Small-scale farmers produce many globally important products such as rice, cocoa, cotton and vanilla. Poverty is widespread among these farmers, and there is an urgent need to increase their incomes.

A living income – what a household needs to afford a decent standard of living for all its members – is a human right. It is increasingly recognized that paying a living income is the responsibility of businesses. Pricing is a vital part part of this, but raising the prices paid to farmers can be complicated, and many companies still treat it with scepticism.

This paper presents lessons learned from the piloting of a novel price premium mechanism in Pakistan. The goal of the price intervention, which targeted basmati rice farmers in Punjab province, was to make a meaningful contribution to the incomes of the most vulnerable small-scale farmers, while at the same time identifying appropriate mechanisms to minimize costs to retailers and/or consumers. The pilot indicates that price, in combination with other complementary measures, can effectively contribute to closing the income gap for even the most vulnerable small-scale farmers, but that any mechanism to raise prices must be designed carefully.

The intervention was part of the wider GRAISEA programme, which supports farmers and food producers in South-East Asia.