Blockchain technology adds great value to palm oil production

The palm oil and palm oil products are controversial in the EU from a sustainability perspective (deforestation and biodiversity impact), social and climate impacts. — Reuters pic
The palm oil and palm oil products are controversial in the EU from a sustainability perspective (deforestation and biodiversity impact), social and climate impacts. — Reuters pic

KUALA LUMPUR, Nov 2 ­— Palm oil industrial players should keep an open mind and explore today’s latest technology, namely the blockchain technology that can offer great value to and differentiate Malaysia’s palm oil production as sustainable and credible.

“The application of blockchain technology in the Malaysian palm oil industry not only provides an unprecedented level of trust in the supply chain, but also contributes to protecting the working conditions and legal employment of field workers and gives plantations rich data on crop harvesting,” managing partner of Lardi & Partner Consulting GmbH, Strategy and Business Advisory, Kamales Lardi said.

She was one of the panellists at the recent International Palm Oil Sustainability Conference (IPOSC 2020) hosted by the Malaysian Palm Oil Council (MPOC).

Kamales said that among the key benefits of blockchain (a ledger that is digital, open and shared) are the real-time traceability of palm oil from plant to plate, cost and effort reduction for sustainability tracking and certification process and improved workers conditions and plantation management.

It can also provide crop management data, digital inventories of the plantation, track land concessions, as well as minimising spoilage with the temperature and humidity monitoring during processing, storage and transport.

The blockchain technology is, hence, the solution for the European Union’s (EU) call for a framework to ensure all its agricultural commodity importers’ supply chains are traceable back to the origin of the raw materials, he explained.

The palm oil and palm oil products are controversial in the EU from a sustainability perspective (deforestation and biodiversity impact), social and climate impacts.

“I see a huge potential for digitisation and benefits that could be realised through blockchain, so just keep an open mind and explore further the technology. So far the application on the ground is still significantly lacking, particularly in the palm oil industry .

“We need to accelerate the adoption of this technology (blockchain) and traceability for the benefit of sustainability, especially for the half a million local smallholders’ crop,” she said.

About five million people in Asia directly depend on the palm oil industry and three million small-scale farmers make a living from palm oil globally, accounting for about 40 per cent of total global palm oil production.

Seventy per cent of the crop are mainly used in food production, 20 per cent for cleaning and personal use and 10 per cent for feedstock and biofuel.

Oil palm plantations currently cover more than 27 million hectares of the earth’s surface.

She said one of the challenges when dealing with this technology across several industries is that it is a very difficult and complex technology to apply.

“But if you think about blockchain in the sense of it being very similar to the Internet... today everyone uses the Internet and no one really know how it works.

“We would say blockchain would be something very similar in the next couple of years. It would be the platform or basis for creating trust and creating traceability for many supply chains but we wouldn’t need to understand the running of the technology itself,” she said.

The IPOSC 2020 is MPOC’s biannual conference that highlights the sustainability challenges and opportunities in the Malaysian palm oil industry to all stakeholders.

This year, the 6th IPOSC 2020 was hosted on a virtual platform, comprising two modules, in response to the COVID-19 pandemic globally. — Bernama

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