Assessing the Feasibility of Fairtrade Living Income-Based Shared Value Model for Sustainable Coffee Value Chains
Keywords:
Sustainable Agriculture, Creating Shared Value, Inclusive Value Chain, Fairtrade Living Income, Sustainable Development GoalsAbstract
Amid volatile coffee prices, which often result in inadequate income for smallholder farmers, this study examines the feasibility of Fairtrade Living Income (FLI)-based shared value model. This study assesses how the development of shared value chains might close income gaps and lower financing risks by aligning them with FLI standards. This study employs a mixed-methods approach. Data were collected and analyzed from four differentiated coffee clusters in Indonesia, each characterized by distinct value chain structures and governances, to assess their impacts on income distribution, productivity, and farmer empowerment. The Fairtrade Living Income Reference Price (LIRP) was applied to evaluate the decent income standards of smallholder farmers within each cluster. The findings indicate that FLI-based shared value model, whether CSV or IVC type, can stabilize incomes through policies that promote minimum price guarantees, institutional development, capacity building, and improved market access. Though, the IVC model demonstrates better performance in empowering farmers and promoting equitable value distribution compared to the CSV type. This study offers a practical framework for enhancing smallholder farmer livelihoods and promoting sustainable development in the global coffee industry. A foundational strategy is the establishment of LIRPs-based minimum price guarantees. Furthermore, government can support shared value initiatives that foster fairtrade standards.
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