Unilever Bets on Blockchain Tech for Deforestation-Free Certified Palm Oil

The food giant’s use of blockchain may benefit small farmers growing palm fruit sustainably and prevent deforestation of more of Southeast Asia’s tropical forests.
Mar. 29, 2022
Paolo DeAndreis

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Unilever, one of the world’s largest food pro­duc­ers, has announced a pilot project based on SAP blockchain tech­nol­ogy to cer­tify the ori­gin of its palm oil.

According to the com­pany, the project could open the door to a new era for trans­parency, trace­abil­ity and sus­tain­abil­ity of palm oil pro­duc­tion, with the involve­ment of small-scale pro­duc­ers in the coun­tries of ori­gin.

Our solu­tion allows com­pa­nies to tell what per­cent­age of palm oil prod­ucts they pur­chased from a sus­tain­able ori­gin and track it to the end con­sumer prod­uct.- Nitin Jain , gen­eral man­ager, SAP GreenToken

The uncer­tain ori­gins of palm oil have been asso­ci­ated with mas­sive defor­esta­tion activ­i­ties.

Raw mate­ri­als like palm oil are often mixed with phys­i­cally iden­ti­cal raw mate­ri­als from ver­i­fied sus­tain­able and non-ver­i­fied sources after the first mile’ of the sup­ply chain, caus­ing the ori­gin infor­ma­tion to be either hid­den or lost,” Unilever said in a press release.

See Also:55 Percent of Consumers Prefer Sustainable Food Options, Survey Finds

The need to cer­tify and ver­ify the ori­gin of palm oil is due to the grow­ing inter­est shown by con­sumers world­wide regard­ing the envi­ron­men­tal impact of food.

It is also due to stricter reg­u­la­tions increas­ingly enforced at an inter­na­tional level. For exam­ple, the European Commission has recently con­firmed that it is work­ing to halt all imports of goods linked to defor­esta­tion.

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Unilever’s pilot project in Indonesia deployed the GreenToken blockchain tech­nol­ogy to source more than 188,000 tons of palm fruit.

According to the com­pany, Unilever’s palm fruit sources cre­ated tokens that mir­ror the mate­r­ial flow of the palm oil through­out the sup­ply chain and cap­ture the unique attrib­utes linked to the oil’s ori­gin.”

As a result of this process, Unilever could track, ver­ify and report the ori­gin of the prod­uct and its pro­cess­ing through­out the sup­ply chain.

Andrew Wilcox, senior man­ager at Unilever, told FoodNavigator that the new sys­tem lever­ages exist­ing busi­ness processes like cre­at­ing pur­chas­ing orders, good receipts and weigh­bridge logs, to orig­i­nate and trans­fer these indi­vis­i­ble and unre­pro­ducible com­mod­ity tokens and keep the account­ing trans­par­ent at each stage of the sup­ply chain.”

This infor­ma­tion allows the com­pany to com­ply with the incom­ing European reg­u­la­tions, which will require pro­duc­ers to vol­un­tar­ily cer­tify and offer com­plete access to infor­ma­tion such as the type of com­mod­ity, pro­duc­tion vol­umes, involved sup­pli­ers and the coun­try of pro­duc­tion.

According to the com­mis­sion, exporters will have to spec­ify the exact geo­graphic coor­di­nates of the pro­duc­tion and cer­tify that their prod­uct chain abides with local laws.

According to Nitin Jain, gen­eral man­ager of SAP GreenToken, the plat­form allows com­pa­nies to bring the same trace­abil­ity and sup­ply chain trans­parency to bulk raw mate­ri­als that you get from scan­ning a bar or QR code on any con­sumer prod­uct.”

Our solu­tion allows com­pa­nies to tell what per­cent­age of palm oil prod­ucts they pur­chased from a sus­tain­able ori­gin and track it to the end con­sumer prod­uct,” he added.

Unilever has noted that it plans to achieve a defor­esta­tion-free sup­ply chain by 2023.

The company’s part­ners, such as Golden Agri-Resources, said the new plat­form enhances the trans­parency of their oper­a­tions and facil­i­tates the flow of infor­ma­tion between dif­fer­ent sup­ply chain actors.

According to Wilcox, blockchain tech­nol­ogy could sig­nif­i­cantly impact trop­i­cal forests where small­hold­ers are often located next to the plan­et’s most excep­tional bio­di­ver­sity, the most car­bon-rich forests and peat­lands and often the most endan­gered ecosys­tems where their pro­duc­tion deci­sion have the most out­sized impacts.”

Unilever said the new plat­form could prove trans­for­ma­tional” for small­holder inclu­sion since they could access cer­ti­fi­ca­tion both of their sus­tain­able prac­tices and how they progress over time.

This vir­tual seg­re­ga­tion enabled by blockchain, and paired with the fist-mile trace­abil­ity data, can cap­ture infor­ma­tion about the small­hold­ers’ farm­ing prac­tices and envi­ron­ment to show the effort and progress made by small­hold­ers towards sus­tain­abil­ity,” Wilcox told FoodNavigator.

While many coun­tries on four con­ti­nents pro­duce palm oil, the largest pro­ducer remains Indonesia which, accord­ing to the United States Department of Agriculture (USDA), accounts for 59 per­cent of global pro­duc­tion. About 40 per­cent of Indonesian pro­duc­tion comes from small-scale farm­ers.

The USDA esti­mates that in 2022/23, pro­duc­tion will grow to 46 mil­lion tons in Indonesia, 500,000 tons more than the pre­vi­ous year, due to favor­able weather and higher prices for pro­duc­ers.”

According to the USDA, exports in the period should rise to 30 mil­lion tons due to grow­ing demand from China and India.

The United Nations Food and Agriculture Organization (FAO) has esti­mated that between 1990 and 2020, 420 mil­lion hectares of for­est were glob­ally lost to defor­esta­tion.

Even count­ing the newly planted or regen­er­ated for­est, which can only par­tially com­pen­sate for the loss, 178 mil­lion hectares were lost in that period, an area approx­i­mately large as the whole of the U.S. state of North Dakota.



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