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 will explore the findings from IISD’s latest research on pricing in eight sustainable agricultural commodity markets. It will provide a series of recommendations for how VSSs can better support farmers in receiving higher prices and incomes and suggest other potential ways to adequately reward farmers for investing in more sustainable agricultural practices.