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ART Episode 2: Traceability - getting to the heart of things
ART Episode 2: Traceability - getting to the heart of things
News Feb 15, 2017

New in our #PeopleOfPalmOil series, TFT's Rudro Roy examines the role of traceability

As of January 2019, The Forest Trust has become Earthworm Foundation.

Let’s face it – there is a lot of negativity in the world today. War, poverty, climate change, corruption – the list goes on. We are reminded every day how scary the world is and how small we are. But even small things matter. Scientist Alan Turing once said, “Sometimes it is the people no one can imagine anything of who do the things no one can imagine.”

TFT’s ART (Aggregator/Refinery Transformation) plan is about changing the palm oil industry. It is about how many seemingly small changes can one day snowball into the large changes we dream of – a world without deforestation and exploitation of people.

A vital initial step of the ART plan is traceability – finding out where your palm oil comes from to see if it’s linked to risks like deforestation and social exploitation. On a sunny Tuesday morning, I caught up for coffee with my colleague, Shea Chan Loong, to learn about him and his work on traceability. The contents of our conversation were edited for clarity and brevity. Special thanks to Florian Wiesner for capturing our conversation in pictures.

Rudro: So Shea, tell me a little about yourself. What did you do before you joined TFT? And what is your passion? Is it technology? You have a lot of tech stuff.

Shea: My background is in forestry. After graduating, I went into oil palm research in Sabah. My work involved advising oil palm plantations, as well as doing my own research. I also managed the field office, which had about 10 staff and 60 workers. So I was managing my own mini-plantation! However, my passion is making things efficient. When I see how people work together, how data is being managed or how work is being done, I’m always thinking if there are more efficient ways to get things done.

Rudro: In recent years, many companies in the palm oil industry have come out with policies against deforestation, planting on peat and social exploitation. And a part of these commitments is that they want to find out where they are buying palm oil from and whether it’s linked to risks. Can you explain the difficulty of doing this, given the complexity of the supply chain?

Shea: So imagine a river that flows into the sea. The sea is where the supply chain ends. So that is downstream, where we have brands like the chocolate companies, who use palm oil to produce their chocolates. When you want to know the source, you go upstream – to the plantations who grow oil palm and the mills who extract what we call crude palm oil. In the middle are the refineries, who produce refined products from the crude palm oil, and traders. From the plantations to the brands, it goes through a very complicated process. It can go from, let’s say, Malaysia all the way to Europe, passing through multiple traders in different regions. It’s a global supply chain. And it just keeps criss-crossing and by the time it reaches the end, you barely know where it came from.

Rudro: But a company that buys these products, don’t they already have this information?

Shea: Well, that is what I thought when I started too. I asked one of our members the same thing. “You guys are in the industry. Don’t you know this already?” They said that the information is there, but it’s not put together and communicated to people.

Rudro: So we know it’s difficult to get this information. And you said it’s already there, but we have to put effort into compiling this information. But if it’s that difficult, what is the value in taking on this challenge – in getting all this information?

Shea: Well, finding out where the palm oil comes from is not the end game. What we want to see is issues we are concerned about, like deforestation and social exploitation, being addressed. But if you don’t know where the issues are, you don’t know how to solve it. So the first step is to find out where all the supply comes from. Then we can go down to the ground to see the issues first-hand. A lot of these issues may be known. But we don’t know exactly what is going on, or how or why it happens. And from this information we can understand how to tackle these problems. A lot of these issues are also related to geography as well.

Rudro: Okay, now in terms of the technical part of your job, how do you do it? Let’s say a company has this policy, and they want to find out the source of their palm oil. How do you get to your destination?

Shea: I work with a major agribusiness, a TFT member which has many refineries in and around Malaysia and Indonesia. So I first work with our member’s sustainability team to get information on the mills that supply to those refineries. We gather and verify information like the parent company, mill name, GPS coordinates and address. We then work together to publish the information in an easily understandable format. This involves a lot of data management as we often receive inconsistent data.

Rudro: I’ve heard that some companies give you volumetric data and some companies give you numeric data. What does this mean?

