With only a few months before the implementation of the European Union Deforestation Regulation (EUDR), global supply chains, particularly those in the tropical regions of the Global South, are set to face significant changes.
In front of the EUDR, countries like Peru, which has a substantial share of coffee, cocoa, and palm oil production in the Amazon, face increasing pressure to ensure their practices align with the regulation’s requirements.
A recent study by the Coalition for Sustainable Production, in partnership with Solidaridad Network and Conservation International, highlights the potential risks and opportunities posed by the EUDR for Peruvian producers, particularly smallholders.
According to official data from the Peruvian Government, in 2023, the Peruvian Amazon Forest had 427,000 hectares dedicated to coffee production and 198,000 hectares to cocoa cultivation. These areas supported 211,000 and 83,000 families, respectively. Additionally, 92,000 hectares of tropical land were used for palm oil production, benefiting 9,000 families, according to Solidaridad.
These factors increase the complexity of Peru’s ability to adapt to the EUDR. Nevertheless, stakeholders across the supply chains are actively working to meet the regulation’s requirements and maintain access to the European market.
Information at the farm level and monitoring
The EUDR establishes that supply chains must provide georeferenced information about production zones. Therefore, Peruvian actors have been collecting data regarding the farm’s polygons and monitoring deforestation surrounding these zones.
Moreover, the Peruvian Ministry of Agricultural Development and Irrigation developed the app Identidad Digital, which aims to create a digital registry of producers and provide georeferenced information about production zones. The app is currently online, and training sessions have been conducted in these areas, where field technicians have taught producers how to use it effectively. Additionally, the app allows users to locate their land polygons on official Peruvian forest maps to verify compliance with the EUDR’s reference date (December 31st, 2020).
Furthermore, the World Resources Institute (WRI) is promoting the tool “Global Forest Watch”, partnering with the Asociación de Exportadores (ADEX) and the Asociacion Peruana de Productores de Cacao (APPCACAO) to increase its use among Peruvian smallholders.
Similarly, the Cocoa, Forests, and Diversity Agreement members are actively collaborating to expand the coverage of georeferenced farms in the Peruvian Amazon through enhanced monitoring tools. Likewise, the members of the Coffee and Forests Agreement, led by the Coffee and Cocoa Chamber, are committed to boosting this coverage as well.
The numerous producers with productive units smaller than five hectares further hampers the country to comply with these requirements. To overcome these challenges, Solidaridad has developed the study “Monitoring the primary forests” to improve accuracy in monitoring deforestation in small production zones. Using Sentinel-2 satellite images in coffee farms, validated by Geobosques (a public platform used for tracking forests), they detected the covering in forests and its loss from 2019 to 2021, with a space resolution of up to 10m.
Traceability
The information collected needs to be constantly tracked through traceability tools. Fortunately, actors in the Peruvian supply chain have experience with these tools because they work with different voluntary certification schemes, such as Fairtrade, that require them to enforce them.
However, not all producers can access technological tools such as blockchain to facilitate traceability. This is because the tools tend to be expensive and unaffordable for them. Therefore, Helvetas, in collaboration with GIZ, implemented the MiCacao project to address this challenge. This project has leveraged open-source technologies which connect fieldwork with digital tools to track the cocoa supply chain, focusing on geo-localisation, deforestation, and farmer productivity.
Moreover, in 2023, the Coalition for Sustainable Development and Tropical Forest Alliance (TFA) worked in a pilot with Acopagro, a Peruvian smallholder cooperative, to trace their deforestation-free commitments within their cocoa supply chain. By leveraging the SEP ecosystem of services developed by Proforest, the project provided insights into self-assessment, establishing a clear baseline beyond a mere commitment to zero deforestation, addressing underlying factors contributing to deforestation risks, and identifying necessary capacity-building tools. Similarly, other organisations like Allima Cacao and Collpa de Loros are making strides in developing deforestation-free traceability tools.
Although many organisations and institutions are actively working to meet the regulation’s requirements before its implementation, there is an urgent need for more collective action and efficient collaboration. The Peruvian government should spearhead this effort, focusing on enhancing tool adaptation and streamlining the due diligence process.
Incentives for small producers
Peruvian stakeholders are also focused on incentivising smallholders to enhance land-use efficiency and reduce the need for agricultural expansion. To this end, an analysis has been conducted to identify factors that can increase the profitability of cocoa production. The study found that leveraging local genetic resources, implementing advanced irrigation technologies, and optimising plant nutrition can significantly boost productivity. Additionally, creating enabling conditions—such as rural extension services, funding, and impact monitoring—is essential. These principles can also be applied to coffee and palm oil, the other two major sectors affected by the EUDR in Peru.
In addition, green bonuses should be promoted to facilitate the transition towards sustainability. A project that has done this is Acorn, an inclusive program made by Solidaridad with Rabobank. This project has captured 9,517 tons of CO2 in 2,100 hectares of coffee produced in the agroforestry system, translating to a total selling of 223,000 USD for 376 producers. What differentiates this project from others is that it links the carbon markets with the smallholders that have improved their agroforestry systems; therefore, it values the job made by the families to keep the regeneration of their ecosystems.
Beyond the EUDR
Looking beyond the EUDR to have sustainable supply chains in Peru is essential. Nowadays, Peru is in the critical process of promoting and establishing landscapes with a low risk of deforestation and with an adequate jurisdictional approach, following public-private governance and landscape monitoring instruments that make buying products safer in the territory. The country is making significant progress in designing two jurisdictional cases aimed at creating deforestation-free, sustainable landscapes in Tocache (San Martín) and Neshuya (Ucayali). These initiatives are being driven by partnerships involving local governments, cooperatives, and civil society organisations such as Earthworm Foundation, Earth Innovation Institute, Helvetas, Solidaridad, CIAT-Biodiversity Alliance, The Nature Conservancy, and others.»
Peruvian stakeholders have recognised the importance of adopting a regenerative approach in the cattle and agricultural industries. In Madre de Dios, pilot projects have introduced regenerative cattle farming to promote a deforestation-free beef supply chain. Additionally, the Alliance for Regenerative Cattle in the Peruvian Amazon, established by the Coalition for Sustainable Development with support from the World Wildlife Fund (WWF), is advancing this agenda beyond deforestation-free production. Peru has also seen success in bioeconomic initiatives, such as the development of an aguaje (Mauritia flexuosa) supply chain, involving companies like AJE (a Peruvian corporation) and native communities from Loreto.
Overall, despite challenges like the lack of gender equality in the industry, Peru’s tropical agriculture sector is actively preparing to meet supply chain traceability requirements and designing incentives to comply with regulations, ensuring continued access to global markets. This effort is being driven by multi-stakeholder agreements focused on collecting and monitoring farm data. Additionally, an agenda is emerging that goes beyond deforestation-free production, incorporating regenerative agriculture, bioeconomy, and jurisdictional approaches. Stakeholders from various sectors are coming together with a shared goal: to position Peruvian products as sustainable, deforestation-free, and of the highest quality.
