Malaysia’s Dayak Palm Oil Smallholders to Use Blockchain Tech for Inclusion in Global Trade
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The Dayak Oil Palm Planters Association (DOPPA) of Sarawak is looking to collaborate with blockchain technology platform Dibiz Global, to enable their inclusion in the global palm oil trade.
The collaboration will enable for once, the traceability of their palm oil farms where smallholders have been touted as a key element of sustainable palm oil.
The collaboration was a proactive move by DOPPA to ensure that its members who are made up of indigenous Dayak farmers, are not excluded from import restrictions by the European Union
According to a press statement by DOPPA
“We deeply regret the approval of the EUDR by the EU Parliament on April 19.
More than 42,000 independent smallholders in Sarawak will feel constrained by the EUDR after the expiry of the grace period of 18 months for large oil palm plantation companies, and 24 months for independent smallholders.
This situation has created a difficult obstacle for independent smallholders, who are not financially able to meet the needs and requirements of the EUDR due-diligence exercise.
The failure could lead to the rejection of fresh fruit bunches (FFB) produced by independent smallholders, especially when selling these FFBS to processing facilities owned by large plantation companies.”
According to the President of DOPPA, Napolean Ningkos, there are more than 260,000 independent palm oil smallholders in Malaysia who manage planting areas of over 980,000 hectares.
With regard to the implementation of the EUDR having been approved by the EU Parliament, Doppa has taken a proactive step towards meeting EUDR demands by collaborating with DIBIZ Malaysia to protect the interests of more than 40,000 independent smallholders in Sarawak.
“The traceability system provided by DIBIZ Malaysia will be able to position the locations and operations of independent smallholders in Sarawak.
The discussions between Doppa and DIBIZ Malaysia Sdn Bhd are still in the early stages but Doppa is very confident that this collaboration will be successful with the support from the Sarawak state government and the fruit processing facilities owned by large oil palm plantation companies in Sarawak.”
What Is a Blockchain and how does this meet EU demands for traceability?
A blockchain platform is a shared digital ledger that allows users to record transactions and share information securely that is tamper-resistant. A distributed network of computers maintains the register with each transaction being verified by consensus among the network participants.
Investopedia defines it as “Blockchains can be used to make data in any industry immutable—the term used to describe the inability to be altered.
Because there is no way to change a block, the only trust needed is at the point where a user or program enters data. This aspect reduces the need for trusted third parties, which are usually auditors or other humans that add costs and make mistakes.”
In an email response, Dibiz Global clarified that:
“Dibiz is a certification system agnostic and provides a Certificate Management Module as part of our offering depending on the individual supply chain stakeholder’s individual certification status. We provide granular supply chain data and deforestation indices over and above what each certification already provides. We also provide a ready Batch Certificate for each shipment for EUDR compliance with immutable data on our Blockchain which is further authenticated by a neutral third-party certification agency in Control Union.”
Dibiz offers two services which are explained as:
The blockchain platform as created by Dibiz has all the elements needed to ensure supply chains do not contain palm oil from deforested areas after December 2020. This would meet the fundamental demand of the EUDR for geolocation.
How Would Blockchain Technology Support Smallholders?
DOPPA’s outspoken President, Napolean Ningkos, “blasted the EU campaign to exclude Dayak smallholders from the entire supply chain” in an earlier press statement.
“Unfortunately, most of the indigenous Dayak smallholders in Sarawak cannot afford to pay for NGO (RSPO) certifications. Given the choice of whether to spend our hard-earned income on NGO certification or our children’s college funds, we would prefer to save for our children’s education,”
In his most recent statement to the press, he reiterated that “This situation (EUDR) has created a difficult obstacle for independent smallholders, who are not financially able to meet the needs and requirements of the EUDR due-diligence exercise.”
This may explain why the RSPO has managed to certify less than 1% of Indonesian smallholders.
