Over 2021–2025, IDH has tested innovative approaches, established sector-level platforms and built practical income-related tools for the broader sector to work on exactly those shifts. In 2025, we have seen more and more companies taking them on.
Introduction
Agricultural markets depend on farmers choosing to farm. When income falls persistently below what a decent livelihood requires, when debt absorbs the gains a good season produces, and when the risks of staying outweigh the returns, farmers exit, choose alternatives or stop investing in their land. The consequences travel up the value chain. Companies that assumed production would always be available have spent recent years discovering that a reliable supply base cannot be taken for granted.
In 2025, supply disruptions such as in cocoa and coffee, brought that reality into boardroom conversations. Companies that had treated farmer income as a sustainability agenda began engaging with it as a sourcing risk: an unreliable production base, an ageing farmer population, and declining investment in land.
What is needed for Better Incomes
IDH's Better Income work is organised around three objectives that address different dimensions of the same ambition: farming households earning enough to live decently, free from the exploitation and precarity that characterise much of smallholder agriculture today. Progress on each depends on progress on the others.
What’s happening through our partnerships
*Cumulative results for 2025 against the 2021-2025 funding cycle
Better Income in numbers
Across our Better Income portfolio, the 2021–2025 cycle closed with the following cumulative results. Some of these outcomes were shaped by external conditions as well as our own interventions. Where that context matters for how a number should be read, it is noted.
How we work towards Better Income
Making living income operational for companies
For companies to act on living income requires more than persuasion. It requires tools and evidence that make the business case concrete inside organisations’ own procurement and treasury systems, and external conditions that give companies a reason to use them.
Over 2021–2025, IDH developed the Income Driver Calculator, the Procurement Library, the Income Measurement Guidance and the broader Smallholder Inclusive Business Analysis methodology which brings a lot of these elements together. Each tool was built to help companies model income impacts, assess procurement options and measure progress against the living income benchmark. Together with our partners, we have developed these tools in stages, moving from an initial Excel prototype to a digitalised platform that is endorsed by the Living Income Community of Practice. These tools are being used by our program partners and beyond.
In 2025, when partners applied the tool in the context of our tea work in India, the results showed that marginal farmers cultivating less than 1 hectare (around 85% of producers) continued to face substantial living income gaps, while farmers with more than 2 hectares were already at or above the benchmark. This showed that investments focused on tea productivity alone could not close income gaps for most smallholders and led programs to pivot toward diversification and alternative livelihood strategies as the main pathway to sustainable income improvements.
The case above, is just one example of how these tools have helped partners define a procurement approach that creates value for the company, for farmers and for the environment, identifying where to act and why.
Innovation Library
In July 2025, IDH launched the Innovation Library on the FarmFit Insights Hub: a curated, evidence-backed resource that maps inclusive business innovations to specific business objectives, model maturity and impact ambitions. Companies can filter by what they need to achieve, compare options at different ambition levels, and access practical how-to guides without extensive research. This makes the complexity of those choices navigable.
In 2025, the forces that drive companies to act on farmer income were converging more visibly than in previous years: supply security risk, tightening regulatory requirements, consumer demand for traceability, growing investor scrutiny over sourcing practice, as well as growing accountability pressure for companies who made public commitments. What the year also showed is that sectors want to move on these topics together: shared measurement frameworks, traceability systems and procurement norms reduce cost and complexity for every company involved. IDH's convening work in 2025 focused on creating the space for that collective action to happen.
Our work on the Coffee Sector
From farming practice to procurement: how sectors are moving on income
Shifting the price-setting mechanisms, contract structures and market power dynamics that determine what income reaches the farmer requires coordination across competitors. No single company has the incentive or the reach to build that kind of shared governance alone. Across the cycle and beyond, IDH has worked on sector coordination, and in 2025 we have seen that the conversation within many programs and initiatives is shifting. Across the portfolio, sectors that have long organised around farming practice and field-level change are increasingly turning to procurement and value distribution as levers to improve the conditions for farmer to earn a living income.
In coffee, IDH has convened sector actors for years. What changed in 2025 was the focus. Together with our partners Solidaridad and the Global Coffee Platform, we have brought twelve companies together to work on value distribution that focused on how income moves along the chain, and what procurement practice needs to look like for more of it to reach farmers. Two shared procurement principles were formulated and published in early 2026, with three companies already updating their sourcing policies.
The principles establish a shared reference point for the sector, which is a pre-condition for broader sector action to take place. In sectors where commitments are in place, 2025 showed that voluntary contributions where buyers directly transfer value to producers are possible. This is further articulated in our Better Jobs chapter for our work in banana and tea.
Our Work on Cocoa Sector
Furthermore, another trend we see in our portfolio is that sectors are coming together to act. Across our cocoa programs, national sustainability platforms had long operated in parallel. In 2025, they took a significant step towards a shared direction. Five initiatives (DISCO, Beyond Chocolate, FRISCO, GISCO and SWISSCO) agreed to a common framework on procurement accountability, learning and external engagement. This is formalising years of incremental convergence into a structural commitment at sector level to act together.
In 2025, Cocoaperation in Côte d'Ivoire demonstrated what sector coordination makes possible on the ground. The program brought cocoa companies, farmer cooperatives, financial service providers and technical partners into four consortia across the main cocoa-growing region. When commodity prices surged in 2025, not every farmer benefited equally. Those who did had built the right foundations through the program: access to finance, technical coaching, quality inputs and functioning cooperatives. Structural factors such as land size, pre-existing debt, and distance from cooperative membership still shaped who could benefit most, even within the program.
An independent evaluation found average household net income rose 35.7% against the baseline, and the living income gap narrowed from approximately 50% below the benchmark to less than 30%. The consortium that integrated all components most fully produced the strongest results. When prices fell sharply in early 2026, the cooperative structures, the financial access and the improved practices remained.
Cocoaperation illustrates what sector-level coordination can deliver and what it depends on. Farmers benefited because the financial services, cooperative structures and technical support were already in place before the market moved. Building those conditions requires more than sector governance: it requires capital that reaches smallholder farmers and agri-SMEs on workable terms, regulatory frameworks that support rather than obstruct, and investment in the services that make farms viable over time.
Agricultural finance
Finance and policy alignment extend impact beyond what programs could reach alone
Viable business models and sector governance cannot deliver income improvements at scale without two further conditions: capital must flow into contexts where it currently does not, and policy frameworks must reinforce the commercial case rather than sit alongside it.
The agricultural finance gap in much of Sub-Saharan Africa is structural. Expected returns in agri-SME lending fall between 0 and 10%, well below the thresholds institutional investors require in markets where commercial banks earn two to three times more from government bonds at near-zero risk. The Fund deliberately takes higher-risk positions , structures complex transactions and provides technical assistance which enables commercial and impact investors to participate in deals that they would otherwise consider too high risk. By the end of 2025 it had over €50 million across eighteen investments, leveraging three euros of private capital for every euro from IDH Farmfit Fund, which were independently assessed as additional. More than 1.48 million smallholders gained access to finance, inputs and markets, 60% of them women.
The Fund's independent evaluation named what remained unresolved: the absence of local currency financing exposes returns to exchange rate volatility; corporate investor expectations diverged from what agri-SME funds can realistically deliver; investment readiness support must accompany capital rather than follow it. These findings define what the next generation of agricultural finance architecture needs to address. At program level, tripartite lending models in Ghana and Nigeria demonstrated what a different structure can produce: USD 1.27 million mobilised through Access Bank and Root Capital in Ghana, and a new partnership between IDH, NADF and the Bank of Agriculture in Nigeria to co-develop agri-SME lending products.