Agriculture and forestry-linked supply chains are responsible for over 30% of global carbon emissions, and our global food system is the primary driver of biodiversity loss. With agriculture alone threatening 86% of species at risk of extinction, fixing these supply chains is crucial. The farming and plantation of tropical soft commodities such as coffee, cocoa, palm oil, rubber, timber, and cattle, primarily originating in the Global South, account for most of these emissions. At the heart of these regions are more than 500 million smallholder farmers, for whom sustainability is a way of life.
These smallholder systems, often less than 2 hectares, are inherently more sustainable than industrial plantations. They practice intercropping, maintain higher biodiversity, use less fertilizer, and adhere to traditional agricultural practices that have stood the test of time. The Drawdon project estimates that adopting regenerative practices, including those already used by smallholder farmers, could reduce between 15.12 to 23.21 gigatons of CO2 by 2050.
Lujeri Tea Estates Ltd. in Malawi, a client of Epoch, exemplifies the benefits of smallholder farming. Their smallholder-grown tea has a carbon intensity of -0.27 kg CO2e per kg of dry tea, compared to the estate-grown tea’s intensity ratio of 2.05 kg CO2e. This significant difference is due to the prevalence of agroforestry in smallholder plots, which operate on a low input, low output model, making them more sustainable.
Despite their green credentials, smallholders face significant challenges. Climate stresses, access to finance, markets, and productive assets are persistent barriers to sustainable growth. Additionally, new regulations such as the European Union’s Deforestation Regulation (EUDR), Corporate Sustainability Due Diligence Directive (CSDDD), and Corporate Sustainability Reporting Directive (CSRD) require businesses to monitor and report on environmental metrics of their supply chains. This puts pressure on smallholders to provide detailed environmental impact data, which they are often not equipped to furnish.
Global businesses face major consequences if they cannot produce this data, including fines of up to 4% of annual revenues under EUDR. As a result, some agrifood players are working with their first-mile partners to produce this data, while others are cutting out parts of supply chains with low data, favoring industrial producers over smallholders.
The crux of the issue lies in the data—or the lack thereof. Smallholders often lack the tools, connectivity, or incentives necessary to provide the detailed environmental impact data demanded by their buyers. Even if they have good records of practice data, access to Monitoring, Reporting, and Verification (MRV) tools that can process this data remains out of reach.
MRV systems today are primarily tailored for “Western” markets, with high costs and a focus on selling data rather than sharing it. There is rarely any meaningful incentive or compensation for farmers whose data is being requested. This model fails to accommodate the needs of smallholder farmers in developing regions, where affordability, accessibility, and simplicity are critical for adoption. Moreover, many MRV systems are “black boxes,” with opaque methodologies that do not remain in the hands of the farmers, reducing their power in the value chain and adding greenwashing risk for buyers.
An open-data approach to environmental monitoring stands in stark contrast to the prevalent model. It requires transparency in the calculation of environmental footprints, with methodologies and assumptions fully auditable and reproducible. Transparency in environmental data is crucial to building trust among all stakeholders, from farmers to consumers, ensuring that environmental claims are credible and verifiable.
When data and methodologies are open and transparent, they can be scrutinized, debated, and improved upon, leading to more accurate and reproducible results. Open datasets and models ensure that farmers retain ownership of their data and control over how it is used. This ownership allows them to benefit directly from their data, whether through participation in carbon markets, receiving payments for ecosystem services, or optimizing their farming practices.
In other words, tying data agency and ownership to direct tangible incentives for farmers is crucial for these value chains to adapt and thrive through climate change. For buyers, a reporting platform built on this open-data approach significantly lowers audit costs and instills more confidence in the quality of sustainability claims and progress, reducing risks around misleading claims and ensuring traceability and consent to the farms.