The main objective of this study was to estimate the reference value of the living income of cacao households benefiting from the USDA Food for Progress Colombia -C4D project, and its difference with the real income, to determine whether the income of these households is sufficient to achieve decent and resilient living standards. Also, from the analysis of the differences found between those households that achieve a decent income and those that do not, to generate strategic recommendations for closing the gaps.
The study was conducted between April and December 2022 by Fundación Solidaridad Latinoamericana and Muttuo Consultores, using the Anker methodology contextualized to the intervention regions, based on primary information collected in field surveys, focus groups by cluster and information collected in the baseline study of the project, as well as secondary sources such as the National Administrative Department of Statistics (DANE).
Living Income
Dignified income is understood as "the net annual income needed by a household in a particular place to afford a decent standard of living for all household members" (LICOP 2021). In other words, it goes beyond the concept of the poverty line or basic needs, and includes elements such as a nutritious and balanced diet, decent housing, education, health, transportation, clothing, other essential needs, and provision for unexpected events.
The study estimated the value of decent income differentiated by geographic cluster and by household size, and showed that for 2021, the reference value of decent income for cluster 1 (Cesar, Magdalena and La Guajira), with a household size of 4 persons is $28, 829,110 COP, for a 3-person household in cluster 2 (Santander and Bolivar) it is $23,616,296 COP, for a 4-person household in cluster 3 (Antioquia and Cordoba) it is $27,784,113 COP, and a 3-person household in cluster 4 (Caldas, Huila and Tolima) it is $23,979,886 COP.
Real Income
The real income corresponds to the net income, in kind or in cash, that is received or produced by the household during a 12-month period, composed of three elements: the net agricultural income of the farm (from the main crop, in this case cacao, and from other crops or livestock activities), the household's off-farm income, and the contribution of non-cash income (family labor and self-consumption of food on the farm).
The annual net income in 2021 for cluster 1 households, with a household size of 4 persons, was calculated at $7,799,410 COP (2,084 USD) per year, for cluster 2 at $6,248,164 COP (1, 669 USD) for a 3-person household, for cluster 3 at $7,187,791 COP (1,920 USD) for a 4-person household and cluster 4 was calculated at $5,595,211 COP (1,494 USD) for a 3-person household.
It is evident that there is a generalized problem of profit margin in cacao since, in the total sample, only 34% of the farms achieved a positive profit margin per hectare and on average for the total sample, the producers present losses per hectare of cacao of $362,000 COP (96 USD) per year.
The behavior of productivity and profit margin of cacao cultivation vs. net cacao income was analyzed, identifying that those that achieve a positive income are farms with productivity higher than the average productivity of the sample (47% of the farms), with an average size of 3 people, and invest about 80 days per hectare of cocoa per year (28 days per year more than those that do not achieve a positive cocoa income). The real annual income of households on farms with above-average productivity is more than 100% higher than that of the opposite segment.
Living Income Gap
When calculating the gap between the living income and the real income of households, it was found that, in the sample as a whole, only 5.3% of households reach the decent income (44 households). Although few households close the gap, and therefore no representative conclusions can be drawn, these households that close the gap offer guidance to the C4D program. The farms of these households have an average productivity of 734 kg/ha, well above the average productivity of the sample (391 kg/ha), and have 3.5 ha under cacao cultivation. They derive their income mainly from net cacao income (32%), other household income (28%) and family labor (19%).
These findings are interesting, considering that the C4D project has the potential to intervene in net cacao income, to promote family labor as a driver of productivity, but also as a potential income for the farm, and to promote and enhance complementary crops to cacao, and crops for self-consumption.
However, it is important to note that the gap found is high. This, together with the multiplicity of factors that influence an analysis of decent income and real income, implies that one should not expect to close the decent income gap with cacao. For a cacao household to have a higher probability of closing the gap, it is necessary to look for other sources of income in addition to cocoa cultivation.
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