Shea: This goes back to how people want to calculate and publish their traceability percentages. Some look at volumes – let’s say we know where 5,000 tonnes out of a total 10,000 tonnes comes from, then it’s 50 percent traceable. With the numeric data, let’s say 10 mills supply to a refinery. And we have all the information – parent company, mill name, GPS coordinates and addresses – for eight of those mills. Then it’s considered 80 percent traceable. It’s important to note that volumetric traceability means buyers can claim they know where X percent of their oil comes from, while numeric traceability means buyers can claim they know Y percent of the mills they source from. These are different and cannot be combined to produce a meaningful outcome.

Rudro: So the outcome of gathering this information is to publish it, which many companies have done on their sustainability dashboards. Do companies see releasing this data as a sensitive issue?

Shea: Yes, because your mill list could be seen as a loss in competitive edge. When others know where the mills are, there is a fear that they may want to purchase from those mills as well. Before we started on this journey, publishing the mill list was considered sensitive. After all, you don’t want people to take away your business. But it’s slowly becoming okay to give out this information.

Rudro: So, in reality, is it really bad for business when companies tell the world which mills they buy from?

Shea: Well, sustainability and responsible practices are now becoming more and more the norm. It’s becoming a business requirement. So being open about where you receive your supplies from is now becoming an advantage. Since TFT started working on traceability in palm oil and the first mill list was published, a lot of companies have followed. One time, we got to know from our member that the commercial side had said, “Business is getting better, so keep doing what you are doing on the sustainability side.”

Rudro: Do you know how companies felt when TFT first encouraged them to publish the mill list? Was there scepticism? Was there any push back?

Shea: I wasn’t there for those discussions. But I can imagine there was a lot of scepticism. I mean, anyone who goes on this sustainability journey will feel very anxious about giving this information away. But there has been gradual improvement each time. Early on, TFT would ask them to make this information available publicly. Companies would say, “Maybe not, because we find this to be sensitive.” As we go along, we understand them better and say, “It’s probably not time yet, you’re not ready yet or it’s genuinely sensitive, so maybe sometime later.” Now companies are starting to say, “Hey, let’s put this information out there right now.” So we are now facilitating the process and they are taking the initiative.

Rudro: Is there a reason for this shift from TFT to the member taking on a majority of the traceability work?

Shea: In general, how I see TFT’s work is that we coach people to move towards something mutually beneficial. We are not looking to do everything. We are not a service provider. We walk with them to get to a certain point and then we let them walk the rest of the journey. Going through this traceability journey together – when we realize that they are getting the hang of it, we slowly back off. Moreover, the work is easier now, because we have improved the processes. I think this is both sides’ aim – they get to manage their own data and TFT is able to focus on other aspects. Like now that transparency is going smoothly, we do less of that and focus more on transformation work on the ground.

Rudro: So what we’ve been talking about so far is traceability to mill right? From what I’ve read, there have been calls for traceability to plantation as the next step. Why haven’t we placed more emphasis on this?

Shea: Getting this information takes a lot of time and money. It’s about comparing where we can put our resources. We have to ask hundreds of mills for the plantations they source from. We then have to go on the ground – send teams through backroads to get coordinates for the plantations, smallholders, small growers. But no change is being made. We’re not addressing social exploitation. We’re not addressing deforestation. So we can either use our resources to just collect information. Or we can use those resources to focus on transformation at the mills, who can then work with their plantations to change their practices and obtain traceability to plantation along the way.

Rudro: As someone with prior experience in the industry, how do you feel about the palm oil industry?

Shea: I would say that – true, there are issues with oil palm plantations. We see that, in some places, foreign workers are not being treated properly. But it has also given us a lot of opportunities by providing growth for the economy and supporting the lives of small farmers. No doubt, there are issues on the ground. Those doing well, we need to give them credit. Those that are not doing well, we need to talk to them and help them to get to a point where people are being treated fairly and forests aren’t being cut down indiscriminately.

Rudro: Great! I feel like I understand traceability and what you do much better. Thank you so much for speaking with me today, Shea.

Shea: You’re welcome! Anytime. Good job guys!

A few thoughts before I go. The idea behind traceability is to find out which mills supply to a refinery and publish this information. In the few years since TFT started down this path, many major companies in the palm oil industry have begun publishing their traceability information on dashboards.

This leads us to the next step. Once we know where the palm oil comes from, we need to get our hands dirty on the ground – to see things first-hand. But since we can’t be everywhere, we need to prioritize our visits to have as much impact as possible. Because at the end of the day, the goal is, and always will be, to transform the industry into one where both people and nature live in harmony.

Related News:

Areas of work:
Healthy Forests

Palm oil

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