Traceability in palm oil: How it drives our ethical sourcing

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Posted: Oct 30, 2024 • 4 minute read • SMART • 3 Likes

For officers like Candra Yogi Feriyawan, traceability means navigating a maze of data, technology, and on-the-ground realities to safeguard the integrity of our palm supply chain. The complex structure of the palm oil supply chain does not make it easy. While the palm supply chain is relatively concentrated in the downstream (the processing side of the supply chain), it is exceptionally fragmented in the upstream, dotted with numerous small plantations. As a result, a single shipment can have palm oil from thousands of different plantations.

What is traceability? Our approach

Traceability means knowing where our palm oil comes from. But it’s more than just tracking data, it’s also about having accountability and transparency across our entire supply chain to build an ethical business.This approach is driven by our GAR Social and Environmental Policy (GSEP). “Traceability confirms that our supply chain is free from deforestation, protects peatlands, and respects human rights. It also identifies issues, which enhances transparency and builds customer trust – critical when our palm oil is used in food and household products worldwide,” says Candra Yogi Feriyawan, our Traceability & NDPE Verification Senior Officer.

Where the tracking begins

Our traceability journey begins when the Origination team identifies a supplier as a potential supplier, who gathers and submits key details.

Next, the Traceability team engages with the potential supplier to obtain a traceability declaration, which maps the palm oil journey from the mill to the plantation. This declaration is updated every six months to ensure the data stays reliable.The challenge comes while gathering traceability data from dealers and smallholders. “Many smallholders and dealers don’t see immediate commercial benefits from traceability, which does not motivate them enough to participate,” explains Candra. Still, we work hard to build trust through ongoing conversations. This openness keeps the trust alive within every part of the supply chain.

Did You Know?
Traceability can actually boost the market value of palm oil?When smallholders and dealers can prove that their Fresh Fruit Bunches (FFBs) are legally and ethically sourced, they can gain access to premium markets that are willing to pay more for certified, traceable products.

So, while the benefits might not be immediate, the long-term gains can be substantial.

From field to system

Did You Know?
Traceability is a legal requirement under EU Deforestation-Free Regulation.To enter EU market, products must be traceable back to the source to ensure they are deforestation-free.

We now have 99% Traceability to the Plantation (TTP) as of end 2023 for our palm supply chain in Indonesia and total traceability of our own estates. We are now mapping our global supply chain for palm and non-palm products, including sugar and soy.

Learn more about how we can help navigate EUDR requirements here.

Once the data is collected from the field, it’s integrated into our digital system. In the past, this process was a slow, error-prone process. To improve it, we partnered with Koltiva in 2018 to facilitate and pilot digital traceability surveys. The success of this pilot led to the Ksatria Sawit programme, which greatly improved how our suppliers manage traceability.“With digital technology, we can now collect and process data more efficiently and reduce human errors,” Candra notes. This database supports various operational needs, like verifying deforestation-free areas for EUDR compliance, tracking progress on NDPE commitments, and identifying risks to tailor better support programmes for suppliers.

Fact-checking with boots on the ground and eyes in the sky

Gathering data is part of the process. Making sure that the data is accurate and reliable is another.

We use advanced technologies like remote sensing and our Geographic Information System (GIS) to confirm the exact locations of mills and plantations and match our data with real-world conditions.

We implement a confidence level system that ranks data accuracy based on its source, from the highest trust in verified data to broader, less specific sources. “This system helps us assess data trustworthiness and focus our verification efforts where it’s needed most,” Candra explains.

But technology alone isn’t enough. “We also rely on on-the-ground inspections,” he continues. We work closely with dealers during their FFB collections from smallholder plantations to verify data directly at the source.

Candra conducting on-the-ground inspection to verify data directly in the field with local stakeholders — Candra (second from left) conducting on-the-ground inspection to verify data directly in the field with local stakeholders, complementing remote sensing and GIS technology with firsthand verification.

Wrapping up with verifications

Verification is crucial for our traceability efforts to stand up to scrutiny.

Major buyers like FMCGs regularly use our traceability data during audits. These audits are closely tied to verifying our deforestation-free supply chain.

While verifying every supplier is challenging, we use a reliable sampling method to cover most of our supply chain. “We ask mills to update their traceability declarations every six months to keep our data fresh. We’re also working with independent verifiers to assess if our supply chain meets the rigorous audits,” Candra points out.

This ongoing cycle of collecting, verifying, and sharing data helps us maintain transparency and build lasting trust with customers and partners.

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Our capabilities and commitment to sustainability position us to meet the evolving requirements, like EUDR, and be ready to support customers, buyers, and suppliers every step of the way.

Discover how our work aligns with these regulations and how we can assist you in meeting them.
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