Customer story

ECOM Peru: Closing the gap between carbon and farmer livelihoods

October 16, 2023

ECOM Peru: Closing the gap between carbon and farmer livelihoods

Peru is a country in transition. Proof of this transition can be found when analyzing satellite imagery of the San Martin region of the past 20-years: each image is a piece of a large puzzle that tells the story of a massive shift in the crops grown in the region. In the 1990s, farmers uprooted illicit coca trees en masse, switching to maize. Then maize gave way to coffee and cacao. The emissions caused by these transitions were sky-high, but the change helped farmers steer away from coca production to the more environmentally friendly cocoa and coffee farming.

Peru’s decades-long landscape transformation intersected all layers of society: from the government’s interventions to stop the growing of illicit crops by handing out cacao seedlings and other crops, to smallholders in the mountains of San Martin uprooting and replanting, and the exporters who distribute raw coffee and cacao to the world's leading brands. ECOM, one of the world’s largest traders in coffee, cocoa and cotton, is a key player in facilitating positive environmental and social change in Peru. For Camila Olmedo Mendez, Sustainability Manager of ECOM Peru, it is clear that environmental change is a social challenge. “We will not find long-term sustainable solutions if farmers do not earn a decent living income.”

“We will not find long-term sustainable solutions if farmers do not earn a decent living income.” - Camila Olmedo Mendez
Camila Olmedo Mendez
Sustainability Manager of ECOM Peru

Former Narco region becomes stomping ground for new cacao trees

Peru’s capital region for cacao production is San Martin. An area that forms the western border of the Amazon. Its beautiful waterfalls are shaped by time, high mountain ranges - where the Incas buried their kin - and lush jungles are home to rare and often endangered species. But not long ago, this magical green landscape was a backdrop for a harsh reality for people living in San Martin. “During the nineties, the main region where cacao grows, San Martin, was a main producer of illicit crops such as coca. Consequently, the communities suffered from oppression.” Camila explains. The region was home to coca - a very environment-unfriendly plant needing a lot of chemical fertilizers, which harm delicate ecosystems below ground. But just before the start of the millennium, the Peruvian government started a successful eradication program.

As a strong military intervention swept through Peru and disrupted drug trafficking in San Martin, the Peruvian Government and USAID came up with the ‘Program de Desarrollo Alternativo’ (the alternative development program). “They offered farmers alternative crops to grow,” Camila continues. Among the options were maize, cacao, and coffee. As coca got cleared from the farmer’s plots, patches of forest disappeared too. “When we looked at the land-use change data that Carble provided, it made sense that the emissions were very high because cocoa is a very new crop here. If we compare Peru to, for example, West Africa, cacao trees have been around for 50 or 60 years. This means that in West Africa, the much older deforestation is not included in the calculation of the emissions.” 

“The question is, for example, with the new EU regulations, what will happen to farmers that want to farm coffee?" - Camila Olmedo Mendez

The transition forced some farmers to leave the region for a while to give the new crops time to mature. Families returned to continue to live off their land, but this time with a more sustainable crop. The land-use change also gave room to Purma: often referred to as fallow forests, characterized by a dense understory and low canopy spanning up to 10m. Purma grows fast and, seen from satellite imagery, it looks like a mature forest. But whether Purma counts as a forest is still to be determined. In light of the upcoming EU Deforestation Regulation, exchanging coca for more sustainable crops like coffee and cacao trees can have consequences for farmers. Or in Camila’s words, “The question is, for example, with the new EU regulations, what will happen to farmers that want to farm coffee? They need to take out all their illicit crops and the Purma with it.” This remains a dilemma for Peruvian agroforestry as a whole.

Setting the stage for future change

San Martin offers the perfect land conditions for high cacao yields. Compared to West Africa, Peruvian smallholders enjoy full fruit-bearing trees during harvest without tending too much to their farms. The great fertility of land gave communities an escape from coca but posed a challenge to the environment too. High popularity of cacao among farmers was shared by ECOM’s customers, the world’s largest chocolate brands. Naturally, farmers want to extend their farms to turn higher yields into a better income. However, the demand for more cacao puts pressure on the untouched land that surrounds the plots of farmers. “People want to extend their land or more people want to join the cocoa industry,” says Camila. The new demand and the land-use change were challenging ECOM Peru to review and update its current sustainability efforts.

