compensated. In other words, mechanisms need to be put in place to ease the financial and administrative burdens, thereby incentivizing transformational change.
Acknowledging the diversity within the agriculture sector is crucial for the development of effective policies. Producers vary greatly in terms of key attributes – such as production systems, types of product (including fisheries, marine products, forestry and primary forestry products), market orientation, subsidized activities, off-farm employment or entrepreneurship, land tenure status and demographic characteristics – all of which need to be taken into account to capture their distinct motivations and challenges and to serve as entry points for policymaking. Some producers already have exemplary experience with sustainable production that safeguards the environment, and their participation in processes to identify how the enabling environment should incentivize similar approaches is essential (Box 13).36 Yet, too often, the hidden benefits of the activities of producers are overlooked. A review of literature on seven commodities found that research was primarily focused on negative environmental, social and economic externalities.37 Therefore, highlighting positive impacts – as well as tailoring interventions to the motivations of a heterogeneous producer group to garner their vested interests – is essential for transforming agrifood systems for sustainability and inclusion.
Box 13Environmental stewardship among small-scale fisheries
Small-scale fisheries, including fishers, fishworkers and their communities, play a vital role in safeguarding aquatic resources and environments. This stewardship contributes to healthier marine and inland aquatic systems, supporting sustainable livelihoods. A recent publication gathering the experiences of small-scale fishing communities and organizations explores the key influences on their stewardship practices and how these can be supported.
The small-scale fishers emphasized that stewardship is both a perspective and a practice, a way of engaging with the natural world and the local environment. Six types of stewardship in small-scale fisheries are identified: maintaining, restoring and improving local habitat and ecosystems; improving fishing practices and post-harvest practices; engaging in fisheries management for sustainable use; stewardship of specific aquatic areas; stewardship of particular aquatic species (such as endangered species); and stewardship through outreach and advocacy. Essential motivations for stewardship action include values, relationships, culture and spiritual aspects, in addition to securing sustainable livelihoods and community well-being.
Supporting and enabling practices can be crucial for success in stewardship. Such practices build capacity for or motivate direct stewardship activities and, indeed, stewardship efforts generally must be accompanied by these measures to create an enabling environment. This goes beyond stewardship itself, being crucial to the involvement of all primary producers and their communities more broadly in decision-making. This can be done by recognizing and reinforcing secure tenure, rights and access; developing knowledge; building community and organizational capacity; and improving education and communications.
Recent protests by farmers globally underscore the importance of integrating political economy considerations from the outset, by initiating processes that are inclusive and address issues of distributive, participatory and recognition justice.7 Box 14 discusses how European farmers have protested against the increase in red tape and the tightening of environmental laws. Though the European Commission has conceded on climate rules, tensions remain high.38 Farmers are increasingly burdened with stresses – from the climate crisis and shrinking profits to outsiders' critique of farming practices – and the motivations behind their protests may have been avoidable only to some extent. Yet, climate resilience is in the long-term interest both of their livelihoods and of society at large. Transformational change, therefore, needs to be designed so that the costs of taking action today are paid by those reaping the long-term benefits. Government pressure for agrifood systems reform, be it in the form of regulation or incentives, must be exerted in an inclusive manner that does not treat producers as external to societal decision-making and provides long-term perspectives to ensure environmentally responsible and economically viable solutions for producers.7, 39
Box 14Farmer protests in Europe
In recent years, farmers in several European countries, many with industrial agrifood systems, have staged numerous protests. They are mainly calling for i) increased government support in various forms; ii) the reduction in or elimination of bureaucratic hurdles associated with new laws, including environmental regulations; and iii) measures to increase their competitiveness against imports.40–42
These demands stem largely from diminished (or even negative) profit margins, explained by several factors. First, the rise in fuel and other input costs may have exceeded the price increases these producers receive from their supply chains. This has prompted protestors to demand more agricultural support together with measures to prevent the fall in the prices they are paid by distributors.
Second, new regulations and the linking of government support to specific standards have increased the bureaucratic load on farmers. Although bureaucracy is not a direct monetary cost (except when farmers hire consultants to manage these tasks), the significant time and effort it demands is challenging, especially for those lacking the necessary skills, disproportionately impacting smaller farms.
Third, some protestor testimonies suggest there has been inadequate involvement of stakeholders in policymaking. For example, some farmers have expressed concern that government-mandated biological phytosanitary products are less precise than those previously used, harming beneficial fauna and flora essential for their crops. Policy enactment without adequate information can lead to unintended consequences and erode trust in policymakers.43
Lastly, while some safety and regulatory standards apply universally (including to imports), other regulations may only target domestic producers, putting them at a disadvantage (compared with imports). Many standards are not strictly mandatory, but are required for receiving agricultural support crucial to the economic survival of many farms, making these standards effectively compulsory for them. This discrepancy in standards between domestic producers and imports fuels claims of unfair competition and can also hinder farmers' ability to compete in external markets.
