PALM OIL CERTIFICATION & STANDARDS
A palm oil digital supply chain would allow transactions to be captured digitally and stored on a private blockchain consortium owned by stakeholders (Source: DIBIZ)
Digital transformation The palm oil industry faces compliance, financial and reputational risks if it does not engage in sustainable palm oil production and trading, according to Unnikrishnan Unnithan, CEO of the DIBIZ digital platform. “Demand for sustainable palm oil is expanding and this has become a massive challenge in the industry as plantations do not generally have a digital workflow to track their fresh fruit bunches (FFB),” Unnithan told the virtual Palm Oil Outlook (POC) conference earlier this year. Malaysia and Indonesia account for over 80% of world’s palm oil supply. According to Unnithan, 18.9M ha of land was planted to oil palm in 2017, producing 75M tonnes of palm oil and
Figure 1: Global CSPO production and planted area 18 OFI – NOVEMBER/DECEMBER 2021
DIBIZ.indd 2
Source: DIBIZ, Virtual POC, March 2021
With demand for sustainable palm oil growing as a result of government, NGO and consumer pressure, what benefits does a digital supply chain platform offer and how can it work? Unnikrishnan Unnithan
7.7M tonnes of palm kernel oil (PKO). In 2019, the area planted under the Roundtable on Sustainable Palm Oil (RSPO), Indonesian Sustainable Palm Oil (ISPO) and Malaysian Sustainable Palm Oil (MSPO) schemes was 14.9M ha. In that year, 14.8M tonnes of RSPOcertified palm oil and 3.37M tonnes of RSPO-certified PKO was produced (see also Figure 1, below). “Producing and trading sustainable palm oil is no more an option. It is mandatory for businesses to survive in 2021 and beyond,” Unnithan said. This was due to increasing regulatory, NGO and consumer pressure. The EU’s Farm to Fork strategy would also add more pressure on Malaysian and Indonesian producers to adopt sustainability. Meanwhile, many large multinational corporations were demanding sustainable certified products.
Bringing in smallholders
Unnithan said any sustainability initiative would not be meaningful without bringing in the more than 3M small-scale oil palm farmers who were limited by funds and inadequate information and knowledge about growing and selling palm oil. “Some 40% of the world’s palm oil is produced by smallholders cut off from the sustainable supply chain.” u Unnithan said current challenges in www.ofimagazine.com
25/10/2021 09:02:43