As ECOM Peru needed a new framework to reshape their sustainability plan to address the environmental and social changes in regions like San Martin, Camila worked with ECOM’s global Sustainability Managers to build a sustainability plan for Peru. They looked to their Smarter Cocoa Charter which describes three defining pillars: 1) improve farmer and worker livelihoods, 2) protect and regenerate nature, and 3) manage change through transparency and traceability. ECOM is a signatory to the Science Based Targets Initiative (SBTi) and pledged to become net-zero by 2050. The three pillars act as guardrails to achieve their climate and social targets.

As the pillars were defined, Camila continued researching best practices in the cacao industry. “We took our indicators and mapped them with the sustainability efforts we found within the cocoa industry. Then, we defined our pillars and strategy so that we could be more proactive when undertaking projects, rather than being passive towards customers,” Camila says. But the Charter gave ECOM Peru just one dimension and Camila needed guidelines for social impact too. “We also based our regional sustainability plan on the Social Progress Indicators, which was an assessment that we did back in 2020. This allowed us to find and prioritize social needs for the community.”

“For ECOM Peru’s customers, certification remains the top challenge followed by projects to accelerate tree distribution, reduce child/forced labor, and improve community development,” Camila explains. Until recently, measuring carbon emissions was not a common requirement that ECOM Peru would receive from customers. But because ECOM is pledged to a net-zero 2050, Camila’s team already mapped polygons of all their plots to prepare for future carbon emission calculations. “We wanted to be more proactive. We already had polygons and thought the next step was knowing and understanding our carbon footprint in scope 3.”

While the ECOM team gathered the polygon data from field workers, their largest customer needed insight into land-use change and emission factors in Peru per plot.

Finding the right solutions to process mountains of data

Mapping polygons is tedious work in a country marked by elevation variation. “It's not easy because your data input is happening at the field with people moving on their motorbikes chasing data,” says Camila. However difficult collecting polygons is, for Camila and her team, it was just the start. As ECOM Global focussed on getting secondary data from an environmental consultancy, Camila and her colleague Cecilia researched Global Forest Watch and QGIS. While investigating the platforms, agronomists on the ground tested software to calculate non-LUC emissions. However, the customer's priority was to measure land-use change, carbon emissions, and model reductions. It was in the early stages of researching possible solutions when Camila received a link to Carble from a former colleague.

Upon researching Carble, Camila discovered two dimensions that sparked her interest in Carble’s platform. First, an understanding of their historic carbon emissions in scope 3. And second, farmer incentives. “We like the aspect that Carble also links the emission calculations back to the income of farmers. It's more like an integrated solution. If not, you have very separate solutions, and then you need to coordinate with separate partners,” Camila says. As ECOM Peru does not only need to coordinate with the global office, but needs to communicate with the customer, or even with funds, to align on data collection, processing, and methodology. “Carble is already doing two things at once rather than separately. I thought this was interesting,” Camila continues.

“What I liked about Carble is that you could approach the Carble team and ask ‘Now, model how much we should pay for carbon storage, and how does this impact the farmer and the living income that the farmer receives.’” - Camila Olmedo Mendez

For Camila and her team, working with Carble was an evolutionary process. “The data that Carble provided was helpful. And the fact that the team was flexible towards us. For example, we shared new maps during data gathering, because we were discovering information as we went. And I think it was very good to have a partnership where this was possible.” Camila continues, “What I liked about Carble is that you could approach the Carble team and ask ‘Now, model how much we should pay for carbon storage, and how does this impact the farmer and the living income that the farmer receives.’” For Andrey Asfaganov, CTO at Carble, building customized tooling for ECOM was critical to helping them get actionable data.

The nuts and bolts of measuring historic carbon emissions, land-use change, and modeling future reductions

While calculating the land-use change and carbon emission of ECOM Peru’s customers, Camila figuratively sat next to Sander Reudrink, CEO at Carble, from the get-go. Camila communicated the customer’s needs, Sander and Andrey evolved the methodology and built missing tech. “First, we ran the analysis on ECOM’s existing supply chain of 3000+ polygons using industry accepted datasets such as Hansen Forest change and WRI Carbon Flux and Emissions” Andrey explains. “Due to specifics of Peru, we then added the Geobosques forest change dataset to make it more accurate for the region.” 