Following the approach expressed above for producers in general, policymakers may want to design policies that redistribute part of the net gains of agrifood systems transformation to farmers. While farmers already receive government support, their economic viability plays a key role in sustaining rural communities and their economies, and this may have greater value than the cost of support in some countries.
Importantly, farmers often wield political influence disproportionate to their population share. For instance, in the Kingdom of the Netherlands, where only 2 percent of jobs are in agriculture, the BoerBurgerBeweging, a political party championing farmer demands, won the most votes in the 2023 Netherlands provincial elections.39 Thus, policies that diminish farmers’ profits risk stalling transformative political action, while policies that enhance their profit margins could mobilize political support for agrifood systems transformation.
Adopting more sustainable production practices is only appealing if there is an expected net gain (monetary or non-monetary) over time, which may be measured in months for subsistence farmers or in years for large-scale producers connected to financial markets. Effective levers to address the barriers to adoption will vary significantly depending on the producer and the technological characteristics.44 Given the complex systems and alternative futures that need to be assessed to demonstrate the private and public benefits of large-scale change, TCA studies can provide valuable insights, such as the comprehensive review of the expanding adoption of agroecological production practices in Andhra Pradesh, India, described in Box 15.45 The case study found that farmers engaged in community-managed natural farming (CNF) – a farming practice that depends on the natural growth of crops without the use of any synthetic fertilizers or pesticides and with less consumption of groundwater – saw increased crop yields and reduced production costs, among other benefits. The benefits of CNF to wider society and the environment were also documented, justifying government support for such a transition.
Box 15True cost accounting of community-managed natural farming in India
The largest transition to agroecology in the world is underway in Andhra Pradesh, India, where more than 630 000 farmers are adopting community-managed natural farming (CNF). The state-wide agroecological transformation of farming practices, supported by central and state governments and private philanthropy (Aziz Premji Foundation), has seen sustained upscaling, thanks to the layering of initiatives and a diversity of adoption pathways, which have allowed the practice to build. To understand the role of CNF in agrifood systems transformation, a true cost accounting assessment compared the impacts of CNF and conventional farming systems.
The results of the study found that CNF increased crop yields and reduced the costs of production (low fertilizer and pesticide use, lower costs of seeds and machinery), increasing net income per hectare. Community-managed natural farming also fostered greater diversity on farms in terms of number of crops. Increased labour intensity is a factor on CNF farms, which may be a drawback for some farmers, particularly if the availability of household labour is low, but this could be viewed as an advantage at community and regional level, providing greater employment in rural landscapes, provided there is enough labour available and farmers have the capacity to pay for it. In contrast, the health expenses and lost wages incurred by farmers due to illness were 26 percent higher in villages with chemically intensive farming than for CNF farmers. There were additional benefits from a reduction in the negative impacts of pesticide use. While public investment costs for CNF were higher than on counterfactual farms, the higher costs for farmers, communities and the environment associated with counterfactual farming (loss of work hours, poorer health and poorer soils) meant that CNF resulted in a better overall return on investment.
Helping to build momentum, early adopters of CNF had access to agricultural credit and government support, easing the constraints on transitioning to new modes of farming. The wider implication is that to achieve scale, sustained policy support is important.
New business opportunities can be created with a just agrifood systems transition, which can be identified through targeted TCA assessments. By involving diverse producers and other stakeholders, the assessments can identify transformation mechanisms that enhance producers’ economic viability rather than impose an undue burden. One such example is the diversity of maize varieties cultivated in Mexico’s milpas, traditional rainfed intercropped plots of land, which have long been overlooked by global markets. A TCA assessment under the TEEBAgriFood Evaluation Framework considered the differentiation in the market for a wide range of maize products and practices, documenting the considerable hidden benefits of conserving traditional, sustainable milpa practices. It recommended policy measures such as incentivizing sustainable agriculture and biocultural heritage, investing in diverse maize product markets and value chains, and certifying and labelling native maize associated with sustainable practices.46
Participation in certification programmes, known as voluntary sustainability standards, such as the Fairtrade, Organic or Rainforest Alliance certifications, can be a means of compensating producers for the costs of transition. However, although the effects of such certifications on producers’ welfare are generally positive,47 they vary substantially by standard, crop and farmer organization. Standards that apply a system of quality-based price differentiation have the greatest impact on net farm revenue through a price effect, as shown in a study in Peru.48 Further context is needed, however, as found in one TCA study comparing the hidden costs of Fairtrade and non-Fairtrade banana supply chains in 2018.49 The findings show social costs were considerably lower for Fairtrade producers than for the sector as a whole, while environmental costs could be higher or lower depending on the country. Consequently, certification schemes that enable producers to sell their products with a price premium facilitate the internalization of some, but not all, hidden costs, depending on the specific objectives of the programme. Still, with external costs 45 percent lower for Fairtrade producers, the study makes the social case for such quality standards and certifications. In more recent years, momentum around improving the banana, coffee and cocoa supply chains has been building. Banana supply chain actors are collaborating to improve living wages and retailers are leveraging their influence, as discussed in the next section and Box 16 and Box 17. Similarly, cocoa value chain actors in Ghana are contributing to environmental and social sustainability under the reducing emissions from deforestation and forest degradation in developing countries (REDD+) framework, as highlighted in Box 31.
