Palm Oil Blockchain: Traceability and Sustainability in Palm Oil Industry

Jakarta, Warta Sawit Indonesia -- Palm oil industry continues to be attacked by negative issues related to the deforestation, human rights and exploitation. Massive expansion of palm oil plantations is considered to be one of the causes of global warming. In addition, the rise of the “Palm Oil Free” movement campaign has put pressure on the palm oil industry in Indonesia and Malaysia.

In dealing with palm oil issues, major brands that use palm oil raw materials such as Nestlé, L’Oreal, Unilever, Colgate-Palmolive, General Mills, Hershey, Kraft Heinz, Mars, Mondelez, PepsiCo and others are starting to policies that all their products will use sustainable raw materials and prevent deforestation. These major brands work together with producers to collect data traceability of all suppliers in realizing their policies.

All of brands, retailers, refineries, and factories are working together with their suppliers to identify where their raw materials come from, who produces them. This has become very important in starting the journey to fulfill the policy of responsible raw material sources.

However, traceability in the palm oil supply chain is a complex and diverse problem. At the upstream level, Fresh Fruit Bunches (FFB) are often traded between smallholders and local traders or agents before fruits arrive in the mill, making it difficult to trace, even impossible. The speed and large scale of palm oil trade in commodity market has hampered the tracking of goods and hampering the tracing to factories and plantations.

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Traceability Solution Using Palm Oil Blockchain Platform

Traceability is the key to achieve transformation of palm oil industry in the industry 4.0 era. In the palm oil supply chain, traceability is intrinsically related to sustainability. If a product can be tracked back to its original mill or plantation, it is possible to investigate whether the origin mill or plantation has complied with laws and principles of sustainability. Therefore, it needs guidance on how to trace raw materials and calculate their traceability. With the guidance, it is hoped that it will become a guideline for all palm oil companies in tracking raw materials to keep up with global demands regarding the sources of raw materials.

As a concrete process, numbers of palm oil industry leaders, included palm oil companies (Asian Agri and Apical), renewable diesel producer (Neste), consumer goods manufacturer (KAO), technology partner (SAP), facilitation team (Proforest and Daemeter,) formed an alliance called Sustainability Assurance and Innovation Alliance (SUSTAIN). The collective aim of this group is to build a Blockchain-based palm oil platform to address sustainability issues and fulfill the objectives related to the principle of No Deforestation, Peat, and Exploitation (NDPE).

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