Besides analyzing the supply chain polygons and using a range of datasets, Andrey tried to see the correlation between data with Carble’s Aboveground Biomass model. “But it wasn't included in the final calculations, since it wasn't a requirement, but we may use it in the future to get more frequent and timely insight into the forest cover on the plots,” Andrey says. Andrey and the team could store and run analysis on each plot, providing total aggregates with references to the individual plot data that made up the numbers. “Once we had the data, we could calculate LUC Emission Factor and model reduction opportunities to achieve their desired reduction goals as well as help segment the supply chain into different risk categories.”

No project comes without hiccups and challenges. For instance, Camila provided very high-quality polygon data. But this meant potentially larger volumes of data for the analysis and the visualization. “I wasn't sure if we needed to split it into chunks or add some additional functionality to handle it, but the system managed to cope with it, and it didn't show any issues, so next time we'll have to test it with much more data. ” Besides the high quality of polygons, Peru’s frequent cloud coverage challenged Andrey’s team to diversify satellite imagery. “We had to improve our model for some years and add additional sources, such as PALSAR imagery to add to our Landsat data when we couldn't get good results.” Andrey says, “This has resulted in quite a significant improvement for our overall ability to go back 20 years and maintain data quality.”

“The level of care from individuals at ECOM surprised me, it inspired and reaffirmed our direction in developing solutions that can turn data into usable tools." - Andrey Asfaganov
Andrey Asfaganov
CTO @ Carble

Andrey continues, “We were flexible, quick, low-cost, and cared about the end goal for the climate and the farmers with opportunities for future co-development in this evolving space. We had a good relationship with Camila and her team. It was a two-way process to make sure the result was usable.” Andrey explains. “The level of care from individuals at ECOM surprised me, it inspired and reaffirmed our direction in developing solutions that can turn data into usable tools. It's not a problem we can solve in one go, but each step at a time we are getting closer to sustainable business and fair compensation.”

Camila adds, “It’s very complicated when solutions and tools involve that we use their systems to input data as it would require more time and resources from our side to integrate in our work. But the Carble presentations and dashboards were very user-friendly, and I think that's key. Because it's challenging for us to integrate information from the systems we have to other external tools. And I think that's something that Carble did very easily.”

Closing the gap between carbon and farmer livelihoods

For ECOM Peru, challenges are broader than carbon and deforestation alone. Take water, for instance. “How is that going to be affecting crops? Some areas will be flooded and some areas need water. So I think that will be very important.” Camila says. Another future hurdle is farmer age. “On average, our farmers are around 56 years old. And every ten visits I bring to farmers, one or two tell me that their son is interested in being in the field. The rest are like, ‘No, my son or my daughter has migrated to the United States’ or they're in Lima nonagricultural career."

Aligning is another continuous challenge for ECOM as a whole, and specifically Camila and her team. “Our customers need and want more traceability, transparency, and data. We get a lot of different data requests.” Camila continues.“ e.g. and we need to work better in being able to process data in a more timely manner, however, it is not easy as the data input is happening at the field with people moving on their motorbikes trying to get that data.”

“The idea is to use all these sources and go back to the customer and say, ‘this is the reality.’” - Camila Olmedo Mendez

With the help and technical know-how of Carble, ECOM Peru can measure historic carbon emissions, calculate the LUC Emission Factor, and model future reductions for its customers. In other words, Camila can now present the critical data needed to help large brands achieve their climate and social goals. Together with the ECOM Global Carbon Team, Camila is comparing and analyzing the data sets from environmental consultancies and Carble to present to customers. “The idea is to use all these sources and go back to the customer and say, ‘this is the reality.’” Still, measuring and modeling carbon emissions show one side of the coin. The social aspect looms in every answer. “We have till December 24’ to comply with the EUDR. But regarding the livelihoods, we do not have incentives or regulations that push for farmers to earn at least the “living wage”, which maybe would be better than preserving forest because then it would solve that inherently.”

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