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Future-Proofed Palm Oil: The Challenge of Sustainability and Traceability

16/12/2020 215 Readers

Future-Proofed Palm Oil: The Challenge of Sustainability and Traceability

Palm oil plantation has been claimed to be associated with deforestation, climate change, displacement of natural habitats, and blamed to cause haze-related air pollution in Southeast Asia cities. It has also been suggested as a major contributor to global warming through displaced carbon-rich peat soils and wetlands purportedly used for oil palm cultivation.

As the biggest palm oil producers, Indonesia and Malaysia have realized these issues. A land moratorium has been implemented, particularly on peatlands and rainforests. But in practice, the emphasis is too often placed on finding solutions to partial problems.

The efforts lack consideration of the long-term aspects and do not represent sustainable development of the agro-food chain which demands transparency of data and information in a highly competitive global market.

However, modifying conventional management that has been rooted for years of crisis is not easy.

In the conventional management practices, there are several discrepancies and inaccuracies in the implementation of plantation operations. Conventional practices will hinder company performance and far from efficient in time and cost.

As a result, the palm oil sector in both Indonesia and Malaysia is developing extensively, yet plantations and producers are performing well below their potential, with yields lower than optimum.

The following observations found by eKomoditi Solutions Indonesia in the conventional management practices of palm oil plantations:

1. Ghost workers
Ghost worker schemes are perpetrated by payroll employees who either create fake identities that are completed with fake identities or issued payment to employees who have resigned or retired and then divert the payment to themselves.

2. Unmonitored leftover fruits
Leftover fruits happened on fresh fruit bunches (FFBs) within material handling, start from FFB falling when harvested, loading up to the truck bin, and transporting from field to loading ramp. Unmonitored leftover fruits properly cause significant losses.

3. Ghost bunches
Ghost Bunches refers to the inequalities in the amounts of fruit production in the field and in the mill. Ghost Bunches were among the many aspects that affect to yield (EOR) and properly cause significant losses.

4. Uncontrolled materials usage
Uncontrolled materials usage of fertilizer or herbicide will impact on operational budget. Material usage control is needed to ensure the provision of the required quantity and quality in the minimum budget and avoiding excessive investment in inventories.

5. Delay activities report
Fresh fruit bunches should be delivered immediately to the mills within 24 hours after harvested. Doing so results in a higher yield and quality of CPO production. The faster the fruit is crushed, the less FFA is formed, the better the yield and quality of CPO.

6. Uncontrolled fruits sorting
Fruits sorting is an activity of fresh fruit bunches sorting as one of the production controls both in quantity and quality in accordance with predetermined criteria and standards.

7. Unmonitored working time and location
Job assignment location error will impact upkeep and job assignment reports. Companies need a geolocation mapping service to monitor infield activities and track mobile employees.

Implementation of digital technology will streamline this complex process, which in turn, reducing the use of fertilizers, pest control management, fire detection, detection of unproductive plots, and increasing yield in every plot of palm oil plantation.

As the consequences on the output side would be a more fresh-fruit bunches (FFBs) yield with less yield risk. In the short run, this would result in a higher profit per hectare.

In conclusion, in a world of rapid and deep change, all of us must look at what we need to do to be sustainable and traceable. Palm oil companies need to look at how sustainable and traceable they are in terms of their own plantation operations.

They cannot say, for example, that they want to preserve smallholder agriculture, conservation for wildlife protects customary rights, implements NDPE (No Deforestation, Peat, Exploitation) policies, etc., without providing a traceability system to support it. Liberalized market forces will give exactly the opposite result.

As the final conclusion, the palm oil company will only be sustainable if it is capable of renewing itself by traceability through data to the sources. This means palm oil companies should implement digital technology to streamlining its operation to sustain maximum profits in a vibrant global economy.

Editor: Joko Yuwono