Making sure that carbon markets work in favour of smallholders who adopt sustainable farming practices is the purpose of the Climate Heroes Dream Fund, a five-year project supported by Postcode Lottery Group. The initiative, led by NGO Solidaridad, facilitates incentive payments to producers who generate Carbon Removal Units (CRUs) through agroforestry. Small-scale farmers cultivate a crop, such as coffee or cocoa, and plant trees at the same time to sequester carbon. The CRUs they generate can then be traded through the ACORN platform, a global carbon marketplace, which guarantees low transaction costs and high carbon prices for farmers.
“The project is all about making smallholder farmers more resilient to climate change and building future-proof farms. We use the carbon market as an incentive mechanism to encourage farmers to embark on this journey. In the end, we want farmers to have a better agricultural commodity production system and a higher income through carbon as an add-on revenue system,” explained Eduard Merger, climate innovation lead and business developer at Solidaridad Deutschland.
A new way to trade
Developed by Rabobank and Solidaridad, ACORN uses satellites and digital technology that detects the growth of each new tree planted on farms and the amount of carbon removed from the atmosphere. Thanks to the use of this technology, farmers are able to receive at least 80% of the total value of every carbon sale.
“Until now, farmers were not really able to fully participate in carbon markets and get compensated for the ecosystem services they deliver to the planet. We want to show that farmers can benefit from new ecosystem markets and receive a fair value for it,” said Merger.
Buyers of offsets via ACORN to date have included Microsoft Corporation, Standard Chartered, DLL International and Rabobank.
“The platform is not open and buyers need to go through a due diligence process to avoid any greenwashing. But as long as companies pass the test, it is open to all,” said Merger.
He added: “Reselling of carbon credit is not allowed to ensure that the actual value goes to farmers and not to the intermediary industry.”
Targeting 100,000 smallholders by 2026
The initiative is being implemented in Columbia, Nicaragua, Uganda and Kenya, and the target is that by the end of 2026, 100,000 smallholders will have signed up to the scheme and adopted climate-smart agroforestry practices.
“This is a very small figure, given that there are about 470 million smallholder farmers globally. But it is also quite a large number if we consider that we are a relatively small organisation in the global agricultural space,” noted Merger.
To recruit farmers to the project, Solidaridad builds on partnerships with the private sector, farmer cooperatives and governmental local authorities. So far, the NGO has connected around 50,000 farmers to the ACORN platform. Between them, they have sold 70,000 tonnes of carbon.
The Climate Heroes project is available to farmers with 0.1 to 10 hectares coffee or cocoa farms where new shade trees can be planted, or farms with existing agroforestry systems that have been established in the last five years.
“For now, we are targeting coffee and cocoa, because these are the crops that are very well suited to growth in agroforestry systems,” said Merger.
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Crops at risk
In addition, he said that coffee and cocoa are particularly sensitive to climate change.
With regard to coffee, he cited a study that predicts climate change will reduce the global area suitable for farming by 50%.
“Rising temperatures are especially problematic for Arabica coffee, as this variety requires specific conditions in order to produce coffee beans. The recent heavy outbreaks of coffee rust can very likely also be linked to climate change induced stress factors for the plant, such as rising temperatures and changing rainfall patterns,” said Merger.
Cocoa production is also extremely vulnerable to climate change, he said.
“Cocoa trees need a stable warm and humid climate and are vulnerable to climate extremes. However, with climate change, temperatures are projected to increase substantially and rainfall patterns will become more erratic,” he explained.
Merger said that in the future, Solidaridad plans to expand to the tea sector as well and any other food crops where agroforestry may be a smart solution to build farmer resilience and diversify farm income.
Working through challenges
Merger admitted the project is not without its challenges - mainly around farmer knowledge and understanding of the agroforestry concept and their participation in carbon markets, but also on a practical data collection level.
However, he said that Solidaridad is working to increase farmer understanding of agroforestry methods through awareness raising and training. The project also utilises digital apps that are used by producers themselves and technicians from extension teams. Some apps are educational, such as the Carbon Farming Academy, whilst others allow for farm monitoring, virtual technical assistance, and the recording of data.
The delay in the rewards to farmers after they have invested quite some work into their farms is another challenge, according to Merger.
“Payment for carbon and improved coffee/cocoa yield materialises after two to four years after the start,” he said.
There are also regulatory changes to contend with.
“Evolving government regulation and taxation for carbon credit trade has reduced the farmers’ share of carbon sales value. We engage with government to educate and bring the farmer’s voice to the table,” said Merger.
But Solidaridad is not to be deterred by these challenges and is already looking ahead to the next step.
“Next step is scaling to more farmers and more countries and expanding to new carbon market ventures beyond agroforestry,” Merger confirmed.