As for the ISPO, World Resources Institute, Indonesia reported that as of June 2021:
“the Indonesian Government had issued ISPO certificates for 5.78 million ha of oil palm plantations until March 2021. From the millions of hectares certified by ISPO, only around 12.7 thousand ha are smallholder plantations, or only about 0.21%.”
As low as these numbers are for Indonesian smallholders, a study on the MSPO in Malaysia, “the Life cycle assessment and life cycle costing analysis for uncertified and Malaysia sustainable palm oil - MSPO-certified independent smallholders” highlights the dynamic impact of the MSPO on smallholders.
“Based on the LCA findings using ReCiPe 2016 Endpoint (H), a net decline in environmental impacts will result when independent smallholders adopt MSPO certification. With at least 10.116% decrease in all impact categories except the Mineral Resource Scarcity category (18.065% increase), the endpoint results indicate that MSPO implementation in independent smallholders can overall reduce the environmental impacts from Human Health (99.913%), Ecosystem Quality (99.958%), and Resources (90.223%) categories.”
The study reported that:
“However, independent smallholders (ISH) who account for 16.71% of the total palm oil plantation area in Malaysia have shown a low MSPO registration rate of 24.82% by midyear 2020. Therefore, it is vital to encourage MSPO certification and incorporation of sustainable production practices in ISHs in order to maintain the supply of certified palm oil.”
In recognizing the importance of smallholders and the financial constraints on their certification and access to market, Dibiz offers its tech platform free of charge to smallholders.
Europe’s oilseeds trade association responded to the adoption of EUDR with a warning of exclusion of smallholders.
The collaboration will enable for once, the traceability of their palm oil farms where smallholders have been touted as a key element of sustainable palm oil.
The collaboration was a proactive move by DOPPA to ensure that its members who are made up of indigenous Dayak farmers, are not excluded from import restrictions by the European Union
According to a press statement by DOPPA
“We deeply regret the approval of the EUDR by the EU Parliament on April 19.
More than 42,000 independent smallholders in Sarawak will feel constrained by the EUDR after the expiry of the grace period of 18 months for large oil palm plantation companies, and 24 months for independent smallholders.
This situation has created a difficult obstacle for independent smallholders, who are not financially able to meet the needs and requirements of the EUDR due-diligence exercise.
The failure could lead to the rejection of fresh fruit bunches (FFB) produced by independent smallholders, especially when selling these FFBS to processing facilities owned by large plantation companies.”
According to the President of DOPPA, Napolean Ningkos, there are more than 260,000 independent palm oil smallholders in Malaysia who manage planting areas of over 980,000 hectares.
With regard to the implementation of the EUDR having been approved by the EU Parliament, Doppa has taken a proactive step towards meeting EUDR demands by collaborating with DIBIZ Malaysia to protect the interests of more than 40,000 independent smallholders in Sarawak.
“The traceability system provided by DIBIZ Malaysia will be able to position the locations and operations of independent smallholders in Sarawak.
The discussions between Doppa and DIBIZ Malaysia Sdn Bhd are still in the early stages but Doppa is very confident that this collaboration will be successful with the support from the Sarawak state government and the fruit processing facilities owned by large oil palm plantation companies in Sarawak.”
What Is a Blockchain and how does this meet EU demands for traceability?
A blockchain platform is a shared digital ledger that allows users to record transactions and share information securely that is tamper-resistant. A distributed network of computers maintains the register with each transaction being verified by consensus among the network participants.
Investopedia defines it as “Blockchains can be used to make data in any industry immutable—the term used to describe the inability to be altered.
Because there is no way to change a block, the only trust needed is at the point where a user or program enters data. This aspect reduces the need for trusted third parties, which are usually auditors or other humans that add costs and make mistakes.”
In an email response, Dibiz Global clarified that:
“Dibiz is a certification system agnostic and provides a Certificate Management Module as part of our offering depending on the individual supply chain stakeholder’s individual certification status. We provide granular supply chain data and deforestation indices over and above what each certification already provides. We also provide a ready Batch Certificate for each shipment for EUDR compliance with immutable data on our Blockchain which is further authenticated by a neutral third-party certification agency in Control Union.”
