Malaysia Endorses Blockchain Technology in the Palm Oil
Source: Pixabay

In the last ten years, escalation of demand has caused the production of palm oil rise to unprecedented levels. 

Being one of Malaysia’s biggest export business, palm oil accounts for 43% of the country’s agricultural income, according to official figures published in 2017. Consequently, the high revenue industry required modern technologies to improve transparency. 

Blockchain Technology is proving to be the solution to boost the economy, make functioning increasingly reliable for stakeholders in the palm oil sector as well as reduce production and supply costs. 

As a result, with the aim to improve palm oil supply chains and revenues for big and small companies, the Malaysian Palm Oil Council (MPOC) teamed up with blockchain development company focused on sustainable supply chain BloomBloc to pilot a traceability platform. The initiative was announced at the World Economic Forum in Davos, Switzerland earlier this year. 

Launched by MPOC, this platform was developed with the aim to increase “real-time traceable, transparent supply chains with respect to sustainable agriculture,” MPCO CEO Datuk Kalyana Sundram told FoodNavigator Asia.

Furthermore, Sundram detailed that given MPOC’s goal was to “give plantations rich data to help improve their crop management and harvests, [and] also to track working conditions and plantation management,” blockchain provided the solution for both.

“It adds a layer of accountability to every touch point, from the individual oil palm tree through processing and product delivery, [and therefore] blockchain [must] be considered for any crop for which traceability, trust and accountability are important factors among end-users,” he added.

The way it works is that through a smartphone each palm tree’s details and related information are uploaded into the system. Most of the checkpoints are done via the app, hence automatically creating an end-to-end digital ledger.

Having already been successfully tested on a pilot scale, the app has been designed specifically for the Malaysian palm oil industry and therefore follows the country’s certified sustainable processes and standards, he said. 

Sundaram said that while “many rapid changes taking place in response to COVID-19” the blockchain app would help make the industry go from strength to strength. “As use of the app becomes more widespread, it will also help us close the gap between the issues of perception, allegations and the realities of palm oil,” he continued. 

As a next step the app will be made available to all Malaysian oil palm growers and palm oil processors through a user agreement.

“It speaks volumes about our trust in our supply chain. And it is yet another way Malaysia is showing the world that we value our people and our planet, We hope that by creating this platform and demonstrating the benefits of using blockchain technology, we will encourage others who are practicing sustainable agriculture to follow our lead,” Sundaram said in a statement published earlier this year by FoodBev Media. 

In fact, the entire palm oil industry in general will witness the shift to blockchain. In the words of WIPRO’s Partner, Strategy & Transformation Jesus Oregui “by 2030, the use of blockchain combined with smartphones, RFID, IoT networks, and mobility applications could create a palm oil trading industry with near-perfect sustainability records.”

The palm oil industry is hardly the only one. A study done by  Juniper Research revealed that the global food industry could save circa $31 bn in fraud costs by 2024 if companies use blockchain to monitor their supply chains. From IBM’s food traceability initiative Food Trust to Nestle which partnered with OpenSC to trace production in its factories, other food companies too are using blockchain for verifying sustainability.