SINGAPORE - Buyers of palm oil have a range of incentives to trace their supply back to the farm gate; including reputational risk, procurement planning and targeting farmer support. However, achieving traceability has proven difficult. While a range of software packages exist to record the relevant data but it’s hard to incentivize suppliers to submit data.
Two actors are party to the purchase of Fresh Fruit Bunches (FFB) at the farm, the farmer and the aggregator (trader). Either party can enter the data required to achieve traceability. However, entering this data carries a cost to farmers in both time and effort and the end buyer must make the relevant digital form available to every farmer. On the other hand, aggregators may find it easier to enter the data, but typically consider their purchasing patterns to be a commercial secret.
Paying either group to enter the data is an expensive option. Paying the farmer or trader just US$1 each time FFB is purchased would raise crude palm oil prices by about 3%, which is a significant margin on a commodity product.
At Grow Asia’s inaugural hackathon we asked teams of innovators to build solutions which improved farmer training, logistics or finance for small palm oil farms. What struck me about the solutions the teams presented was that many achieved traceability not by asking farmers or traders to record data, but by offering them a service which resulted in them recording the information. For example:
Simple Aja’s solution kept a record of FFB sales by allowing farmers to “offer” their FFB to a marketplace of aggregators and allowing traders to plan an efficient collection route.
Team A collected data on farmers by offering a chatbot which provided free agronomic advice.
Ezos captured transaction records by offering farmers a loan to buy fertilizer and then securing repayment from FFB sales.
By offering a service which is useful to farmer or traders these solutions have the potential to cut the cost of achieving traceability while also lifting productivity and efficiency at the same time.
Many of the digital services we use every day, such as Google, Grab or Facebook gather data on us and sell or monitorize this data. I believe that we can achieve traceability in smallholder supply chains more easily and quickly by offering services which are useful to farmers and aggregators than we can by paying them to record the data or by sending survey teams to ask them.
Following the Hackathon, Grow Asia plans to work hand in hand with the winners to take the solution to the ground and impact smallholders. To learn more, visit the Hackathon website or register your interest for the 2019 Grow Asia Hackathon.
The Grow Asia Hackathon was made possible with support from our partners Unilever and Padang & Co, MUFG Bank and Bayer. The Hackathon teams were also provided with real-world data, including satellite imagery from Planet Labs and weather data from IBM's The Weather Company, and thanks to mentorship from Yara, Cargill, Forum for the Future, Eachmile Technologies, International Finance Cooperation (IFC), Daemeter, The IDH (Sustainable Trade Initiative) and Ocean Protocol the Hackathon teams were able to refine their solutions.