Dibiz offers two services which are explained as:
- SaaS platform for the use of our Digital Transformation software with immutable supply chain data stored on a Blockchain. Here we capture granular supply chain transactions all the way from Harvesting/Smallholders to end buyers including all the supply chain hops like Dealers, Mills, Refineries, Oleochemical plants, Biodiesel plants and end buyers. This establishes real time traceability with real time deforestation monitoring for each and every Sales contract finally authenticated by Control Union. This would already help the industry with EUDR compliance.
- TRUSTPARENT MARKETPLACE: This is a first of its kind online MP where Buyers & Sellers of CSPO can register for FREE and Trade in sustainable palm oil with DIBIZ Platform providing an immutable Digital repository of the Trade transaction and its related Geo-spatial Analytics around all the Mills that are connected with that trade. The Geo-spatial analytics by our Partner Descartes Labs provides a Deforestation Index through a Mill Score.
The blockchain platform as created by Dibiz has all the elements needed to ensure supply chains do not contain palm oil from deforested areas after December 2020. This would meet the fundamental demand of the EUDR for geolocation.
How Would Blockchain Technology Support Smallholders?
DOPPA’s outspoken President, Napolean Ningkos, “blasted the EU campaign to exclude Dayak smallholders from the entire supply chain” in an earlier press statement.
“Unfortunately, most of the indigenous Dayak smallholders in Sarawak cannot afford to pay for NGO (RSPO) certifications. Given the choice of whether to spend our hard-earned income on NGO certification or our children’s college funds, we would prefer to save for our children’s education,”
In his most recent statement to the press, he reiterated that “This situation (EUDR) has created a difficult obstacle for independent smallholders, who are not financially able to meet the needs and requirements of the EUDR due-diligence exercise.”
This may explain why the RSPO has managed to certify less than 1% of Indonesian smallholders.
As for the ISPO, World Resources Institute, Indonesia reported that as of June 2021:
“the Indonesian Government had issued ISPO certificates for 5.78 million ha of oil palm plantations until March 2021. From the millions of hectares certified by ISPO, only around 12.7 thousand ha are smallholder plantations, or only about 0.21%.”
As low as these numbers are for Indonesian smallholders, a study on the MSPO in Malaysia, “the Life cycle assessment and life cycle costing analysis for uncertified and Malaysia sustainable palm oil - MSPO-certified independent smallholders” highlights the dynamic impact of the MSPO on smallholders.
“Based on the LCA findings using ReCiPe 2016 Endpoint (H), a net decline in environmental impacts will result when independent smallholders adopt MSPO certification. With at least 10.116% decrease in all impact categories except the Mineral Resource Scarcity category (18.065% increase), the endpoint results indicate that MSPO implementation in independent smallholders can overall reduce the environmental impacts from Human Health (99.913%), Ecosystem Quality (99.958%), and Resources (90.223%) categories.”
The study reported that:
“However, independent smallholders (ISH) who account for 16.71% of the total palm oil plantation area in Malaysia have shown a low MSPO registration rate of 24.82% by midyear 2020. Therefore, it is vital to encourage MSPO certification and incorporation of sustainable production practices in ISHs in order to maintain the supply of certified palm oil.”
In recognizing the importance of smallholders and the financial constraints on their certification and access to market, Dibiz offers its tech platform free of charge to smallholders.
Europe’s oilseeds trade association responded to the adoption of EUDR with a warning of exclusion of smallholders.
OVID Verband made an honest plea that there is very little time left.
Considering the tight timelines imposed by the EU to effect the Deforestation Regulations onto companies in 18 months and smallholders in 24 months, the efforts and investments into making palm oil sustainable by the different certification bodies and Dibiz, provide a great starting point for EUDR.
Published May 2023. CSPO Watch
Published May 2023. CSPO Watch
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