Digging Deeper Into Living Income: Policies and Strategies for Rural Poverty Reduction in Tropical Value Chains

Abstract

Rural poverty alleviation programmes have adopted living income benchmarks as a major strategic goal. Much of the policy discussion centers around appropriate measurement procedures, while far less attention is usually given to concrete strategies for reducing existing living income gaps. This article digs deeper into possible opportunities for smallholder farmers and midstream value chain agents to reduce living income gaps. Therefore, it identifies major determinants of living income differences between production systems and countries and discusses policy options to create better prospects for improving living incomes. We rely on comparative cross-country data on living incomes and poverty lines combined with structural country-level characteristics and stylized farm-household models to identify major leverage points for mitigating the registered living income gaps. This analysis combines case study material from agri-food value chains in sub-Sahara Africa with statistical analysis on income gaps, drawing on theoretical discussions on the structural causes of income differentiation. Increasing our insights into the drivers of income differences and income gaps might enable us to bring the discussion on living income from principle to practice.