Organic Farm in Jaén Blazes a Trail for Selling Carbon Credits

Summary

The demand for sus­tain­able and organic olive oil is increas­ing glob­ally, with the value of the sec­tor expected to dou­ble by 2031. To address the lower yields and prof­itabil­ity chal­lenges faced by organic olive farm­ers, O.Live in Spain is sell­ing car­bon cred­its on the vol­un­tary mar­ket to make organic farm­ing more eco­nom­i­cally viable and sus­tain­able. This ini­tia­tive not only gen­er­ates addi­tional rev­enue for the com­pany but also con­tributes to cre­at­ing a more envi­ron­men­tally friendly future for gen­er­a­tions to come.

Demand for sus­tain­able and organic olive oil is increas­ing on a global level, with some mar­ket research indi­cat­ing the value of the sec­tor will more than dou­ble by 2031.

However, the chal­lenges con­tinue to dis­suade many grow­ers from con­vert­ing to organic prac­tices.

A 2018 study car­ried out by researchers in Spain inves­ti­gated the dis­ad­van­tages faced by organic olive farm­ers com­pared to their con­ven­tional coun­ter­parts.

One of the most sig­nif­i­cant chal­lenges is the lower yields of organic trees com­pared to con­ven­tional ones, result­ing in organic grow­ers need­ing more land to pro­duce the same amount of olive oil.

This has been com­pounded by ris­ing olive oil prices at ori­gin, which have made con­ven­tion­ally pro­duced olive oil far more prof­itable for farm­ers to sell over the past year com­pared to organic olive oil.

“Organic farm­ers are fre­quently at a cer­tain dis­ad­van­tage com­pared with con­ven­tional ones,” the authors of the study wrote. ​“The future of organic agri­cul­ture will depend on its eco­nomic via­bil­ity.”

José María Chica, the chief exec­u­tive of O.Live, broadly agrees with this assess­ment and is devel­op­ing a model of sell­ing car­bon cred­its on the vol­un­tary mar­ket to make organic olive farm­ing more prof­itable.

“When farm­ers want to tran­si­tion to organic agri­cul­ture, many quickly find out that there are no eco­nomic advan­tages and in two or three years, many switch back to con­ven­tional farm­ing,” he told Olive Oil Times. ​“Carbon cred­its are a solu­tion to change people’s men­tal­ity about organic farm­ing.”

Situated in Jaén, a province of Andalusia respon­si­ble for about one-third of Spanish olive oil pro­duc­tion in any given year, O.Live boasts more than 1,000 hectares of organic olive groves, a state-of-the-art mill pow­ered by solar pan­els, a his­toric mill and some tourism infra­struc­ture.

Chica believes that car­bon cred­its will pro­vide organic olive grow­ers an alter­na­tive rev­enue stream to main­tain these prac­tices and allow them to com­pete with con­ven­tional olive grow­ers in the region.

“We issue 4.5 car­bon cred­its per hectare of olive groves,” Chica said. One car­bon credit is the equiv­a­lent of one met­ric ton of sequestered car­bon diox­ide.

Currently, one car­bon credit in the European Union’s com­pli­ance mar­ket trades at €68.08 ($73.28), which is about 15 per­cent lower than the start of the year.

Under cur­rent reg­u­la­tions, olive grow­ers can cer­tify sequestered emis­sions going back four years. ​“In total, we have 18,045 car­bon cred­its avail­able,” he said.

The idea to begin sell­ing car­bon cred­its came to Chica three years ago after friends of his began sell­ing the cred­its through their forestry project. He thought that O.Live’s 1,000 hectares of olive groves, com­plete with cover crops, was very sim­i­lar to his friend’s forestry project and began inves­ti­gat­ing the pos­si­bil­ity.

Chica turned to researchers from the Polytechnical University of Madrid to deter­mine how much car­bon diox­ide was sequestered by the trees and soil, along with how much car­bon the com­pany emit­ted grow­ing, har­vest­ing and milling the olives at their mill.

He added that grow­ers need to be thor­ough in this process, includ­ing count­ing emis­sions that come from work­ers dri­ving to work and emis­sions from var­i­ous pieces of farm equip­ment.

After mak­ing this deter­mi­na­tion, Chica invited a third party to ver­ify the results of the study, which they did. Chica then took that study to a sep­a­rate com­pany that gen­er­ated the car­bon credit based on its results.

Once the cred­its are cer­ti­fied, they are pub­lished in a pub­lic reg­istry on the blockchain, which Chica said cre­ates trans­parency and account­abil­ity in the mar­ket. The cred­its remain on the blockchain, with orders and invoices pub­lished there as well, so the move­ment of the cred­its is very pub­lic and vis­i­ble.

Chica rein­vests the money he earns from sell­ing car­bon cred­its on the vol­un­tary car­bon mar­ket back into the farm to con­tinue to improve its sus­tain­abil­ity.

“The phi­los­o­phy of the car­bon cred­its is the addi­tion­al­ity,” he said. ​“Every year, you have to be bet­ter. You have to do some­thing to improve.”

Chica said the com­pany prac­tices no-till agri­cul­ture, com­posts the branches that are pruned and uses this com­post to fer­til­ize the soil.

The com­pany also has goats, bees and horses in the olive groves that eat the grass and nat­u­rally fer­til­ize the trees.

“Of course, we are organic, so we don’t use any insec­ti­cides, pes­ti­cides or fungi­cides,” all of which require sig­nif­i­cant energy to pro­duce, he said.

Sustainability con­tin­ues to the mill, which incor­po­rates solar pan­els and boasts the lat­est tech­nol­ogy to use energy more effi­ciently. The com­pany also used the olive pits as bio­fuel to heat the water used in the mill.

Currently, Chica sells car­bon cred­its to local Spanish com­pa­nies, includ­ing a sig­nif­i­cant order for 4,000 ear­lier this year when the cred­its were trad­ing at €72 ($77.50) each.

One of the chal­lenges with vol­un­tary mar­kets is spec­u­la­tion. The price of car­bon cred­its has been trend­ing down over the past year after sig­nif­i­cant rises, but Chica believes that prices will con­tinue to trend upward in the future.

“People are buy­ing car­bon cred­its today to sell in two, three or four years because the price is down now, but [I think] will go up in the future,” he said.

Chica said he tries his best not to sell to spec­u­la­tors, who attempt to buy cred­its at a lower price and hold onto them to resell when the price rises.

“We don’t want to sell to some­one that wants to spec­u­late with my car­bon cred­its,” he said. ​“We sell directly to com­pa­nies that com­pen­sate their emis­sions to be car­bon neu­tral.”

The extra rev­enue gen­er­ated by sell­ing car­bon cred­its has helped the com­pany deal with the chal­lenges of the pre­vi­ous and cur­rent har­vest in Spain, but Chica said the rea­son O.Live is an organic pro­ducer goes beyond the addi­tional rev­enue.

O.Live usu­ally har­vests five to six mil­lion kilo­grams of olives. Last year, they only har­vested one mil­lion tons, and this year, they expect to har­vest two mil­lion tons.

High heat in May at the time of flow­er­ing dam­aged trees as they were about to blos­som, which resulted in reduced yields.

“For us, sus­tain­abil­ity is very impor­tant,” Chica said. “[Being organic] is not only about the eco­nomic ben­e­fits [of sell­ing car­bon cred­its], but about cre­at­ing an envi­ron­ment for my chil­dren and my children’s chil­dren to pro­duce organic extra vir­gin olive oil too.”