Box 16The World Banana Forum Commission on Living Wages and Income
The World Banana Forum (WBF), founded in 2009, is a space where the main stakeholders of the global banana supply chain work together to achieve consensus on best practices for sustainable production and trade.69 By bringing together retailers, importers, producers, exporters, consumer associations, governments, research institutions, trade unions and civil society organizations, the WBF aims to inspire collaboration between stakeholders and produce pragmatic outcomes for the betterment of the banana industry. Its mission is also to achieve consensus on best practices with regard to workplace issues, gender equity, environmental impact, sustainable production and economic issues.
To address the issue of living wages in the banana industry, the WBF established the Commission on Living Wages and Income and two dedicated subgroups. These entities are committed to advancing multistakeholder efforts for a more equitable and economically sustainable sector:
- The Markets subgroup was created to work towards establishing minimum and sustainable prices for banana boxes, utilizing tools such as the Fairtrade Minimum Price methodology. It actively monitors legal frameworks, compiling a database of national legislation and advocating for responsible procurement practices.
- The Living Wage Methodologies and Tools subgroup was created to foster multistakeholder dialogue to enhance current living wage methodologies. Its objectives include achieving consensus on how to implement these methodologies in producing countries without harming the national industry or producers’ international competitiveness, or imposing additional costs on producers.
The Fourth Global Conference of the World Banana Forum produced an Action Plan on Living Wages for 2024. The action plan states that the Markets subgroup will ensure adherence to minimum prices for producers, support the ongoing development of a sustainable purchasing practices database and toolbox, and continuously monitor and track wage improvements to ensure progress across the banana industry. The action plan also confirmed that the Living Wage Methodologies and Tools subgroup would continue to evaluate the benchmarking methodology, propose potential upgrades to and implementations of the salary matrix, and conduct audits and verifications of wage assessment tools. In addition, the commission aims to support the International Labour Organization in estimating wages across the industry.
Box 17Retailers call for living wages in the banana sector
In the banana sector in March 2023, nine retailers in the United Kingdom of Great Britain and Northern Ireland joined together in a commitment to promote living wages, coordinated by the Sustainable Trade Initiative (IDH).70 The retailers have been working closely with their supply chain partners and supporting organizations to ensure that workers in their banana supply chains receive a living wage by the end of 2027. In the inaugural year of the initiative, retailers focused on engaging with their supply chain partners, aligning with other European banana living wage commitments and collecting wage data.
An essential aspect of meeting the commitment involves gathering data to assess the living wage disparity and monitoring advancements on an annual basis. To this end, the IDH Salary Matrix served as a tool for evaluating the actual living wage gaps of 84 672 workers on 554 farms in 12 countries in 2023: Belize, Cameroon, Colombia, Costa Rica, Côte d’Ivoire, Dominican Republic, Ecuador, Ghana, Guatemala, Nicaragua, Panama and Peru. The initial study covered 84 percent of the total volumes sourced by the participating retailers from farms using hired labour.
The findings reveal that 30.8 percent of hired workers are not earning a living wage, with an average gap of 17.41 percent. On average, women suffer slightly larger living wage disparities (19.68 percent) than men (17.06 percent). In addition, a greater proportion of women than men experience a wage gap (34.1 percent compared with 30.2 percent, respectively). In terms of workforce composition, men constitute a significantly larger share (84.4 percent) of the banana workforce than women (15.6 percent).
Similar commitments have been made in the Belgium and the Kingdom of the Netherlands (also coordinated by IDH) and in Germany (coordinated by the German Agency for International Cooperation [GIZ]). In response to the need for collaborative learning, to reduce redundancy and prevent unintended repercussions for producers and workers, IDH and GIZ facilitated a series of “Better Together” learning spaces and workshops on various banana commitments for 21 retailers. A notable achievement was the implementation of a synchronized timeline for wage data collection across all initiatives. This harmonization ensured that producers were not burdened with submitting data at different intervals throughout the year for various retail customers. Moreover, it facilitates the consolidation of training and auditing activities into the logical phases of annual data collection and reporting.
When individual producers join forces by way of collective action, they create a bargaining power they can leverage to advance their goals for economic growth, as well as transformational change. Collective action is also shown to facilitate participation in certification programmes.47 For example, after the Association of Avocado Exporting Producers and Packers of Mexico participated in TCA training sessions and evaluated how their businesses depended on and impacted the four capitals, it then collaborated with the government to develop a national standard for sustainable avocado production. It subsequently partnered with Banorte bank to devise financing strategies for sustainable practices, demonstrating how public–private partnerships can demonstrate and enhance value from transformation for producers.50
